Did YOU Know?

Every dollar you pay above the minimum monthly payment on a debt earns you a gain equivalent to the interest rate the debt charges. In other words, if you pay and extra $100 towards the balance of a credit card that charges 15% interest, you're getting the wealth building effect of earning 15% annually on that $100. That's way better than most investments average over time. So the more you prepay against debt balances (without adding to them at the same time) the more you earn in effective interest. Prepaying your mortgage balance earns you more than you could possibly lose, in terms of the mortgage interest tax deduction. Let's say you're in the 28% tax bracket. That means the government gives you a 28-cent tax break for every dollar you spend on mortgage interest. But that means you're LOSING 72 cents out of each of those dollars. If anyone tells you that paying a dollar to get back 28 cents is a good investment, suggest they recheck their math.