What No One Tells You About Dave Ramsey's Mortgage Advice

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Dave Ramsey is wrong on something... You shouldn't pay off your mortgage early!
Now you might be thinking to yourself...if I pay off early doesn't that save me money in the long term? You'd be wrong and that is what this video is about. Shows you what paying off your mortgage sooner than later will actually do to your investment and also help you understand interest rates and how they work in the world of real estate.
Now Dave Ramsey isn't the only person that has thought this. There are others out there and even some people that are in this space may encourage the behavior. But if you want to maximize your return when buying a house, then this is something that you'll need to see and have some takeaways from.
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16 сен 2024

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@EverythingMoney 3 года назад

WARNING: Since we are growing There are increased levels of scammers impersonating our channel and that create fake accounts. The only thing we offer is our software and our patreon/discord community. The only place we send people to get access is: patreon.com/everythingmoney The real links to our content are located in the description of the video, We don't give out my WhatsApp numbers and we are never involved in Cryptocurrency related things! BE CAREFUL to not call WhatsApp or click fake links. This is happening across the RU-vid platform on many channels.

@sharafdafi4495 2 года назад

Without watching this video; when you pay off you mortgage 15 years rather than 30 your saving more than half in interest,

@alejandrotopo 2 года назад

And if we go a step further and instead of buying a home we invested the complete amount ?

@alejandrotopo 2 года назад

@@sharafdafi4495 incorrect, given that the majority of interest are charged in the first half of the loan, around 65%

@sharafdafi4495 2 года назад

@@alejandrotopo yes that is true and after half of that time frame interest the would be paid off and you only pay the principle left, but that is why you choose a shorter term so you can save on not paying more in interest.

@masonmer000 2 года назад

What about paying extra on your mortgage until you are at 20% down to avoid PMI?

@Greggsberdard Месяц назад

I believe the retirement crisis will get even worse. Many struggle to save due to low wages, rising prices, and exorbitant rents. With homeownership becoming unattainable for middle-class Americans, they may not have a home to rely on for retirement either.

@BateserJoanne Месяц назад

I recommend diversifying your investments by shifting some of your real estate holdings into stocks. While recessions can be challenging, they often present excellent buying opportunities for those who are cautious. Additionally, market volatility during these times can offer profitable short-term trading opportunities.

@VictorBiggerstaff Месяц назад

You are right! I have diversified my 450K portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above $830k in net profit across high dividend yield stocks, ETF and bonds.

@crystalcassandra5597 Месяц назад

Please can you leave the info of your investment advisor here? I’m in dire need for one

@VictorBiggerstaff Месяц назад

There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Sharon Marissa Wolfe’’ for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.

@lolitashaniel2342 Месяц назад

I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an email shortly.

@sethmontank8623 3 года назад

Dave Ramsey is well aware of this. The problem is that the people that listen to him will not save that extra $700 per month, they are used to spending every dollar. They lack the self control.

@deecee2174 Год назад

So wrong, i do agree that Dave Ramsey's real estate plans arent the best, but Dave Ramsey advocates budgets and spending less than you earn. He's the reason why i went from paycheque to paycheque, to putting away thousands a month into investments

@consumerdebtchitchat 3 года назад

One thing that reaching my 50s has taught me is that money management is as much emotional and psychological as it is mathematical. And one isn't better than the other as long as you don't mind giving up whatever the other one might have given you. Very informative video. It's an option and I think people always need to be aware of options. Then be content with whatever decision you choose and make no apologies.

@EverythingMoney 3 года назад

Thanks for sharing ! Love -AP

@anishphi1 3 года назад

Well said. For some ppl the potential money lost is worth the peace of mind earlier

@neelj5155 2 года назад

Wow, great advice !! I just don't like having a fkin payment to make every month.

@AnthonyAlvarado78 3 года назад

Psychological vs math problems. A lot of people take the psychology out of the equation.

@plants4thewin 3 года назад

Great point....I just dont want to feel like I "have to work". Getting rid of debt is the first step...In my opinion. Its not just all about the math...psychologically if I get laid off tomorrow I dont want to feel "pressed"

@AnthonyAlvarado78 3 года назад

@@plants4thewin that's exactly it. Be surprised how many situstions were not detrimental to my psychological health because I didn't treat it as all math. Peace of mind is peace of heart.

