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From: ded@aplvax.UUCP (Don E. Davis)
Newsgroups: net.invest
Subject: A penny saved...
Message-ID: <161@aplvax.UUCP>
Date: Tue, 1-Oct-85 16:22:08 EDT
Article-I.D.: aplvax.161
Posted: Tue Oct  1 16:22:08 1985
Date-Received: Fri, 4-Oct-85 03:15:20 EDT
Reply-To: ded@aplvax.UUCP (Don E. Davis)
Distribution: net
Organization: JHU/Applied Physics Lab, Laurel, MD
Lines: 18

I've been adding an extra $100 to my mortgage payment every month.  Ignoring
taxes, this is the same as investing this money at 12.5% (my mortgage rate).
A pretty fair return (and the money in effect is insured!), but of course 
it gets locked up in equity, so if interest rates suddenly jump to 20% 
I'll miss the boat.

Here is an alternative I've been considering.  What if instead I add
the $100 to my car payment (also a 12.5% loan).   After the loan is paid
off I will continue to make the payment (plus the extra $100) to a savings 
account so I can buy my next car with cash, thereby saving on the interest.
Is this second scenario preferable to the first?

-- 

					Don Davis
					JHU/APL
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