Is Having a Mortgage a Great Way to Force Savings?

Today, Passive Income MD looks at a mortgage and how it forces one to “save money” by paying down the principal on real property, building equity.

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PIMD will go into detail, but when I hear the term “forced savings,” I am reminded of one of the arguments in favor of cash value life insurance, often purported by those who profit from selling such policies.

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A mortgage, of course, is very different from an insurance policy, and is actually a good and necessary product for many people.

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Is Having a Mortgage a Great Way to Force Savings?

A Mortgage is a Great Forced Savings Vehicle

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Most experts suggest at least a 10% savings rate, with some, like the White Coat Investor, even recommending 20%. The truth is, thanks to life’s little expenses, many of us fail to come close to those percentages.

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Creates Long-Term Wealth

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Interest on your mortgage can be deducted at tax time, which means more money in your pocket. Although with the new tax plan, this benefit has been reduced for some people, particularly in high cost of living areas.

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Avoid Capital Gains Taxes

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Is Having a Mortgage a Great Way to Force Savings?

Today, Passive Income MD looks at a mortgage and how it forces one to “save money” by paying down the principal on real property, building equity.

PIMD will go into detail, but when I hear the term “forced savings,” I am reminded of one of the arguments in favor of cash value life insurance, often purported by those who profit from selling such policies.

A mortgage, of course, is very different from an insurance policy, and is actually a good and necessary product for many people.

Is Having a Mortgage a Great Way to Force Savings?

A Mortgage is a Great Forced Savings Vehicle

Most experts suggest at least a 10% savings rate, with some, like the White Coat Investor, even recommending 20%. The truth is, thanks to life’s little expenses, many of us fail to come close to those percentages.

It’s Easy

Creates Long-Term Wealth

Interest on your mortgage can be deducted at tax time, which means more money in your pocket. Although with the new tax plan, this benefit has been reduced for some people, particularly in high cost of living areas.

Tax Deductions

Avoid Capital Gains Taxes

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