Cheaper to Keep Her and Pay Off the Loan

Even before the recent economic mudslide, the inbox for my regular online chat had filled up with questions from people wondering how to get out of debt or seeking assurances that they weren't the crazy ones for trying to pay off loans aggressively.

The following is a transcript of a recent discussion that included some of these questions. But before I get to the debt questions, I wanted to share this query from a reader in Boston, who asked: "How does a married woman protect herself financially in case she gets 'Spitzered'?"

The woman was referring to former New York governor Eliot Spitzer, who was caught on a federal wiretap paying for a high-priced prostitute. Spitzer allegedly spent $4,300 for at least one tryst.

So how can you know if your spouse might be prone to some wild spending?

"Premarital counseling" was my answer during the chat. "It's amazing the things that come out that may foreshadow certain behavior. Also, have your husband (or wife) listen to 'Cheaper to Keep Her,' particularly the version by Johnnie Taylor. Great blues song with a great warning."

On to the debt questions:

Q My mortgage is relatively small and I have a good interest rate, but I would like to pay it down as soon as possible and be completely debt-free. When the issue comes up, people always tell me to hang on to the mortgage, arguing the merits of tax deductions, earning interest on the money that's freed up, etc. None of that moves me (as I know it doesn't move you), but instead of launching into a detailed explanation about why being debt-free is preferable, I'd rather have a short, succinct comeback. Any ideas on how to respond?

A How about this: "I don't like being a slave."

If they don't get it, they don't get it.

You see, you are up against years and years of brainwashing. People believe that they should take a mortgage to their grave because that's what lenders want them to believe.

But you are a slave when you borrow money.

And the tax-deduction issue drives me nuts. I'll use a very simple example. Let's say you spend $1 in mortgage interest a year. You are in the 35 percent tax bracket. Simply put, you spend a buck to get 35 cents back.