7 ms·

No need to hire an accountant, the IRS treats Bitcoin as property, so it would be capital gains tax at sale, not income. There's very good reasons to pay off t

by Sleeep 9y ago

No need to hire an accountant, the IRS treats Bitcoin as property, so it would be capital gains tax at sale, not income. There's very good reasons to pay off the mortgage, it certainly is not "nearly always a bad idea." If you were given a house free and clear would you immediately take out a mortgage on the house? Once you pay off your current mortgage are you planning on immediately taking out a second one? We don't know a thing about this person's finances so we can't advise either way. The feeling of having no debt is amazing and that sort of emotional security can't just be discounted. Finances are just as much about emotion as they are about cold hard numbers. Of course, everyone is different. "But you can get a higher return in the market," you say. You can also lose money in the market, too. It's a great idea in a bull market but a terrible idea in a bear market. If you have a time machine you'd already be filthy rich. Many people think equities are overpriced right now and we are heading for a correction. "But mortgage interest is tax deductible," you say. Only if you itemize and not everyone itemizes and interest on a margin loan is tax deductible too. Some people may not want to retire at all and if they did why should they wait 30 year, specifically, if they want to retire? The poster didn't give his or her age so he or she might already be retired or is approaching retirement age. They may be younger but with significant assets. A million dollar windfall is enough for me to retire on right now.

0xbear 9y ago
Paying off mortgage gets you off the hook from 4.16% per year in interest. S&P (in the form of VOO) is up 18% YoY. Do the math. The feeling of not having debt, you can have that if you have enough liquidity to pay off your mortgage if money can't be put to better use elsewhere. I hire accountant to do my taxes and save thousands of dollars every year over what I'd pay if I used turbotax. That's why I recommend hiring one once you venture into high six figures and up.
- soccerdave 9y ago
  Genuinely curious as a TurboTax user, what are some of the ways your accountant has helped you save money on taxes that you would have missed on TurboTax?
  - 0xbear 9y ago
    More detailed handling of stock compensation mostly. I was also able to recover a ton of money overpaid in previous years. You have to understand that the primary goal of TT is not to save you the maximum amount of money. It is to be both "good enough" for most users and to not underestimate. Overestimating is OK, it's not their money after all, and you can hire an accountant if you don't like the result (as I did). Underestimating could destroy them financially.
- Sleeep 9y ago
  Once again, paying off your mortgage is 100% guaranteed returns, investing in the stock market not only is not guaranteed to be over 4%, you can lose a significant amount of money. Need I remind you that the S&P 500 dropped around ~50% between 2007-2009? Here's the math: +number > -number. Equities are currently overprice. I'm not saying don't buy them at all, but expect a correction in the near future. If not holding a mortgage is a "bad idea," then by that logic you should immediately take one out if you don't already have one. Do you plan on taking out another mortgage once yours is paid off? Would you take out a mortgage on a home you own free and clear? Do you buy stocks on margin? Do you take out personal loans to put in the stock market? Do you have a home equity line of credit that you use to put in the market? Why or why not? I mean, if you're expecting 18% returns, there's a thousand ways you can borrow money cheaper than that. Everyone's situation is different so making blanket statements isn't appropriate. I'm not saying that they should immediately pay off the mortgage, I'm disagreeing that paying off the mortgage is a "always a bad idea."
  - 0xbear 9y ago
    Look at s&p over a longer, mortgage like time period, and then come back to me.
    - Sleeep 9y ago
      Do you plan on taking out another mortgage once yours is paid off? Would you take out a mortgage on a home you own free and clear? Do you buy stocks on margin? Do you take out personal loans to put in the stock market? Do you have a home equity line of credit that you use to put in the market? Why or why not? Anyways, it's all personal preference. Some people are only happy going after the best returns, some want more security with less risk instead. No choice is better than the other, it's what makes you, personally, feel good. It also changes with age and life situations too. My parents are elderly now and now they feel really good with low risk low returns investments. This was not always the case. My investments increased in risk after I got married because a single income can cover all of our expenses but we have two, there's so much more room for breathing now. Personal finance is not just numbers on paper and bigger numbers are better. It's personal, hence the name. You never answered why this person should retire in 30 years. If they are 45 why wait until 75 to retire, especially with such a big windfall? If they are 22 with no savings, sure, $1M might not be enough to retire yet but waiting 30 years is super overkill with such a big windfall. We know nothing about this person's finances, or life, so the sort of advise you gave is inappropriate to offer.

by Sleeep 9y ago

0xbear 9y ago

Paying off mortgage gets you off the hook from 4.16% per year in interest. S&P (in the form of VOO) is up 18% YoY. Do the math. The feeling of not having debt, you can have that if you have enough liquidity to pay off your mortgage if money can't be put to better use elsewhere. I hire accountant to do my taxes and save thousands of dollars every year over what I'd pay if I used turbotax. That's why I recommend hiring one once you venture into high six figures and up.

soccerdave 9y ago
Genuinely curious as a TurboTax user, what are some of the ways your accountant has helped you save money on taxes that you would have missed on TurboTax?
- 0xbear 9y ago
  More detailed handling of stock compensation mostly. I was also able to recover a ton of money overpaid in previous years. You have to understand that the primary goal of TT is not to save you the maximum amount of money. It is to be both "good enough" for most users and to not underestimate. Overestimating is OK, it's not their money after all, and you can hire an accountant if you don't like the result (as I did). Underestimating could destroy them financially.
Sleeep 9y ago
Once again, paying off your mortgage is 100% guaranteed returns, investing in the stock market not only is not guaranteed to be over 4%, you can lose a significant amount of money. Need I remind you that the S&P 500 dropped around ~50% between 2007-2009? Here's the math: +number > -number. Equities are currently overprice. I'm not saying don't buy them at all, but expect a correction in the near future. If not holding a mortgage is a "bad idea," then by that logic you should immediately take one out if you don't already have one. Do you plan on taking out another mortgage once yours is paid off? Would you take out a mortgage on a home you own free and clear? Do you buy stocks on margin? Do you take out personal loans to put in the stock market? Do you have a home equity line of credit that you use to put in the market? Why or why not? I mean, if you're expecting 18% returns, there's a thousand ways you can borrow money cheaper than that. Everyone's situation is different so making blanket statements isn't appropriate. I'm not saying that they should immediately pay off the mortgage, I'm disagreeing that paying off the mortgage is a "always a bad idea."
- 0xbear 9y ago
  Look at s&p over a longer, mortgage like time period, and then come back to me.
  - Sleeep 9y ago
    Do you plan on taking out another mortgage once yours is paid off? Would you take out a mortgage on a home you own free and clear? Do you buy stocks on margin? Do you take out personal loans to put in the stock market? Do you have a home equity line of credit that you use to put in the market? Why or why not? Anyways, it's all personal preference. Some people are only happy going after the best returns, some want more security with less risk instead. No choice is better than the other, it's what makes you, personally, feel good. It also changes with age and life situations too. My parents are elderly now and now they feel really good with low risk low returns investments. This was not always the case. My investments increased in risk after I got married because a single income can cover all of our expenses but we have two, there's so much more room for breathing now. Personal finance is not just numbers on paper and bigger numbers are better. It's personal, hence the name. You never answered why this person should retire in 30 years. If they are 45 why wait until 75 to retire, especially with such a big windfall? If they are 22 with no savings, sure, $1M might not be enough to retire yet but waiting 30 years is super overkill with such a big windfall. We know nothing about this person's finances, or life, so the sort of advise you gave is inappropriate to offer.