@AnthonyAlvarado78 3 года назад

@@Cere23 like it or not, we are all emotional. This is why most people don't do well with money. Most people don't want to "have the most money". It's important to give yourself small goals and understand WHY you're doing something. Chalking it up to "emotional children" is really ignoring half of who they are and that's not smart.

@X11CHASE 3 года назад

They did in fact address that at least a couple times. Stupid reason

@AnthonyAlvarado78 3 года назад

@@X11CHASE sure but it's still clickbate. I think Dave's method helps a lot more people than his. Im also curious about the creator and the math with the current inflation landscape.

@viper0981 3 года назад

I've been trying to convince my friends of this for a while. The problem is people don't have the self control to not spend that extra on toys.

@sambira 2 года назад

And this is why Dave Ramsey does what he does. You do have to have control on your spending to make this work.

@UncleRuckus7600 Год назад

It's significantly better paying off your morgan less stress, less worries, and happier life vs making a few extra bucks

@joshwiebe9204 3 года назад

Something missed here is most will go to the bank and take a mortgage for the maximum amount the bank will allow on a 30 year, so they are paying $1,730 per month for 30 years, not the $1050, and nothing is going into investments either way. What you have to assume is that folks will make responsible choices, and that there will be money left over to invest. Buying a home you can afford on a 15, on a 30 year term, then putting the difference into the market is the best option if you are financially responsible. This is where Dave is correct for much of the population, most people should get a 15 year, and will come out ahead, because most people don't make responsible money choices.

@EverythingMoney 3 года назад

If they aren’t responsible, then how do they think it will go after they pay off their house? Will they have the discipline to invest that extra money? In my analysis is probably financial. If someone doesn’t think they’re disciplined, then this is all irrelevant. I’m assuming that someone who’s watching this channel has a desire to be disciplined and long-term wealthy and not worry about buying for those things they don’t need. It’s comparing emotions to analysis. - PG

@BradyPuryear 3 года назад

@Josh is right but Paul’s advice is not for “average” people. Average people are broke and use what little money they have to buy Tesla stock in order to try and get rich quick. Dave is great for those people. Paul is great for the already disciplined and rational person.

@EverythingMoney 3 года назад

Ha thanks Mr thesing.

@EverythingMoney 3 года назад

I receive that come in a lot lately Josh. That he is more for the person who needs to keep money out of their hand so they don’t spend it. PG

@travis1240 3 года назад

Dave is a blowhard who assumes that everyone but him is completely powerless against the spectre of emotional spending. If you can control yourself, you're better off listening to someone who doesn't place so much emphasis on the emotional side of things.

@es330td 3 года назад

The key to this is that the person has the discipline to invest the difference between the 15 and 30 year house payments. Dave Ramsey's advice is targeted at the General Public, the least common denominator of which is that they cannot handle money. The "pay off your mortgage" mentality comes from a time when people had only Social Security and a pension to support them in retirement so their goal was to reduce their monthly outlay as much as possible prior to retirement. Thinking this way requires people to have a completely different understanding of money.

@richardgriffin6302 2 года назад

Thanks for the video guys! I love the math, and can’t deny any of your figures. I would add though, in Ramsey’s system, paying off the mortgage comes AFTER investing 15% into retirement. So if you assumed 25% of income for the mortgage, your example would have the 30 year mortgage customer already putting 630 toward retirement each month, and the 15 year mortgage customer putting 1050 per month, THEN they’d be paying off the house with any extra funds. P.S. I took Ramsey’s book from the library for free, but $40 would’ve been worth it too. Keep up the great work!

@YusifRefae 3 года назад

great explanation. want to mention that, due to inflation, those fixed mortgage payments at years 20-25 are only going to cost you half as much as they do now, in relative purchasing power

@EverythingMoney 3 года назад

Thanks for the info!AP

@5x106 3 года назад

That’s assuming your wages rise with inflation

@YusifRefae 3 года назад

@@5x106 true but if you're not making more 20 yrs from now than you are making now, something is seriously wrong!! :) 20+ yrs experience tends to demand a higher salary

@warlockman-ri2jr 3 года назад

@@5x106 true and if they don't you need to change that however you can, switch jobs ect.. wages should go up 3-4% min every year.

