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To: Tommaso who wrote (211737)	12/29/2002 3:31:47 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 436258

So if I buy $20,000 worth, cash them all in after six months, pay off the credit card, I get $200. What is wrong with this scenario? on a systemic level, there are problems with giving people money for nothing! but in terms of the math of your scenario, it seems to me the math here would work out theoretically, although in practice i personally wouldn't want to send 20K to the government in hopes of skimming 1%. however, there are some holes in your second scenario... I deduct $5,500 off my taxes, making it a real interest rate of about 3.5%. I buy $100,000 of Series I bonds and collect better than 4% interest that accumulates tax free on the deductions, you first need to consider the opportunity cost of the standard deduction, which is around $7850 for a family of 3 filing married-jointly in 2002. this is something the touters of the mortgage tax deduction often forget (not that you are by any means a touter, but i am amazed at how many people ignore the standard deduction and thus dismiss the idea of paying off their mortgage.) secondly, you can only buy $30,000 of I bonds in a calendar year. also, this scenario ignores loan processing costs, origination fees, appraisal fees, title fees, etc.