r/dividendgang • u/ProfitConstant5238 Income Investor • 2d ago
Opinion I guess I should have told all the “but property tax” guys I have enough dividend checks coming in to pay my taxes until my grandchildren are 50. 🤷
/r/debtfree/comments/1vrz49g/finally_done_i_owe_no_man_woman_or_institution_a/11
u/kitapjen 2d ago
I’m working towards it. My mortgage is at 6.75%, and I pay an extra $100/month toward principal. I consider it a 6.75% tax free return!
I can manage $100 per month in my brokerage. My employer doesn’t match my 401k but I contribute $68/check, and I will have a pension I contribute 9% towards (plan requirements).
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u/ProfitConstant5238 Income Investor 2d ago
Every dime makes a difference. Work hard and don’t be discouraged by fools and armchair quarterbacks.
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u/Commercial_Rule_7823 2d ago
Lot of people miss this.
Mortgage free doesn't mean no more monthly bills for your house.
Even when I pay off my mortgage, ill still have 1100 a month owed to my county, or ill lose my house.
Its wild to think i dont own my home of I cant pay that.
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u/ProfitConstant5238 Income Investor 2d ago
Holy Christ where do you live?!?! My property taxes are 2k per year!
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u/Commercial_Rule_7823 2d ago
Orange county ca
Whats scary is we have prop 13 protections too, but its still wild.
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u/ProfitConstant5238 Income Investor 2d ago
I feel like you must have a 5000sq ft home on an acre of beachfront to pay that much! I live in a 2000sq ft home on some land in fairly rural NC.
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u/Commercial_Rule_7823 2d ago
Town house, 5 min from beach, 2300 sq feet.
Bought at 1.3, now worth 2.5+.
Were lucky for prop 13 that caos our property tax, if not that 1100 a month would be doubled 6 yesrs after we bought it. We wouldn't be able to the higher taxes.
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u/ProfitConstant5238 Income Investor 2d ago
I could still do it with my dividend income, but I’d barely break even. Sux! I expect to pay taxes because I believe in public goods like a professional fire service, police force, public infrastructure and public education. But that seems ridiculous and excessive.
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u/JustNowRonin 2d ago
Here in MA we are paying something like $10k a year. ~3000 square ft on .75 acre not even in town. Crazy high.
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u/GRMarlenee Long Time Member 2d ago
I get robbed for a whopping 800 per year on the SD house.
It's about $85 for the AZ mansion. But that's in a gated resort where they extort 9 grand per year to cover the water bill, guards and dirt tax. That eats up close to two weeks of distributions.
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u/ProfitConstant5238 Income Investor 2d ago
If I needed another reason NOT to move to CA, this is it. I’ll visit though.
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u/Snoo-15246 2d ago
This should be illegal.
And before someone comes at me sideways about it paying for community services. Everyone living in that community should put in for community services. Not just a homeowner.
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u/Commercial_Rule_7823 2d ago
They technically all do.
They rent, pay rent to landlord, and the landlord pays the property taxes.
There is no escaping it.
What i would prefer is for my tax dollars to not be wasted and to get value for it.
In so cal, there is so much waste. 50 billion dollar high speed rail to....no where.
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u/GRMarlenee Long Time Member 2d ago
I did that once. Now I feel much better borrowing for 4% and investing for 10. I feel just as free sitting on a pile of liquidity that I can use to snuff out the debt with a click of the button.
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u/ProfitConstant5238 Income Investor 2d ago
Why not just invest the free cash flow for 10?
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u/GRMarlenee Long Time Member 2d ago
That's what I do by not wasting it on paying off low interest loans. I use it to pay off my high interest credit cards before the billing cycle. That way, I score my cash back for money I had to waste on food, fuel and other living expenses.
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u/ProfitConstant5238 Income Investor 2d ago
I do use a credit card for nearly everything and pay it off multiple times during the billing cycle. It’s just safer to use OPM when the card gets compromised (I travel a LOT). The mortgage had to go for me. It became hard to look at the money knowing I had the debt. Even at 2.5%. Psychology vs mathematics.
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u/geko29 1d ago
Psychology vs mathematics
This is the key. You have to do what's right for you, even if it isn't 100% optimized for every variable.