@channell11 3 года назад

This is one of those things where the math adds up, but there's a lot of factors that are worth consideration: 1. Debt is risk, no matter how you slice it. Some people are going to prioritize eliminating debt rather than maximum profit because having no debt buys you a lot of flexibility. Not to mention if something happens (market crash, major life change, change in financial status, etc.) it's a lot easier to make moves than if you're levered up and have debt obligations. 2. They say mental well-being is important, and there's a lot of psychological peace that comes from not owing money. 3. Dave's not really wrong, per se, his advice is just more conservative and will not maximize your potential profit. That generally fits in with his audience, who need to learn fiscal responsibility and have no business relying on a model that requires a lot of responsibility out the gate.

@metalbulllet7777 2 года назад

I have a 50k 401k loan. Should I pay that off early? Or same concept?

@Ammar23217 2 года назад

@@metalbulllet7777 Yes. You should, in my opinion.

@joehern5587 2 года назад

Yup. pay that sucker off early.

@KP-hi1om 2 года назад

@@metalbulllet7777 I'd pay off everything as quickly as possible except the house.

@TomBTerrific 2 года назад

Why would you take a loan from your 401 k? To make down payment on a house?

@gregadamo4423 3 года назад

So I’m 47 and my home will be paid off in about a year . My retirement investments are maxed out . I have no debt . And I do not make six figures . I still have another 19 1/2 years to invest my money and work before retirement assuming I remain in good health . I have no intention of selling my home . I’m happy with my choices and have no regrets . I understand your math , but I’m content . At this rate if I have a few less million by not doing it your way I’m not going to lose sleep at night . You can only spend so much when your 70 years old . And having more to leave behind for someone else is of no consequence to me. What it comes down to is how much money does it take to make you happy ? I don’t think that Dave Ramsey or your way of doing things financially is wrong . It’s a matter of preference . I appreciate your insights . In my mind , if you end your days with a decent nest egg , have no debts , and your enjoying the end of your life what difference does it make how you get there ? And at the end your going to leave this world the same way you came into it-- with nothing .

@EverythingMoney 3 года назад

Loved it -AP

@bigbill74scots 3 года назад

Wise, wise words my friend.

@daviddunmall7607 3 года назад

What your not addressing is interest rates rising. Once you pay off your house you have the best leverage with the bank to do other things.

@sentinelcrew9677 3 года назад

Also what if you lose your income and can't pay your mortgage payment??

@interlocution6619 3 года назад

This also assumes you will be able to work at the same level and maintain your existing income for that period of time. If you lose your job or become unable to work (think about recent events) you may become unable to save money at the same rate, or even unable to keep up with those mortgage payments.

@jacobhinsey 3 года назад

@@sentinelcrew9677You can always withdraw money from your brokerage account to pay your mortgage or buy other necessities. But you can’t easily withdraw equity from your house to buy food and other items

@MikeLee-tv3pz 3 года назад

So if it changes (eg interest rates hit 15%), fine, sell the shares and lump sum pay off your mortgage. Same principal, put your money where the %s are the highest.

@DavidJao 3 года назад

@@MikeLee-tv3pz The problem is that when interest rates rise, stocks go down, so you'll end up selling at a low. Holding a mortgage is a lot more risky than people think. Most people here have never been alive during a period of high interest rates. I lived through the stagflation of the 70s. If (IF) you can get a 30 year fixed rate to reduce interest rate risk, then it MIGHT make sense to keep your mortgage around like a pet. Most countries don't have anything remotely resembling a 30-year fixed rate. The US is the only major exception. Also, most countries don't have a mortgage interest tax deduction.

@peanutman243 3 года назад

I love not having a mortgage payment

@james8zaq 3 года назад

Yeah but if you didn’t pay it back early, you could’ve put that money into something making 12% a year

@SicSemperTyrannisx9 3 года назад

@@james8zaq Yeah, but if you are already maxing out your tax advantaged accounts, you are getting closer to 10% on an equivalent basis. On top of that, the return on the S&P 500 is around 7% annually for the last 50 years, so there is no guarantee that the current rate of return will be sustained. If you move and are paying cash, you can avoid avoid origination fees that you would have to pay a bank. You might also be able to negotiate a better price for a motivated seller. Certainly the math still suggests that not paying off your home will yield a decent outcome, but the picture is more complicated than just comparing rates of return.

