Income after
expenses (Total net monthly income minus total monthly expenses)
$25
Savings
goals
Goal 1: Pay off car/credit
cards
Amount needed: $4,000
Save
monthly:
$333
Goal 2: Save for house
Amount needed: $8,000
Save
monthly:
$666
Tax advantages
When it comes time to pay your federal
income tax, you’ll find there may be advantages to
owning a home. You can deduct (or subtract) the interest
you pay on your loan from the total income you report on
your federal income tax. You may also be able to take other
deductions on your home. If you paid points at closing,
you can deduct these. You can also deduct the amount you
pay for local real estate taxes and the cost of some repairs
you make to improve your home.
To get these deductions, however, you
must use the long tax form. This form requires you to list
(itemize) each item you deduct. For example, let’s
say you are paying 10 percent interest on an $80,000 30-year
mortgage. Your monthly total of principal and interest for
the year is $8,424. In the first year of the loan, if you
make no prepayments, you will pay the lender $7,944 in interest
and only $480 in principal. This means you may be able to
subtract $7,944 from your income that year.
