Thread: My sig explained (finally..and it's a fricken' novel)

Originally Posted by wizardPC

hey, I dont plan on living like I am now forever, that's no fun!

Just the next 18 months or so. Maybe the next 4 years if I decide I really do want to go to law school.

Okay! That's a relief!

Originally Posted by wizardPC

Yes, interest is tax deductable, but you deduct from your taxable income, not the taxes that you pay. If you paid $10,000 in interest on a house this year, and you are in a 25% tax bracket, you've only avoided $2500 in taxes. If you want $2500 of your taxes for 2005 paid for you, I'll gladly do it--as soon as your check to me for $10,000 clears the bank.

I think I explained this once, but here it is again. For your personal home, you don't want to owe unless you have to. Most of us have to. However, if I have a house rented out for $1000/mo and there is no mortgage on that house, that income is taxable at my taxable income rate of 30% - I lose $300/mo. If I carry a mortgage on that house and use the equity to cover my living expenses, and the rent is set to cover the mortgage - I'm deducting nearly 100% of my taxable income. In other words, I'm not paying taxes. Your biggest expense in life is taxes - avoid that trap with financing and you'll work a whole lot less! Like I said - it's a matter of knowing the rules of the game and using them to your benefit.

There is risk associated with this approach, just like there is risk associated with EVERY approach. If you lose a renter, it costs money. Then again, if you lose your job, that costs money, too! So a strong savings account is a necessity regardless of what approach you take.