Author Topic: Quick question - pay extra on mtg or pay down debt?  (Read 1534 times)

mousebandit

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Quick question - pay extra on mtg or pay down debt?
« on: September 02, 2015, 10:39:45 AM »
Hi! I'm new.  Found MMM last night, and stayed up half the night reading.  We are literally in the middle of moving and making big changes to our life/finances, pulling out of here in two days. 

But, I have an immediate and quick question.  We currently have a private mortgage on our property at 10% interest (funky monkey backwoods home doesn't qualify for conventional financing), and have been paying about $120/mo extra on it to pay it off faster.  ($600/mo vs $480, we owe about $45k on it)  We have a lot of high-interest debt right now (higher than 10% for sure), and are trying to dig out.  I'm coming up with lots of ideas, but my immediate thing I can see to do, is halt the extra money on the mtg and putting it towards the credit card debt.  Is that the right idea?

Once I'm back home and have re-assessed our plan in light of MMM principles, I will probably post a full case-study. 

Thanks!

Saving in Austin

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Re: Quick question - pay extra on mtg or pay down debt?
« Reply #1 on: September 02, 2015, 10:46:08 AM »
I think I would pay off the highest interest credit cards debt first.

Are you taking the mortgage interest deduction on your taxes every year?

JLee

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Re: Quick question - pay extra on mtg or pay down debt?
« Reply #2 on: September 02, 2015, 10:49:45 AM »
I think I would pay off the highest interest credit cards debt first.

Are you taking the mortgage interest deduction on your taxes every year?

Yep.  Post a case study!

mousebandit

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Re: Quick question - pay extra on mtg or pay down debt?
« Reply #3 on: September 02, 2015, 10:59:38 AM »
Okay, I will make that switch with the deed company today so it takes effect this month.  I am really fired up after reading through all the blog and forums. 

I'll post a full case study next week.  Short version, husband is staying in Portland (oregon) to keep working, and kids (x4) and I are going back to our house (I use the word loosely, haha) in the boonies to perfect our "living off the land" skills and try to dig our hineys out of this monstrous debt hole we're in. 

When we itemize our taxes, I do use the mortgage interest, but it doesn't usually come out better to itemize.  I think since we had baby #4, it has been better to just take standard deduction. 


seattlecyclone

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Re: Quick question - pay extra on mtg or pay down debt?
« Reply #4 on: September 02, 2015, 12:03:29 PM »
When we itemize our taxes, I do use the mortgage interest, but it doesn't usually come out better to itemize.  I think since we had baby #4, it has been better to just take standard deduction. 

While you certainly may be better off taking the standard deduction, the number of kids you have doesn't make any difference here. You'll get an additional $4,000 exemption for each dependent, but that's completely separate from your itemized/standard deduction.