Is there any incentive to pay off your tractor early?

[adventure bob]

Moss, you should already be deducting your interest... If you pay off your mortgage early you eliminate debt. Fully fund your 401K, then pay off you mortgage. Biggest cash flow fix there is in the American home. So that's another thing to do with your tractor payment unless your 401K is already fully funded.

 

[oldpilgrim]

When I retired almost 5 years ago, I had a mortgage and a new truck payment. I could have paid them off but it would have taken a good chunk of my retirement savings. Not knowing how long I'd live, I figured it was easier to continue to make payments as I was able to do it without any problems. That way, my retirement savings would not deplete.

After a couple years, I saw exactly what it cost me to live and I figured I could pay the mortgage and truck off without a problem.

Now I'm debt free, still have some invested savings (not as much as before, but enough) and am doing all right.

It's amazing how little it costs to live when you have no debt. I'm actually living off my SS income, not touching my savings, and still have some money left over every month.

When you are debt free, it's a great feeling.

Pay off whatever you can but ALWAYS put away money for your retirement.... as much as you can. If I hadn't started salting away money when I was in my 20's, albeit just a little at that time, things would have been different today.

 

[big bubba]

After a couple years, I saw exactly what it cost me to live and I figured I could pay the mortgage and truck off without a problem.

Now I'm debt free, still have some invested savings (not as much as before, but enough) and am doing all right.

It's amazing how little it costs to live when you have no debt. I'm actually living off my SS income, not touching my savings, and still have some money left over every month.

When you are debt free, it's a great feeling. oldpilgrim

my feelings as well. i'm also retired and that @ this stage in life, i finally have achieved debt free finances on all bases. my point to the OP: not sure what stage of life you are in, & of course the demands are plenty. if you can swing paying the tractor off w/o sacrificing other needs, then do it. just my take in these uncertain times....yes, the dow is at record highs, but given the overall climate (political & environ.) i would prefer to be in a financially stable place. just imho best regards

btw i feel for those farmers making a living that depend on the climate. must be tough and uncertain as well. all the best to you, we need you.....

 

[MossRoad]

Moss, you should already be deducting your interest... If you pay off your mortgage early you eliminate debt. Fully fund your 401K, then pay off you mortgage. Biggest cash flow fix there is in the American home. So that's another thing to do with your tractor payment unless your 401K is already fully funded.

I've never been able to beat the standard deduction, so I can't deduct that interest.

As for fully funding a 401K, I don't see that as a good idea. I contribute as much as my employer matches, then put the rest in a ROTH IRA.

ROTH IRA's you pay taxes now, but no taxes later. There's some benefits to that in regard to college savings VS 529 plans, too. All things to look at.

 

[adventure bob]

So the bet your taking with a Roth is "am I in a higher tax bracket today than I will be in the future." Your paying tax on your Roth based on your income today. If you don't touch your 401K until you've retired and have less income, your taxes on the same dollars will be lower. If you pay off your house before you retire then your cash flow position is way better and you need way less income, lowering your tax burden even more.

 

[dickfoster]

When I retired almost 5 years ago, I had a mortgage and a new truck payment. I could have paid them off but it would have taken a good chunk of my retirement savings. Not knowing how long I'd live, I figured it was easier to continue to make payments as I was able to do it without any problems. That way, my retirement savings would not deplete.

After a couple years, I saw exactly what it cost me to live and I figured I could pay the mortgage and truck off without a problem.

Now I'm debt free, still have some invested savings (not as much as before, but enough) and am doing all right.

It's amazing how little it costs to live when you have no debt. I'm actually living off my SS income, not touching my savings, and still have some money left over every month.

When you are debt free, it's a great feeling.

Pay off whatever you can but ALWAYS put away money for your retirement.... as much as you can. If I hadn't started salting away money when I was in my 20's, albeit just a little at that time, things would have been different today.

Xactly!

BTW somehow they upgraded my FICO to 855 but I don't for the life of me know why or how since I have no debts to pay. I only pay a few monthly bills like power and that's pretty much it. Like you I'm living mostly off of SS now and have money left over. I'm not old enough to have to draw down on my IRA stuff yet but my wife has to take some of her's every month now.

Important advice to the younger ones out there is get out of debt as soon as you can and stay out of debt if you ever want to be free. You'll probably live a lot longer just from the reduced stress.

 

[oldpilgrim]

I just got a letter from my IRA investment company saying that I need to start taking out money every year as dictated by the govt. Seems you can't keep money invested until you croak. Nothing is yours anymore. The .gov makes you take it out so they can take their piece of it. I'm going to fool them though as if I take the minimum, I'm still below the level where I need to pay taxes. !!!

To the OP: pay off what you can, save as much as you can and you'll be better off when you get to be an old phart like some of us here.

 

[daugen]

I just got a letter from my IRA investment company saying that I need to start taking out money every year as dictated by the govt. Seems you can't keep money invested until you croak. Nothing is yours anymore. The .gov makes you take it out so they can take their piece of it. I'm going to fool them though as if I take the minimum, I'm still below the level where I need to pay taxes. !!!

To the OP: pay off what you can, save as much as you can and you'll be better off when you get to be an old phart like some of us here.

RMD: required minimum withdrawal, been part of IRAs from the beginning. I would normally say most qualified plans too but I'm sure
there are lots of exceptions. You avoid taxes the whole time you save within an IRA; the gov says now it's our turn ever so belatedly to chow down on your income.

 

[prichard]

So the bet your taking with a Roth is "am I in a higher tax bracket today than I will be in the future." Your paying tax on your Roth based on your income today. If you don't touch your 401K until you've retired and have less income, your taxes on the same dollars will be lower. If you pay off your house before you retire then your cash flow position is way better and you need way less income, lowering your tax burden even more.

Other way around. Roth is taxed now not in retirement. Traditional is for expecting lower tax rate later.

 

[MossRoad]

So the bet your taking with a Roth is "am I in a higher tax bracket today than I will be in the future." Your paying tax on your Roth based on your income today. If you don't touch your 401K until you've retired and have less income, your taxes on the same dollars will be lower. If you pay off your house before you retire then your cash flow position is way better and you need way less income, lowering your tax burden even more.

When we retire, we will be in a higher income tax bracket than we are today. We paid off our house in 1998, back in our late 30's.