Mortgage Killer Accelerator

Strategy 91 of 107 · new for the five-year plan

Ministers: a designated housing allowance

Most predictableFrom new cash flow, not your paycheckFive-year size: helps at the margin

What it is

Ask your church to designate part of pay as a housing allowance before it is paid.

Steps

  1. Ask your church to designate part of pay as a housing allowance before it is paid.
  2. That part is not subject to income tax, up to the home's fair rental value and actual costs.
  3. Send the tax saved to principal.

Repeat: Every year.

Measure: Income tax saved.

Try it in the calculator Enter its amount in "Yearly amount to principal". Add a payoff goal of 5 years to see what is still needed.

Risks

  • It is still subject to self-employment tax.
  • Only for ministers of the gospel as the IRS defines them.

Who it fits

Married couples, Single, Average household, Grandmas and grandpas (62 and over)

Needs

Is a minister

How predictable

Most predictable: once in place, the payoff date is arithmetic

A worked example (hypothetical, not guaranteed)

Picture a hypothetical household (married couples). They owe $300,000 at 6.5% with 30 years left. The required payment is $1,896 a month, and that payment, which comes from income, never changes in this example.

They follow the steps: ask your church to designate part of pay as a housing allowance before it is paid.

Suppose it brings $1,500 once a year on principal. The loan would be paid off in 25 years 4 months instead of 30 years, saving about $70,138 in interest. To finish in five years, they would still need about $3,852 a month more from other strategies. That is why the five-year sequences stack several at once.

The amount above is chosen only to show the arithmetic. It is not an estimate of what this strategy will produce for anyone. Put real numbers from the fact finder into the calculator.

Sources and more information

Where to get help

Related strategies

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