Quote:
Originally Posted by Arctic Fox
Any advisor worth his salt will tell you that he needs to know a lot more about your financial situation before he can come to a decision.
In other words, for some people it will make sense to pay off the bond; for others it will not.
We paid ours off immediately because it was one less thing to bother with and because we couldn't find an "investment" that would guarantee us the 7% over the remaining life of the bond. Your situation may be different.
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That's a good point. You may be able to get 7 or 8% on an investment for awhile, but there is no guarantee you will have that for 20 or 30 years. And another point is that you will be taxed on that investment. On the other hand, the bond interest is not tax deductible. Lastly, at our age, we will most likely not have 100% of our investments in stocks, which is where you'd hope to get an average of 8% return. Perhaps 50% of our investments might be in quality bonds or fixed income vehicles, which will earn considerably less than 8%.
You can go to the districtgov.org website and there is an area where they show the amortization tables for the bonds. For example, if you live in district 10, unit 187, you have a 5.9999% interest rate on the a $22,851 bond, and over the life of the bond, you will pay $1735 per month, for a total of $52,063.