1. “A Tale of Two Brothers” Adapted from the book, The New Rules of Money
Our story follows two brothers, each earning $150,000 a year. They each have $100,000 in savings and both are buying $500,000 homes.
Brother “A”
Believes in “The Old Way” – paying off the mortgage as soon as possible
Brother “B”
Believes in “The New Way” – carrying a big, long mortgage
15-year mortgage at 5.875% APR
30-year interest-only loan at 6.375% APR1
$100,000 big down payment (20%)
$0 left to invest
$3,348 monthly payment (57% is tax deductible first year/33% average)
$2,983 average monthly net after-tax cost2
Sends in $200 extra each month with mortgage payment in an effort to pay mortgage off sooner.
$25,000 small down payment (5%)
$75,000 remaining to invest
$2,523 monthly payment (100% is tax-deductible)
$1,690 monthly net after-tax cost2
Adds $200 monthly to investment account, plus $1,293 saved from lower mortgage payment, earning 6.0%3
Who made the right decision?
The above hypothetical examples are for illustrative purposes only. Plans vary based on the needs and wants of the customer.
1 This example is based on a 30 Year Interest Only loan at 6.375% APR.
2 Assumes combined federal/state income tax rate of 33%.
3 Assumes 6.0% rate of return on investments. Rate of return may vary based on type of investment.
Copyright © 2005 Strategic Equity Group

2. “A Tale of Two Brothers” Adapted from the book, The New Rules of Money
Brother “B”
Believes in “The New Way” – carrying a big, long mortgage
Brother “A”
Believes in “The Old Way” – paying off the mortgage as soon as possible
Results After Just 5 Years
Received $33,796 in tax savings1
Received $49,955 in tax savings1
Has $0 in savings and investments
Has $205,330 in savings and investments2
What if both brothers suddenly lose their jobs?
Has no savings to get through the crisis
Has $205,330 to tide him over
Can’t get a loan–even though he has $210,562 in home equity – because he has no job
Must sell his home or face foreclosure because he can’t make payments
At this point he must sell quickly, possibly at a discount, then pay real estate commissions (6-7%)
Doesn’t need a loan
Can easily make his mortgage payment even if he’s unemployed for years
Has no reason to panic since he’s still in control — remember … Cash is King!
The above hypothetical examples are for illustrative purposes only.
1 Assumes combined federal/state income tax rate of 33%.
2 Assumes 6.0% rate of return. Rate of return may vary based on type of investment.
Copyright © 2005 Strategic Equity Group

3. “A Tale of Two Brothers” Adapted from the book, The New Rules of Money
Brother “B”
Believes in “The New Way” – carrying a big, long mortgage
Brother “A”
Believes in “The Old Way” – paying off the mortgage as soon as possible
Results After 15 Years
Received $60,517 in tax savings1
Received $149,866 in tax savings1
Has $51,832 in savings and investments2
Owns home outright
Has $618,249 in savings and investments2
He has enough savings to pay off $475k mortgage and still have $143,249 left over!
Results After 30 Years
Received $60,517 in tax savings1
Received $299,732 in tax savings1
Has $1,092,503 in savings and investments2
Owns home outright
Has $1,951,434 in savings and investments2
Never plans to pay his home off – he enjoys the liquidity, safety, tax savings, and investment returns too much!
The above hypothetical examples are for illustrative purposes only. Plans vary based on the needs and wants of the customer.
1 Assumes Brother B refinanced at year 15 into another 15 year interest only mortgage at 6.375%.
2 Assumes 6.0% rate of return. Rate of return may vary based on type of investment.
Copyright © 2005 Strategic Equity Group