"Should I Pay Off My House?", Tax Breaks in the Senate Bill, 4 Debt Strategies, and More

Read Time: 4-minutes

Happy Saturday,

Here is this week’s edition of 6-Point Saturday — financial insights to help you make smarter money decisions.

Let’s get into it.

Point #1 — “Should I Pay Off My House?”

When you have the cash to eliminate your mortgage, the emotional appeal is strong.

But does it actually make sense financially?

This Reddit user locked in a 30-year fixed mortgage at 2.875% in 2019. She’s 5 years in, owes $320,000, and now has enough money to pay it off completely.

She’s not planning to move. She has no other debt. And she admits there’s an allure to being 100% debt-free.

But with a rate that low, the math points elsewhere…

If she invests the money and earns ~7% long-term, that’s a ~4% spread compounding in her favor.

There’s no mention of the mortgage causing stress or sleepless nights. So, the numbers clearly point towards investing instead. If it was acting as a major emotional burden, the answer might change.

In this case, the math wins. With a sub-3% mortgage, keeping the loan and letting the extra cash grow is the smarter move.

Point #2 — Keeping Tabs on Tax Breaks

This week the Senate released their proposed version of the “One, Big, Beautiful Bill.”

Tax expert Jeffrey Levine on some of the similarities between the 2 proposals that are now “reasonably likely” to be in the final bill:

The actual bill link if you’re a glutton for punishment.

Point #3 — Debt Solutions Breakdown

High-interest debt is one of the biggest obstacles to building wealth and should be one of your top priorities.

The key is finding areas in your spending that no longer bring you as much value, so you can attack your debt more aggressively.

A few widely-discussed tactics along with their advantages and disadvantages:

The “Snowball” Method:

What it is: The “Snowball” method pays down the smallest balance credit card while making minimum payments on your other cards. After you pay off your first card, shift those funds to your next lowest balance card.

Advantages: This builds momentum and is highly effective. Great if you feel overwhelmed by multiple credit cards.

Disadvantages: Technically, there’s the possibility of paying more overall interest, since you’re not beginning with the highest interest rate card.

The “Avalanche” Approach:

What it is: The “Avalanche” approach pays down the credit card with the highest interest rate first, while making minimum payments on your other cards.

Advantages: This approach could let you pay less total interest overall.

Disadvantages: You may not see progress as fast as you would with the Snowball method.

Card Balance Transfer:

What it is: This strategy involves consolidating your cards into 1 credit card with a 0% interest rate for a limited time period.

Advantages: Simplifies your debt payments and lowers interest temporarily.

Disadvantages: Requires discipline to pay off the new card balance within the 0% rate period and not rack up credit again on old cards.

Personal Consolidation Loan:

What it is: Similar to the Card Balance Transfer, a Personal Consolidation Loan consolidates the outstanding balances on your credit cards. This means the loan is used to pay off your credit card balances. But this is an installment loan where a fixed amount is due each period, with interest. Unlike a Card Balance Transfer, this is not revolving credit where you can continue to pay off the balance and take out new credit.

Advantages: Combining your debt payments creates simplicity and may offer a lower rate.

Disadvantages: May not qualify for lower interest rates than your existing cards in higher interest rate environments, origination fees (0 to 8%), and still need to address underlying spending habits.

The Best Approach?

Consider Snowball and Avalanche and pick the one that sounds most appealing to you…

If you find yourself wavering, go with the Snowball to get started.

Paying from cash flow always beats card balance transfers and personal consolidation loans. Because you improve your spending habits (the root of the problem) and keep the solution simple.

Point #4 — Taking Breaks For Productivity

You might think you're recharging when you take a break to scroll your phone, but science says most breaks aren’t actually restorative.

Daniel Pink shares 4 research-backed rules for breaks that actually boost performance.

Point #5 — Quotes of the Week

If you’re building wealth by focusing on external motivation (like chasing titles, comparing salaries, or impressing others), you might find yourself playing a game you don’t actually want to win…

This week’s quotes highlight the power of internal motivation and the fulfillment in realizing your own potential.

Point #6 — My Question of the Week

Thanks for reading — I hope you found a helpful idea or two.

I’ll see you next Saturday with more.

Have a great weekend,

Benjamin Daniel, CFP®

Founder, Money Wisdom

P.S. Want to take control of your money (and stop stressing)? Here are 2 ways I can help:

1. Financial Health Check: Get your biggest money questions answered, understand where you stand financially, and get a personalized action plan from a CFP® professional. Book a free Intro Call here (or purchase today) to see if you’re a good fit.

2. Financial Coaching: If you’d like some accountability in getting your finances into shape, engage in financial coaching. Build the habits & systems to help you start building wealth, pay off debt, and feel confident about achieving your goals. Reply to this email and say “Coaching” to join the waitlist.

Disclaimer:

This material is not investment or tax advice. No responsibility for loss occasioned to any person or corporate body acting or refraining to act as a result of reading this material can be accepted by the publisher.

👉 Is there another topic(s) you would like me to cover? If so, reply to this email & let me know—I read & respond to ALL emails.