@anniesshenanigans3815 3 года назад

@@SicSemperTyrannisx9 yes it is not black and white... I recently did a refi for a better rate, but when the dust settled my total balance went up by almost 10k with all the fees. I agree with investing if you are willing to take the risk and tie up cash for the long term in order to make the money from it... plus!!!! a 3percent compounded interest mortgage on 200K is far more expensive in the long run than investing extra cash.

@anthonygarcia2267 3 года назад

@@anniesshenanigans3815 ....I ve refinanced twice...since march2019...first time to eliminate pmi...the second time to go from 3.75...rate to 2.7...and each time I refi...I paid nothing...theres mortage companies out there that do..no closing cost fee...s ...I added nothing to my principal...its true...I did it twice

@joshuamendes1565 3 года назад

I'm with you on that. My wife and I are on our way paying off our mortgage. This is an opinionated choicable discussion. We choose no mortgage.

@danieldpa8484 2 года назад

You are right guys, however risk of having debt is not considered, it’s a psychological thing and being debt free is priceless.

@XPkoolXD 2 года назад

I love revisiting these videos during a down market because the assumption of a perfect market return scenario sounds great in a rocketing up market return scenario. The reason the 'safe' option is recommended is because of the market right now where you lose 20-50%+ when things aren't perfect. Imagine losing your house because you bet on the perfect scenario. Now you're wrecked financially vs just making a guaranteed return by saving and not gambling. Everyone has a plan until they get punched in the mouth.

@davideyres955 Год назад

Yep. Basically they are using hindsight to say you should …. Remember you need somewhere to live. If you invest the spare cash in to investments you are gambling that money and worse still gambling with money you don’t actually have. All these people are the same type of people that said in the 20’s invest in the stock market it’s free money. Borrow money and invest it in the stock market, then the Great Depression happened and people lost everything. If you pay your mortgage off then you have your house, then you can invest and it dosnt matter if your stocks collapse you still have your house. So 7:56 they say house value always goes up. So clearly didn’t live in the uk in the 80s. Never seen a stock market crash. Talk about rose tinted spectacles.

@michaelmilford8549 2 года назад

I’m a financial planner at EY and I try to explain this all the time… it falls on deaf ears but I hope everyone takes this to heart!

@eileenwatt8283 2 года назад

Peace of mind is more important than carrying a mortgage incase someone loses their job or has a catastrophe. There is no price on knowing that they won't be homeless because they own that house and not the bank. It reduces anxiety.

@michaelmilford8549 2 года назад

@@eileenwatt8283 the bank doesn’t own the equity and worst case scenario you move out and rent the house out to someone who can afford the mortgage. Also there are plenty of thing to consider to make sure you can actually afford the house you’re getting.

@eatpigsnot 3 года назад

there is so much more to money, and especially to financial peace which is what Dave Ramsey teaches, than math. keeping a mortgage is financially unsophisticated and dangerous

@rwinkel54 3 года назад

Well don't be that person later who complains about not having enough money or using your house as an investment. Why should I pay extra when my mortgage is $840? In the end even after the extra 5 payments in a year. You still owe that same mortgage that occurs. It is about drawing it out IMO. BTW, if you have been saving for 15 years you might even have enough to pay off the house! What happens if you or significant other gets cancer? Then one of you loses half of your income. I hate to scare you, but I have known two people through my dad. One of them was forced to withdraw all of his 401k(Not sure about house). The other had a house and boat(Obviously bad) not a good situation. The out of pocket cost is 7k to 10k yearly. Can anybody absorb this?? Then afterward if they pass away you have there life insurance(If you bought it). But then you are stuck with just yourself saving for retirement. Basically you are fronting money in a more risky way then even for a car loan. The bank only cares about the money you will give them monthly. My dad told me don't take out that car loan. 6 years later 3 or 4 months left and my credit score is at 800 and will probably climb after I pay it off. The cost was paying a longer loan, but I gained a great credit score, and have a house(Might not have been possible if I paid off early). I wish you luck.

