Asked & Answered

My Accountant Lost His Calculator

Q - You seem to advocate paying off your mortgage early, but my accountant says I should keep my mortgage for the tax shelter.

A - Let’s do the math. For every $100 in interest you pay the bank, you get to keep from sending about $25 to the IRS. If you want, you can send me $100 and I’ll send $25 back to you and we can leave your mortgage company out of it.

By paying off your mortgage early you will lose a valuable tax deduction, but you will gain about four times that amount in interest saved. I still advocate paying your mortgage off as the last debt, since at least you do get the 25% discount. This is not tax advice, just common sense.

Follow my method and you’ll save enough money that you can afford to send your accountant back to college to take a remedial math course.

You can reprint this article for free. Simply include the following byline at the end of the article:

Bill Pratt is a former credit card executive turned student-advocate. He is the author of Extra Credit: The 7 Things Every College Student Needs to Know About Credit Debt & Ca$h and a contributor to YoungMoney.com. Bill speaks at colleges to educate and entertain students about real-life issues in money, leadership and success. His goal is to help students succeed personally and financially so they can improve the lives of those around them.You can learn more about money at www.ExtraCreditBook.com