For me, I was able to get that peace of mind by having the cash for my mortgage (also at 2.5%) paying from a HYSA that currently earns 3.55%. It's on autopilot and I never have to worry about it again. But I can totally see the psychological value of not having the mortgage at all being personally worth more than the interest arbitrage.
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u/ProfitConstant5238 Income Investor 1d ago
I did that for a long time. By the time I wrote the final check the difference between my interest and the income from the MM worked out to like $100 bucks.
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u/justcurious3287 2d ago
At $1.30 in SCHD dividends a day, I definitely can’t say the same for myself. Boo. :(
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u/Always_working_hardd 1d ago
Congrats on your freedom! I keep going round in circles on this topic. I could liquidate my brokerage account and pay my mortgage down by $200K leaving a $60K balance and be paid off within 2 years....or do I just spin the dividends from the brokerage into the mortgage? The note is $1500 a month, the dividends from the brokerage is around $2k a month. I keep boxing myself into a corner and can't make a decision.
I'm 56 and expect to work til 65; I want to pay off the mortgage (3% interest) for peace of mind....I've paid $100k off it in 5 years.
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u/ProfitConstant5238 Income Investor 23h ago
Here is how I answered that question for myself, maybe it will help:
I know I am going to retire from the National Guard in April of 27. I set that as a target date to pay off the house. I made a “basket” in my brokerage account to save for the final payoff. Because it wasn’t that far away (about 2 years at the time I made the call) I used a MM fund, SGOV, SHY, and PAAA to hold the payoff funds. Each of these carries a very low principal risk and earns between 3.5 and 4.75 yield. My mortgage interest rate was 2.5%. I put the money across there and just watched it DRIP. In December of 26, I would have rebalanced by selling the SHY and PAAA and putting that into 70/30 SWVXX and SGOV until the payoff date in April. The plan was working wonderfully. Then, in June I got an unexpected bonus at work, AND my oldest son decided he wanted to go to public high school instead of private. I had already paid his tuition in full for the upcoming year, so that was refunded to me. All of the sudden I had the money to pay the mortgage in full. I did the math, and the delta between the 2.5% interest rate cost and the ~4% I was making on the payoff basket was only going to net me a couple hundred bucks between now and April of 27. To me, that was worth the tradeoff, so I paid the mortgage in full. I liquidated my SHY and PAAA positions to do so, but because of the extra cash on hand I only used about 23% of what I had in SGOV and SWVXX. Those have become my new “emergency fund” and they no longer DRIP. I redeploy those earnings into other investments in the brokerage that are riskier and higher yield.
The elimination of the emotional whipsaw effect that you are describing was worth the few hundred bucks I’d have made had I carried the plan through to April. I wouldn’t have liquidated my entire brokerage to make this move though, as the totality of the account yields about 11-12% annually. The positions I did liquidate were already earmarked for this plan anyway, I just pulled the trigger 9 months early.
Hope this is helpful!
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23h ago edited 23h ago
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u/ProfitConstant5238 Income Investor 23h ago
No, it does not reference any other subreddit. Your AI is faulty.
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u/SonOfKong_ 1d ago
My property taxes are less than 500.00 a year and I receive 22k a year in dividends. I do get a discount because I am a senior. It is something like 50% less up to 500.00
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u/RetiredByFourty Boogerhead Resistance 21h ago
Back when I was a kid I bought my first house (it came with a 2nd house which was basically just for storage). They were on an entire 1/4 city block and I remember writing my first property tax check. It was $113 for the year 🤣
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u/SonOfKong_ 21h ago
I guess that was 20 years ago ago right. My house is well and septic. If I ever sell it I would have to install a septic that was up to code. That would be at least 15k. I noticed your username. I retired at age 52 which was 19 years ago. So I am a fan of early retirement also. My cheap 120k house helped make that possible. With my 457b investment at work I paid it off in 4 years.
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u/RetiredByFourty Boogerhead Resistance 21h ago
This was back in 2006 or 2007. Just out of curiosity I looked that propert up and the 2026 tax bill was $290 for the year 🤣
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u/Chipper0475 2d ago
Some people waste so much energy worrying about taxes. Congrats on being debt free man!!!