@LogicalEpi 3 года назад

Glad I saw this. I just refinanced my home (owned for almost 4 years now) to take advantage of the lower interest rates and did 30 year. Was going to start being more aggressive to payments after I finish my student loan in a couple years (ironically it would free up $700 a month) while investing some of the $700 but I may now looking into putting a larger percentage towards investing.

@EverythingMoney 3 года назад

If you’re young I think that’s a great idea. Congratulations on that. Rates are amazing right now. PG

@keithrichardson9127 2 года назад

Dude pay that house 🏠 off ASAP, because a company you work for can go out of business or get bought out or something medically happens. Live with peace of peace ☮️ so if something off guard happens you still have a safe place to lay your head at night. These guys are giving wrong advice as if everything goes perfect in life in which it doesn’t in 30 years.

@fingerstylefan 3 года назад

Ok, when speaking strictly numbers it makes sense. However, something that is NOT being taken into consideration here is risk. This assumes that you will have a guaranteed for at least 30 years. BUT, what happens when, God-forbid, a pandemic happens and now you are furloughed, or even lose your job. Or what if you get cancer or simply your company, at some point just goes belly up. How are you going to make those payments. Dave's teaching in all of this is to give you the sense of security that, with a paid off house, if you lose your income, it will be much easier to handle and you won't have to worry about the bank foreclosing because you can't make the payments.

@Mr326 3 года назад

Yes, they are basing that on everything going perfectly and we know it’s not possible.

@Outworlder 3 года назад

What about all the money you have in your investments ? This strategy is actually less risk. If you throw all the money for 15 years in the mortgage, nothing can go wrong in those 15 years because you have little savings. Vs 30 years (less per month) and money saved in investments. You are much likely to weather the storm with extra money stashed away (and giving you returns).

@allysoncipollone890 3 года назад

@@Outworlder before paying down the house you do a 3 to 6 month emergency fund and then you do 15% into retirement before you start the pay down of the mortgage so you dont have nothing in your savings.

@UMK3HumanSmokeUMK3 3 года назад

@@Outworlder that’s why I put my cash ina saving account. When I have the whole thing I’ll pay the mortgage off. But I started off by planning to have my house paid off in 5 years. And what accounts would you be investing in bc if it’s a roth or ira then your getting fined big time for withdrawing early. And If not using tax advantage accounts then that changes the numbers when you start selling off your stocks and have to pay taxes.

@cmpdas 3 года назад

I probably depends on your industry and the level of skills you've developed. making yourself marketable is part of financial security...so I agree it should be taken into account...have some extra cash or conservative investments to tap if this happens. but missing out on high growth stocks is just not safe in my opinion.

@tankscrittersandurbanhomes5579 3 года назад

I believe owning what's yours is always more responsible than risking it. No matter the millionaire status. I have no desire to be a millionaire. I have a desire to own what's mine and not be at risk of losing it due to any reason at all.

@EverythingMoney 3 года назад

Well there’s no way to abolish all risk. - PG

@braceyourselvesfortruth2492 3 года назад

You could own your house faster by investing the extra money instead of making larger payments, then selling and paying capital gains taxes once your brokerage balance equals your outstanding mortgage balance. There really is no logical way out of this. It really is the best risk management you can do, period. You could even give all the extra money away if you wanted to.

@tankscrittersandurbanhomes5579 3 года назад

@@braceyourselvesfortruth2492 interesting things to ponder. Thanks

@tyesco1000 3 года назад

This assumes you are not saving the 15% of your income in retirement that Ramsey requires before you get a house payment and that the house is in an area that has appreciation. Steps 4,5 & 6 are done at the same time. He only says this over and over again.

@matthewharrigan3568 3 года назад

In both scenarios they could be saving 15% additionally. Since it's the same that additonal amount would grow to the same value. 15 year plan would still have 800k more

@ryantoole299 3 года назад

@@matthewharrigan3568 How about early retirement?

@matthewharrigan3568 3 года назад

@@ryantoole299 what about it? I don't follow your question

@edward.abraham 11 месяцев назад

I was advised to diversify my portfolio among several assets such as stocks and bonds since this can protect my inherited portfolio of about $2.5m. I’m used to just buying and holding assets which doesn’t seem applicable to the current rollercoaster market plus inflation is catching up with my portfolio. I’m really worried about survival after retirement.

