Re: Scary article on retirement planning.

Larisa wrote:
> True, but if you pay a normal 30-year mortgage, you end up paying much
> more in interest (twice as much, no?) than what the house is actually
> worth.  Even if you pay it off quicker, you still pay much more.  I
> haven't done the math, but wouldn't it be faster to live in a *very*
> cheap room and save up the money for the house, and then, in about 10
> years, pay cash?  That way, compound interest works with you instead
> of against you.

But the interest payments are tax-deductible, so you're
really only paying a portion of that interest.  In the
early years of your loan, your equal monthly payments
consist of predominantly interest, so the effect is
especially powerful.  And the higher your marginal income
tax rate is (federal plus state plus sometimes even local),
the more compelling the deductions are.