Getting Personal
Downsizing
Question: My wife and both turn 50 this year. Our son is graduating college and our daughter enters college this fall. We are downsizing into a smaller home, purchasing with cash. We'll then sell our current home. I've looked forward to being "mortgage-free" for some time, but several of our friends suggest losing the tax advantage is a bad financial move. Chris, what is your opinion? Tom, Charlotte, NC.
Answer: First of all, from a financial point of view it's really smart to make a downsizing move while you're still working. You'll save a lot of money--no mortgage, lower property taxes, cheaper utility bills, and so forth--and you can salt away at least some of that money for later on. In a sense, it's a smart savings strategy. Secondly, I don't think the mortgage deduction is all that important to your bottom line. Sure, it helps. But it's far better to enter your Golden Years owning a home without a mortgage. This way you have a solid equity foundation for your overall portfolio. Go for it
Looking for guidance on your personal finances? I'm taking your questions and answering one here each day. Just click on the "Ask a question" link to tell me what's on your mind.
Chris Farrell Marketplace Money personal finance guru
Latest Posts
Archives
| S | M | T | W | T | F | S |
|---|---|---|---|---|---|---|
| 1 | 2 | 3 | 4 | 5 | ||
| 6 | 7 | 8 | 9 | 10 | 11 | 12 |
| 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| 20 | 21 | 22 | 23 | 24 | 25 | 26 |
| 27 | 28 | 29 | 30 | 31 |
Categories
- Banking
- Books
- Budgeting
- Charitable giving
- Credit report, credit score
- Debt
- Dollar Exchange Rate
- Financial planner
- Housing
- Insurance
- Investing
- Stocks
- Kids and money
- Mutual funds
- Paying for College
- Retirement Savings
- 401k
- Bonds
- IRAs
- Money Markets
- Mutual Funds
- Social Security
- Taxes
- credit cards
- economy
- estate planning
- insurance
- retirement
- savings
- scams
sponsor
Latest Comments
- Credit Card Debt (1)
- Jim wrote: This is sound reasoning, and advice to be followed--except t... [read]
- Book Recommendation on Investing (1)
- St Y wrote: I like the book "The Little Book of Common Sense Investing" ... [read]
- O% interest (2)
- Ted wrote: Kris, Make sure that you check the balance transfer fees (l... [read]
- St Y wrote: Have you looked into Prosper.com? You might get a better in... [read]
- A Bigger Mortgage? (1)
- robert lord wrote: Excellent response, wise advice. Love your simple delivery, ... [read]
- A DIY MOrtgage? (1)
- Jodi wrote: My husband and I have a mortgage through my father. It's be... [read]
sponsor
Comments (1)
Not sure where you live currently or what type of market this is, but you probably are selling your home at a low point in the real estate market.
You might consider renting out your home if there is a market for this. You could use a real estate management company to do this. They take care of all the ugly details of renting (contracts, evictions, etc.) for a small monthly fee. Doing this for a number of years might give you income and allow the value of your house to rebound.
Just my 2 cents...