@james.atkins88 11 месяцев назад

True, I mostly just buy and hold stocks, but my portfolio has been mostly in the red for quite awhile now. Unfortunately to be able to make good gains, you’ll need to be consistent and restructure your portfolio frequently.

@hunter-bourke21 11 месяцев назад

In my opinion, it was much easier investing back in the 60s but it’s a lot trickier now, those making consistent profit in these times are professionals reason I’ve been using an advisor for the past 5 years to consistently build my portfolio in preparations for retirement.

@rebecca_burns14 11 месяцев назад

@@hunter-bourke21 My partner’s been considering going the same route, could you share more info please on the advisor that guides you?

@hunter-bourke21 11 месяцев назад

My advisor is "Camille Alicia Garcia, A renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.

@rebecca_burns14 11 месяцев назад

@@hunter-bourke21 Thanks, I just googled her I'm really impressed with her credentials. I reached out to her since I need all the assistance I can get.

@imdoc7872 3 года назад

So Dave recommends saving 10-15% into retirement, start a college fund, have a 3-6 month emergency fund, pay off all other debt before paying off your mortgage. I followed Dave’s advice and I can’t imagine how much money I’m going to make in the next few years with a paid off house in addition to what I’m going to have in my retirement accounts.

@damland1357 3 года назад

Although it would've been more without paying off house.

@kombe971 2 года назад

Go and study compound interest lmao

@damland1357 2 года назад

@@kombe971 I have a bachelors degree in compound interest

@kombe971 2 года назад

@@damland1357 I’m replying to the comment above not you

@Nursemidratz 2 года назад

Dave all the way. It works. Not a payment in the world and everything else going into mutual funds.

@Roosterbate44 3 года назад

I've had mortgage payment almost my whole adult life I just paid it off last year and it was the best thing I ever did! Wish I could have done it years ago.

@andersax1 3 года назад

Stay in debt forever... says every bank and loan officer ever!

@jasonrobbind231 2 года назад

I paid off my mortgage at 42 years old. Since then I've invested 2300 a month in index funds currently 62 with 5 more years to invest. My portfolio sits at 1.8mil it has worked out nice for me so far being mortgage Free for the last 20 years.

@robertfeldbruegge6694 3 года назад

You contradict yourself at 15:28. “At age 30 you should buy the most expensive house you can afford. I believe that.” Run the numbers of having a mortgage on a $400k house versus a $200k house. And invest the difference. Or go bold and buy a $100k house, because your house is only growing in value with inflation. You want to spend your money on assets that will grow 10% or better.

@mram7715 3 года назад

The key is to find the middle. Treat yourself to a nice home. U dont Have to live in a sh$those just to have an extra million when your 70+. U could still do well. I mean u could live in your car and save 20 mil by the time your 90!

@mram7715 3 года назад

Great vid

@hic7021 2 года назад

I paid off my house early years ago. Now that money goes to ether the market or to saving. The best thing about paying off my house is that if the economy nosedived, I keep the roof over my head.

@CarsandCats 2 года назад

While it seems like great advice, and advice that I followed, it did not work out for me. I did not pay off my mortgage and instead invested the money which has declined 35% in the last year! So now I still have a mortage and substantially less money as well. It doesn't always work. Paying off your mortgage ALWAYS works. There are no guaranteed returns in the stock market.

@mirianadimitrova2112 2 года назад

True, also the actual 50-year inflation-adjusted return of the S&P500 is 7%, not 10% and I`m not sure how things are in U.S., but at least where I live in Europe the banks can and do rise the mortgage % before expiration.

@KP-hi1om 2 года назад

I love Dave Ramsey. We paid off $70k in debt following his plan. I agree with you on the paying off the house. My mortgage interest rate is 2.25%. We have an extra $1k to throw at the house. We decided to sock it away in my Roth deferred comp. The trick is to be consistent and not deviate. Our mortgage is $1135. $600 of which goes to escrow. With that said - paying our house quickly only saves us $500 a month.

