Pay off Mortgage vs. Purchasing Gold/Silver

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bcc87's picture
bcc87
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Posts: 52
Pay off Mortgage vs. Purchasing Gold/Silver

I realize the importance of paying off debts. My only debt is my mortgage. With many years left on the mortgage, I've considered paying down the mortgage by making 1 to 2 extra payments a year to pay if off much sooner, but will take a long time, 20 years. In the meantime, the next 20 years, things don't look good!!!  Thus, I want to increase my PM position, but taking this extra money to paydown and buy more PM. This seems more prudent due to potential gains, possibly liquidity if needed vs. striving to pay off mortgage while TSHTF during the timeframe in which Im trying to do so.

LogansRun's picture
LogansRun
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Joined: Mar 18 2009
Posts: 1444
Re: Pay off Mortgage vs. Purchasing Gold/Silver

This debate has been done many times here.  You may want to do a search within the site DB to find an answer.

It's all a personal choice though.  It's also dependent on how much you have/make and how much your mortgage is right now.  Did you know, that if you put your payment schedule (mortgage) to be every two weeks instead of once a month you'll come close to doing the same thing as paying an extra payment a month?  Check it out with your mortgage specialist.  We set ours up that way on our first "interest only" mortgage 8-9 years ago on a $400k mortgage.  Remember, this is an interest only loan so none of the principle should be getting paid.  So, after 3 years of paying our mortgage, our principle was at $366k.  All because we had our payments on two week programs instead of 1 month.  You're cutting off the interest payment essentially.

Anyway, if you're prepared to walk away from your mortgage at any time if things get really bad, I'd rather walk away with PM's in my pockets than walk away with no PM's and leaving a little less mortgage/debt on the banks books.  

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Jager06
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Re: Pay off Mortgage vs. Purchasing Gold/Silver

bcc-

I am a fiscal novice, but one thing changed my mind about mortgage paydown vs pm purchases. That was listening to some of the really smart guys in the room as far as national money printing and qe-2.

I figured if thats the way we go, I should be able to walk into the bank with a bag of pm, and walk out with the mortgage note and the business note.

I am sure this a long shot, but I figured the ratio to be 1oz silver for every $1000.00 of debt. If things get that bad, or if there is required currency change, then the PMs should help out considerably with capital preservation.

As for the 2 week payment options....wow! I never knew! I am calling the bank today to get that going. What an awesome idea....thanks LR!

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scbt
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Re: Pay off Mortgage vs. Purchasing Gold/Silver

On top of bi-weekly, ask about bi-weekly accelerated, which is an option in Canada, not sure about the US.  This drops the amortization by about 15% and only amounts to a small increase in bi-weekly payments.

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rickets
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Re: Pay off Mortgage vs. Purchasing Gold/Silver

What I would say is that your debt is a certain thing if you are an honorable person (meaning you honor your debts and intend to try and pay them with your best efforts - and not walk away).  Gold's value is not certain.  Inflation is not certain.  Deflation is not certain.  Extreme/rapid currency devaluation is not certain.  Your debt payments are scheduled and certain.  Perhaps PMs should be reserved for those who have no debt and have set themselves up to be more sustainable?  I think its wise to take care of the certainties and things which will help regardless of the future (self sufficiency and low/no debt), then worry about how to diversify extra wealth once that is done.  Another option is to sell the home and rent.

These are just ideas and thoughts - not intended as advice for anyone.

bcc87's picture
bcc87
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Joined: Jul 14 2010
Posts: 52
Re: Pay off Mortgage vs. Purchasing Gold/Silver

Thanks for input :) I'll do a search on previous posts.

So regarding the bi-weekly, are you saying that it will pay the mortgage down faster if a bi-weekly vs. making 1 extra payment in Dec. for instance? For me this will equate to $1,700 a year. With what may be ahead, I think I'd want  to put 3,400 in PM annually vs. 1,700.

So far, I have numismatic coins only, but want to build up bullion now. Every few months, I will build up money and buy. What gold bullion coins would anybody suggest looking into?

 

 

SteveW's picture
SteveW
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Joined: Jan 21 2010
Posts: 490
Re: Pay off Mortgage vs. Purchasing Gold/Silver
bcc87 wrote:

What gold bullion coins would anybody suggest looking into?

In the US its Eagles, in Canada its Maple Leafs, and if you plan to leave N. America when TSHTF get Krugerrands.

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jhart5
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Joined: Jul 25 2009
Posts: 89
Re: Pay off Mortgage vs. Purchasing Gold/Silver

bcc87 wrote - What gold bullion coins would anybody suggest looking into?  

Check out Gainsville Coins - great website to get familiar with what is avaliable on the market.. They have a wide selection of gold/silver bullion and gold/silver bullion coins.

For reviews of gold and silver dealers check out - http://inflation.us/reviews

ao's picture
ao
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Joined: Feb 4 2009
Posts: 2220
Re: Pay off Mortgage vs. Purchasing Gold/Silver
jhart5 wrote:

bcc87 wrote - What gold bullion coins would anybody suggest looking into?  

Check out Gainsville Coins - great website to get familiar with what is avaliable on the market.. They have a wide selection of gold/silver bullion and gold/silver bullion coins.

For reviews of gold and silver dealers check out - http://inflation.us/reviews

Gainesville was the highest rated and seems to be a fine company but be sure to check shipping.  The last I checked (admittedly, months ago), when shipping was factored in, second rated Apmex was slightly cheaper for the quantities I was buying.  I like 1 oz. American gold eagles although I've bought other coins and bars.  Looking at all the various pros and cons, eagles still remain my top choice with maples leaves and krugerrands a close second and third.  Considering the coming new $600 limit for reportability, however, some French roosters might not be a bad idea.  They have a very low premium (considerably lower than fractional eagles, for example) but they do have a large bid-ask spread.  You have to weigh the benefit of profitability vs. reportability.

 

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jhart5
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Joined: Jul 25 2009
Posts: 89
Re: Pay off Mortgage vs. Purchasing Gold/Silver

bcc87 - So regarding the bi-weekly, are you saying that it will pay the mortgage down faster if a bi-weekly vs. making 1 extra payment in Dec

Another way to get a long term mortgage paid off fast is to calculate the principle payment [not the Interest part] for the year and pay that amount plus your regular payment anytime during the year. By doing this it will knock off a whole year of future payments. Another approach that works well and is painless is to make an additional principle payment each month, This will have a 30 year morgage paid off in 15 years or less!!! For the early years of your mortgage not much of your payment goes to principle. For instance on a $100,000 6.50% mortgage the payment is $632.00 / mo., the average monthly principle for the year is $93.00 and interest $539.00. So instead if paying $632.00 include an additional principle payment of $93.00 for a total payment of $725.00. Banks won't like this but who wants to pay $127,500 in interest on a 30 year $100,000 loan. I paid off a 30 year loan in less than 10 years by initially tripling up then doubling up on the principle payments. 

Hales236's picture
Hales236
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Joined: Mar 8 2017
Posts: 1
How about doing the both?

How about doing the both? See http://www.oemortgage.ca/testimonials/

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