On average people will pay 35 percent of their lifetime earnings to interest and 45 percent to items like taxes and healthcare coverage. That leaves just 25 percent for savings, charity contributions and fun.
Experts say there are simple ways to avoid paying extra interest and taxes.
1. Invest in vehicles where you pay the interest now
"We all agree that taxes are going up in the future, so instead of investing in things like a traditional IRA or 401k where you are saving the taxes now and paying them in the future, you want to flip that around and utilize the Roth plans that are out there," said Glenn Leach, senior mortgage banker with Cobalt Mortgage in Puyallup.
2. Owning a home is the key to wealth
"Home ownership can start the clock to ending the interest payments because there is an end date and if you do it right and actually pay off your loan, you won't have interest later on. Also, the interest you pay on your home is tax deductible. It lets you itemize on your taxes, and when you do that you also get to write off other things that you are spending money on like healthcare and business expenses," said Leach.
Interest rates are historically low and thousands are looking to re-finance their homes, but Leach warns to be careful when negotiating the terms.
"You are usually given the choice between a 15- or a 30-year loan, but you actually have all the choices that you want. If you have 23 years left on your mortgage and you want to take advantage of a low interest rate, do that, but do a new 23 year loan so that you can stay on track to pay off on time and save money as well," said Leach.
Source: http://www.king5.com/news/business/Tips-to-avoid-paying-extra-interest-and-taxes-144258495.html
Experts say there are simple ways to avoid paying extra interest and taxes.
1. Invest in vehicles where you pay the interest now
"We all agree that taxes are going up in the future, so instead of investing in things like a traditional IRA or 401k where you are saving the taxes now and paying them in the future, you want to flip that around and utilize the Roth plans that are out there," said Glenn Leach, senior mortgage banker with Cobalt Mortgage in Puyallup.
2. Owning a home is the key to wealth
"Home ownership can start the clock to ending the interest payments because there is an end date and if you do it right and actually pay off your loan, you won't have interest later on. Also, the interest you pay on your home is tax deductible. It lets you itemize on your taxes, and when you do that you also get to write off other things that you are spending money on like healthcare and business expenses," said Leach.
Interest rates are historically low and thousands are looking to re-finance their homes, but Leach warns to be careful when negotiating the terms.
"You are usually given the choice between a 15- or a 30-year loan, but you actually have all the choices that you want. If you have 23 years left on your mortgage and you want to take advantage of a low interest rate, do that, but do a new 23 year loan so that you can stay on track to pay off on time and save money as well," said Leach.
Source: http://www.king5.com/news/business/Tips-to-avoid-paying-extra-interest-and-taxes-144258495.html
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