@johndoe-wv3nu 3 года назад

My home is paid off. No "if". I have a place to live, no matter what happens to the stock market, stagnant wages, loss of income. My home is where I live, separate from my investments.

@chrisrobbins5045 3 года назад

Your house is never paid off. You will always owe taxes on it.

@johndoe-wv3nu 3 года назад

@@chrisrobbins5045 yep, I pay $158/ month taxes and insurance. I also have to come up with $250 month (average) for water, trash and utilities. Grand total= $408/month. What's your rent?

@tavosol 2 года назад

Thanks for this explanation for Dummies! I got a real situation: 1- I live in Costa Rica, Central America 2- interest rate on a loan: 7,15% a year 3- looking to buy a $850k house 4- mortgage for 30 years 5- how would you manage this asset debt ? 6- would you consider pay extra payments? I’m selling my actual condo $250k and get this money to the loan 7- best investment here 9% return rate and we don’t have compound interest options I’ll really appreciate your thoughts here

@JorgeRamos-xw6dy 2 года назад

Paying off your home early is more of a state of mind that gives you additional security. Yes, invest your money of course but not having a mortgage is a great feeling and you will feel more confident to invest the additional cash you have every month. The other issue is that most Americans don't have the sophistication to know how to invest their $. In Paul's case it works but the average American will take the extra $ and buy crap. Sneakers, expensive cars etc... I believe Ramsey is talking more to the average American and not to financial millionaires.

@expertonnothing6624 3 года назад

Dave ramsey encouraged saving , especially 401k while paying extra on the home or doing a 15 year mortgage. Then he recommends to take the amount of mortgage and current saving amount to investments. Paying off your home manages risk , like an emergency fund.

@tappmancollective2483 3 года назад

Interesting perspective. I always thought I’d pay off my mortgage early till I got one w/ the current interest rates. Now I have been looking for this kind of confirmation bias. Thx guys

@Moe-bg1or 3 года назад

Great analysis by Paul, mathematically it makes sense. The other point of the argument is that many people 1. WANT to retire early and not work till 70, 2. WANT peace of mind that their mortgage is paid off 3. WILL NOT live/work till 70 due to illness, injuries, death, 4. DON'T want to risk a foreclosure, 5. May NEVER invest to realize this difference in wealth, etc.

@Shedlight208 2 года назад

This subject is interesting and I've thought a lot about it. I think for me, there is a significant amount of risk beyond the analytical evidence in the video. I'm paying off my mortgage as fast as possible because I'm not guaranteed life. What if something happens to me? My wife and 5 year old daughter will have a major liability on their hands without my help to make payments and perform all the home maintenance. Without my income, the household budget gets cut to 1/3 of current. My family has also intentionally bought a house that only one of us could afford in case of that event. Also, this content assumes that prices in both stocks and real estate will continue to go up. That assumption is risky. I think in the long run this should be the case, but we could clearly undergo market periods of 5-20 years of downward prices or sideways prices. I watch these guys do prices analyses on stocks all the time and clearly there aren't many companies that fit there conservative criteria and I think that be conservative financially is smart. You can't predict the future. All you can do is buy a durable asset at a fair price.

@DreaminBig Год назад

If I’m not mistaken. In the even of your unfortunate death. The money that you all have paid so far can then be pulled after giving back the house. ( not sure though, I’m not a homeowner…. YET)

@debbieframpton3857 3 года назад

I worked overtime and put every extra money on paying my mortgage off in 14 years best thing I ever did so much peace of mind

@ronstidham1 3 года назад

The only math u need to know is your interest rate on a payed off mortgage is %0.0

@TheMrN4R3K 3 года назад

If someone came up to you and said: lend out money at 3% to make an investment of 8%, would you do it?

@ronstidham1 3 года назад

@@TheMrN4R3K no when I can invest my own money

@travis1240 3 года назад

@@TheMrN4R3K it's called leverage and adds risk to your position. The 3% is guaranteed but the 8% is not. Odds are you will win by doing that but you could also lose.

@TheMrN4R3K 3 года назад

@@travis1240 yes most definitely, it purely depends on your risk tolerance. However, I do think making 8% investments over 30 years if fairly effortless. And most definitely if your underlying product is a house in our (fairly) stable housing market. I would not take that out a loan to buy stocks, but if you're young, taking out a longer mortgage has its benefits.

