[perrjojo]

Pay off or not pay off? Do whatever helps you sleep at night. There is no one size fits all answer

[Arctic Fox]

Originally Posted by electricblue

If this is your forever home, does it make financial sense to payoff the bond? Pros and cons of doing this?

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.

[golfing eagles]

A lot of "voodoo" economics floating around this thread.

First of all, I agree that everyone should do what they think is right for their situation.

I chose not to pay it off, and here is why----

My bond is $28,742 for which I pay $2,004 for 30 years = $60,120

The same $28,742 invested in the stock market for 30 years at the 100 year statistical ROI of 8% ends up being $289,221. (Do the math) Food for thought for those that claim it is a "no-brainer" to pay it off, or suggest that a financial advisor is somehow an idiot for advising a client not to pay it off. But once again, it remains a personal decision for each individual to make.

[Barefoot]

Originally Posted by Arctic Fox

We paid ours off immediately because it was one less thing to bother with ....

We paid ours off for the same reason.
Our resale home didn't have a high bond, and we didn't like paying 6% interest every year.

[golfing eagles]

Originally Posted by Barefoot

We paid ours off for the same reason.
Our resale home didn't have a high bond, and we didn't like paying 6% interest every year.

Again, an individual decision. I preferred paying 6% simple interest and collecting 8% compound interest to the tune of $229,101 in profit. If I live that long, I'll die the next day and have one heck of a wake. You're invited---there will be unlimited lobster!

[Fraugoofy]

Originally Posted by electricblue

Was wondering if this is your forever home, does it make financial sense to payoff the bond? Pros and cons of doing this? Thanks...

We bought a pre owned patio villa that had a bond balance of $4200 in 2012. We were paying about $800 a year toward the bond. After one year we paid off the bond and now invest the $800 a year to make money. We don't have to pay the administration fee for the bond every year now either. For us it made sense to pay it off. We still own that patio villa and intend to keep it as a rental for at least 5 more years. Good luck with your decision.

Sent from my SM-N910R4 using Tapatalk

[mickey100]

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.

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.

[golfing eagles]

Originally Posted by mickey100

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.

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.

What does the interest on the bond not being tax deductible and investment income being taxed have to do with anything? Unless you pay off the bond in monopoly money, the income you used to pay it WAS taxed.

And BTW, the historical ROI in the stock market over the last 100 years is about 8%, so on a 30 year investment, you should be pretty close to that average, not just "for a while"

[ColdNoMore]

For some people, not having a bond/debt gives them peace of mind and they may also be trying to maximize...what they pass on to their heirs.

For others, having the additional cash in the bank for unexpected bills or longevity (we can all hope )...gives them peace of mind.

As many others have said, it really does boil down to an individual choice...and what each person thinks is best for them.

There is no right/wrong choice...that fits all.

[golfing eagles]

Originally Posted by ColdNoMore

For some people, not having a bond/debt gives them peace of mind and they may also be trying to maximize...what they pass on to their heirs.

For others, having the additional cash in the bank for unexpected bills or longevity (we can all hope )...gives them peace of mind.

As many others have said, it really does boil down to an individual choice...and what each person thinks is best for them.

There is no right/wrong choice...that fits all.

Sounds awfully close to 4 this week

[ColdNoMore]

Originally Posted by golfing eagles

Sounds awfully close to 4 this week

Nope.

3:1.

[golfing eagles]

Originally Posted by golfing eagles

.

First of all, I agree that everyone should do what they think is right for their situation.

Originally Posted by ColdNoMore

As many others have said, it really does boil down to an individual choice...and what each person thinks is best for them.

There is no right/wrong choice...that fits all.

Are you sure it's not 4:0?????

[mickey100]

Originally Posted by golfing eagles

What does the interest on the bond not being tax deductible and investment income being taxed have to do with anything? Unless you pay off the bond in monopoly money, the income you used to pay it WAS taxed.

And BTW, the historical ROI in the stock market over the last 100 years is about 8%, so on a 30 year investment, you should be pretty close to that average, not just "for a while"

Someone posted making a certain profit on a stock market investment, but didn't account for taxes. So the point is, one may have to deduct 15 or 20%, or whatever bracket a person is in, to show the true earnings. And BTW, as any seasoned investor is aware, past performance is no guarantee of future earnings. Stock returns have varied greatly by decade. You may get lucky and be in a decade or two of high earnings, or you may hit negative territory. Some investment gurus have said the says of double digit returns are a thing of the past, and we'll be lucky to get 6% on our investments over time. The thing is, no one has a crystal ball. If we did we would have bought Apple stock when it was $12/share.

[golfing eagles]

Originally Posted by mickey100

Someone posted making a certain profit on a stock market investment, but didn't account for taxes. So the point is, one may have to deduct 15 or 20%, or whatever bracket a person is in, to show the true earnings. And BTW, as any seasoned investor is aware, past performance is no guarantee of future earnings. Stock returns have varied greatly by decade. You may get lucky and be in a decade or two of hight earnings, or you may hit negative territory. Some investment gurus have said the says of double digit returns are a thing of the past, and we'll be lucky to get 6% on our investments over time. The thing is, no one has a crystal ball. If we did we would have bought Apple stock when it was $12/share.

And hence the term "risk tolerance" Yes, my numbers were pre-tax, but I'd rather have 80% of something than 100% of nothing. Now, if someone doesn't anticipate the cash flow to pay the bond and interest yearly, has the $$$ right now, and might be tempted to spend it on something else, I'd pay it off too.

[Arctic Fox]

Originally Posted by golfing eagles

I preferred paying 6% simple interest and collecting 8% compound interest to the tune of $229,101 in profit.

May we assume, then, that you have remortgaged your home (at the current 30-year fixed rate of around 4%) and put all of the money into the stockmarket?