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FS - DAIR Question

Started by ManInAVan, January 12, 2019, 10:35:51 PM

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I've seen a lot of discussion on this so far, but I still think I'm missing something and would really appreciate some input.

Im referring to this article:

Let's assume that I have no other debt but a mortgage with an effective rate of 3.23% using this formula ("take your mortgage interest rate and multiply it by 100% minus your marginal tax rate")

According to the article, I should be focusing 32.3% of my savings each month toward paying it down.

Why would I do that?

Wouldn't it make more sense to just buy a muni with a YTW/YTM of 4% (tax free) or even a 10-year CD at 3.55% (taxable).

Thanks for any input!


Sure. In general, less debt is better than more debt.

You've got to do what you think is right for you. I've personally never regretted paying off debt.

Arbitraging a higher CD to live for free is what I did for many years as well. I personally don't like taking longer than 15 years to pay off a home, so I don't.



Thanks for the input, Sam!  I can definitely agree the idea of not having any debt seems better than having debt. 

I think by the time I have children in my home I would feel more secure having a roof without a lien on it and would likely employ the strategy for peace of mind should anything happen to me.  For now, the leverage doesn't keep me up at night though.  I really appreciate the input! 

I especially enjoy your posts that make me question what I've been operating under as the "right" way. 


The thing about paying down a mortgage with extra principle payments is that if you lose your job the bank still wants payment.  Saving cash in an account that breaks even with the mortgage rate after taxes is pretty sweet and gives you more long as you don't spend it on something else...

Once you can pay it off then do so if you want.