Anyone here play the stock market?

[Simon Dog]

Double mortgage payments do reduce the amount of total interest paid over time.

Depending on the mortgage terms, one of two thing may happen:

1).  The interest due on future payments is adjusted to reflect the lowered principle

or

2).  The payment amount in future months remains the same, but actual total interest accural drops a bit faster, as does the principle you are paying down, resulting in fewer payments.

Although #1 seems better, #2 actually result in paying the mortgate off a bit faster with less total interest paid.

Many years ago, a company contacted me wanting to set me up with bi-weekly mortgage payments (resulting in 13 instead of 12 payments a year).  It touted all the advantages for a modest $1000 up front fee, plus trusting them as an intermediary with my payment.    In the FAQ it asked "can I do this myself".  Instead of a straightforward answer of "You can just send the bank the extra money each month", they said "You may be able to do this provided you are in compliance with contract terms, federal regulations and banking law - we take care of all this for you".   About as much integrity as a time share sales pitch.

Also, you do not have to send in a "double payment" - even if all you can afford is an extra $100 a month, you still come out ahead.  Just check your statements to make sure the extra principle is credited.

I knew it would never sell for that price, and even with the tax deduction, it was still a lot of money.)

People often forget that they "extract value" from a house over time in the form of housing that they would otherwise have to rent.   Even if you break even after 10 years in a house, you can come out ahead compared to where renting would have left you.

[Marilee]

True enough, Simon Dog. My hubby likes to say, "It's better to buy than rent, and better to own than buy".

[Simon Dog]

True enough, Simon Dog. My hubby likes to say, "It's better to buy than rent, and better to own than buy".

Ownership is impossible due to the lack of allodial title in the US    The closest you can come is renting from the government.

[Paul]

Ownership is impossible due to the lack of allodial title in the US    The closest you can come is renting from the government.

I've never heard of this and am curious as to what you mean. Are you saying that all land in the US is owned by the government and that no citizen ever owns the freehold?

[Marilee]

Another way to "pay off a house"
I just wanted to share my sister's story here.
She was in her late '40s, married with 2 kids, 2 mortgages and 2 incomes when her husband suddenly died. The grief and stress made her too sick to work and she lost her teaching job. It was 2008. She was starting to say things like, "I could probably be a great bag-lady", was draining her savings to pay the mortgages and hope her health would improve enough to be able to work again. Long story short, she sold her home before defaulting on the loans, and - here's the big, bold part - she moved to another town where she was able to buy a house paid-in-full with the remaining equity from the first house. It was a huge step: She had to leave friends, a neighborhood she had known for decades, any possibility of returning to her old job. She was starting from scratch. But with the new house paid for, she could burn through her savings much more slowly, regain some health and started work again a year later. And she's able to invest because she doesn't have any house payment (sure, she's got property tax, insurance, repair and maintenance - but that's a lot less than a mortgage) so she and the kids are not on the street, and now in her late '50s she can daydream about some kind of retirement again.
We often think of downsizing as a retired senior after the kids are gone, but my sister showed that downsizing can be the right thing to do much sooner. At least it was for her.

[iolaire]

here's the big, bold part - she moved to another town where she was able to buy a house paid-in-full with the remaining equity from the first house. It was a huge step:

I personally feel we need much more internal migration here in the US.  People like to blame the "Mexicans" (i.e. any member of a Spanish speaking culture) for taking all the jobs but they are the people willing to move anywhere in the US for a job. 

I live in the DC area where there constantly are jobs (many like mine are non government) - anyone at roughly any skill level (food services, plumbing, auto mechanics, professional, healthcare, education) who is willing to work hard should be able to get a job.  Yet I keep reading about people all over the country that can not find work.  They should come on their own to an area with jobs, rent a bedroom in a house with others and work hard until they can afford the high cost of living and bring their loved one's with them.

[iolaire]

One thing that I feel most financial books push is "How to get rich," but richness is not a destination (there is always someone more rich) rather you should seek to be content and comfortable. 

Sometime soon I'll quote this a post the name/link to a basic money savings (i.e. coupons are nice, but make sure you don't ruin all that savings buy overpaying on that dishwasher) book that I really liked.

To me the first step is always trying to figure out how you can live for less than you earn - and continue that as your income increases.  (Plus get in a career field that will have raises and opportunity to advance.) 

Once you have some free cash its time to build your emergency fund and after that move forward with other investments, first any retirement accounts at work up to the company match, then up to the annual retirement contribution limit, and after that you can talk about investing for fun. Somewhere in there you should purchase an affordable home, but only if it makes sense, and view that as your forever home - and pay down the balance when you can.  Also in there you should buy a car (if you can not live with public transportation) that will be dependable for many years and keep it as long as possible.

Somewhere in there you also need to make sure you are making smart choices, like would you rather pay $150 for a internet/cable package at $1,800 year, or use "rabbit ears" and a cheaper internet package to save say $1,200/year...  Or is it really worth overpaying by $300/year for a cell phone by not changing providers and plans every so often...

[Simon Dog]

I've never heard of this and am curious as to what you mean. Are you saying that all land in the US is owned by the government and that no citizen ever owns the freehold?

You pay a fee to the government each year in return for the government allowing you to live in your house instead of selling your lease to someone else who will pay that fee.   They call the rent "property taxes".    I pay about $8500 a year in rent (taxes) to the town for my house.  It's not much compared to renting from someone else, but it's still $700 a month I pay not to be kicked out.

[MooseMom]

Hold up, Simon Dog.  Are you saying that the payment of property taxes to the FEDERAL government allow you to live in your house?

I don't think that's correct, if that's what you are saying.  Property taxes go to your local city/town, and they distribute in to the various tax bodies.  Do you mean to say that property taxes go to LOCAL government, perhaps?  I don't want Paul to get the wrong idea.

Paul, I don't know if the UK still has council taxes like they did when I still lived there, but property taxes here are like council taxes there.  They pay for schools, police, etc.

[Simon Dog]

I never said "Federal Government", just "Government".    In my state, the property taxes are all local.  In my previous state of NY, there was a town/city and separate county property tax.

Federal or state, the concept is the same - I pay or people wil guns force me out of my house and let someone else pay the fee to live there.

[MooseMom]

I never said "Federal Government", just "Government".    In my state, the property taxes are all local.  In my previous state of NY, there was a town/city and separate county property tax.

I understand.  It's just that people from other countries might read the word "government" and assume you meant the US government.  In my state, too, the property taxes are all local, and I was saying to Paul, the council tax is just that...it is imposed by the local council to pay for local services, so they're analogous to our property taxes.

Thanks for clearing that up, Simon Dog. 

[Paul]

Paul, I don't know if the UK still has council taxes like they did when I still lived there

I believe we do, but I cannot be certain, because since I was declared disabled last year I no longer have to pay them.

[iolaire]

Sometime soon I'll quote this a post the name/link to a basic money savings (i.e. coupons are nice, but make sure you don't ruin all that savings buy overpaying on that dishwasher) book that I really liked.

I really liked this book: The Beardstown Ladies' Guide to Smart Spending for Big Savings: How to Save for a Rainy Day Without Sacrificing Your Lifestyle

It had good practical advice on lots of subjects as far as how to spend what money you have smartly.  The Beardstown Ladies had a stock investing club and wrote a book, afterwards someone figured out their match was wrong and thus their strong investing returns were not accurate, but this book's advice still stands.