Woods Cross, UT (PRWEB) June 20, 2007
More and more people are finding ways to justify carrying mortgage debt into their golden years. Unfortunately, those reasons may not be as good as they think.
According to a recently released mortgage study done by the Joint Center for Housing Studies at Harvard University, the number of homeowners in the 55 to 64 age bracket carrying mortgage debt shot up from 39 percent to 54 percent over a 10-year period. The total debt from home-owning households nearly doubled between 1990 and 2000 alone, increasing from $2.4 trillion to $4.1 trillion.
There are a number of mortgage myths that help homeowners validate not paying off their mortgage. For one, they think they'd need a fortune to pay everything off in a short amount of time, so there's no need to worry about it until later. According to Alan Williams, author and personal finance expert with Utah-based Money Mastery, that's not so.
"Anybody can get out of all debt, mortgage included, in nine years or less," he said. "It doesn't matter how much debt they have, what their interest rates are or how little money they make. With the right information and tools, anybody can eliminate all their debt interest and earn interest instead."
People also believe that their mortgage is "good debt" because they're building equity so the interest that they pay over the years is worth it.
"That's another myth," said Peter Jeppson, a motivational speaker and financial planning educator with Money Mastery. "A home that you live in is not considered 'good' debt. It's bad debt because you can't get any of the investment out of it until you sell the house and move out of it. So if you're paying interest on debt for that house, it's not making you any immediate money. It's costing you money."
But perhaps the biggest myth surrounding mortgage is that people who use it as a tax write-off will be unable to afford their taxes without it. They think the tax savings are a better deal than just paying off the debt.
"This is a ridiculous notion that needs dispelling immediately," said Jeppson. "That mentality is like spending a dollar in interest to get back 28 cents from Uncle Sam, which is the average returns in tax savings for most Americans who use their mortgage as a write-off. There are lots of other things people could be doing with that money that would pay higher dividends than just tax savings."
It's important to look at the whole picture regarding mortgage, debt and finances. Learning money management today could save tons of stress in the long run. Get a free financial assessment today at MoneyMastery.com.
About Money Mastery
Money Mastery® is a time-proven personal financial literacy and coaching program created by the founders of Time & Money, LLC, a service company specializing in the financial education of individuals, families and corporations. It is the only comprehensive financial management system that helps individuals and families take control of every aspect of their financial life.