CPAs, as a whole, are a necessity for many businesses. I have some personal friends who are CPAs. They save companies a lot of money in taxes and time. But every now and then, you get one who doesn’t know what they are talking about. They see one aspect of a situation and never stop to consider the whole.
Recently, I had a conversation on this very subject with one of my Facebook friends. It’s below.
Chris- I should know this by now, but can you give me some backup? I want to run some numbers by you:
- $100,000 emergency fund
- $273,000 retirement ROTH (120 of that in kids’ college fund)
- $200,000 in other mutual fund investments
- $36,000 on hand in bank
- No-debt and mortgage left is $417,000 (We have paid it down from $750,000, but the house is now appraising at $650,000.)
- Husband’s salary is $357,000 and mine is $125,000, but we may adopt soon and I may be at home, so I don’t want to include that amount)
I want to use the $200,000 to pay down the house, then pay about $15,000 (at least) a month on the mortgage until it is paid, and then pay that $15,000 back to the mutual funds. Our financial planner/FPU teacher wants us to keep the house payment as a tax write-off and is concerned about removing the $200,000 because it is making 10% a year. We just refinanced with Churchill Mortgage at 3.85%.
We would be even further, but we got our pants kicked last year from my business tax stuff that I thought was properly managed. That’s done now. We paid the IRS in cash. Our financial planner also suggests we move instead of paying it down. We own second house, which my office is in, outright. It is about $100,000. My nanny and a missionary live there.
Your planner is a dork. With 4% interest and 10% return, you’re netting 6%– not including the amazing amount of extra money you’re paying in interest for not paying it off. Paying it off early is equal to getting a GREAT return. On top of that, you’re giving the bank THREE TIMES the amount of money, so you don’t give it to the IRS. Fire this dork and get someone who can count.
Does all of that make sense?
Thank you Chris I appreciate you :) I am also laughing and I needed that. Yes, it all makes sense, and I KNOW that!!!!! He will get the money back in possibly less than a year, too. Just let me pay off the house!
Question: When have you seen an “expert” giving the wrong advice?