Adding a mortgage to ones Circle of Wealth |
Let's illustrate the point by looking at an example of a house mortgage. There are many reasons not to have a mortgage and basically only three reasons to have one. First, you do not have the money to afford to pay cash and must finance. Second is the tax deduction. While you have the mortgage in place it seems prudent that if you qualify for the tax deduction that you would want the maximum allowable. Thirdly, you have the cash but choose to maintain use and control of your money. You then use it alternatively to your advantage. For sake of illustration, let’s assume the person in our example does not have the cash and they finance. Let’s also assume they purchased a $100,000 house. What really happened is that you artificially inflated your Circle of Wealth by $100,000. You do not have the money. You have a note that says you are good for the money. If you had a 30-year mortgage, at the end of 30 years your Circle of Wealth would now include the $100,000 you initially borrowed. $100,000 of your total wealth would now be sitting in your house. |
No math presented on this screen. |