@shanestauffer1624 3 года назад

Dumbass....did you not watch the video?

@interlocution6619 3 года назад

So many people talk about not paying off the house early. I think one of the biggest reasons that a person SHOULD pay off the house is that they then own it. If they become unemployed or have a catastrophic emergency in your life, there is no mortgage to stress out about. If you owe money on your home or rent, and you lose your job or become unable to work at the level you did before, the risk is extremely high that you will also lose your home. If you OWN your home, with no mortgage, you at least have a place to live while you work things out. It's a security measure as much as en economic one.

@EverythingMoney 3 года назад

Well...you ‘own’ until you don’t pay yearly taxes. 401K can’t be touch by bankruptcy. They can take your home. Happened to my neighbor. Does that sway your opinion???

@interlocution6619 3 года назад

@@EverythingMoney Thank you for the response. I'm not sure if that affects my opinion or not. I will need to think about it some more. If one is debt-free, I feel like the chances of filing bankruptcy is very low. I feel like most people could come up with the less than $100 a month for property taxes, especially if they are otherwise debt-free and even less likely if they have been investing any portion of the amount they are no longer paying toward a mortgage. Of course the amount of property tax depends on where you live. Also, if bankruptcy does become necessary, they can't take your 401K, but it can take other investments. I still feel like bankruptcy is unlikely if you don't have a mortgage and are investing, even if you become unemployed.

@happydays454 3 года назад

@@EverythingMoney being delinquent on property taxes is nothing to worry about you can still sell your home close to auction date and get most of your money back tax free after 2 years of ownership which I'm my state it takes 7 years of not paying property taxes before it goes to auction

@ttu888didfitrhondavigil8 3 года назад

Mortgage free, debt free and loving it. We'll retire at 55 and 58. Piling up cash quickly. We didn't pay our mortgage off to save interest. We paid it off as a step in our financial plan to retire early.

@kathryncashner3294 3 месяца назад

There are several points here. MOST people won't put that extra $700 per month into investments--they will spend it on vacations, junk, etc. The other thing is that people can usually get a lower interest rate on a 15 year mortgage than on a 30. I got 2.1% on a 15 while the 30 was going to be 4%. The payments are almost exactly the same, so I took the 2%. Another point is that you need to look at rates. When I bought my first home in the late 80s, the interest rate was 9%. I talked to several real financial advisors--all suggested that the first move should be to pay off that house as they couldn't guarantee me a return any better than what I'd be saving on the interest. It is a totally different ball game when you are looking at 2 and 3% mortgage rates. And yes, I am that person who paid off that first home and then invested all of what had previously been the house payment....and have a great retirement account, a free and clear first home, and a second home with a 2.1% 15 year mortgage (currently occupied by my daughter,). The people Dave deals with are financial illiterates. He knows they won't save that money.

@angelmission 3 года назад

Greed can get you in trouble. A bird in the hand...

@brendacodrington7125 3 года назад

NEVER have I thought about what you have just spoke about. Mind blown! Great show!

@EverythingMoney 3 года назад

Thanks for the comment .AP

@BradyPuryear 3 года назад

Nooooo! Don’t hate on my boy Dave 🙌🏼 yes I have changed my perspective on some of his principles but I’m still 90% DR and went from being homeless and living in my car to having a net worth of close to 1M in just 10 years by following his advice. Yes I see the math but Dave knows the truth which is the average household has $8k credit card debt and can’t cover a $1,000 emergency with cash. People spend and save on emotion. Look at all the Tesla people. And when the market tanks people panic and pull out which is a lot easier to do then sell your home. So there’s math and then there is what (if we are being honest) most people do. Dave teaches based on the ladder but no it is not to fastest path with the highest return towards wealth because it calculates for the reality of irrational, emotional, humans ❤️❤️ P.S. Dave does not advocate for paying a penny extra towards you house unless you are already invest at least 15% of your take home pay towards your retirement.

@EverythingMoney 3 года назад

Hahaha sorry Brady! I’m glad he is still talking about saving 15% but even then, my argument would be that you’d be saving 20% or more now and you would still not have as much money in retirement. It doesn’t matter how much more or less you were saving because at the end the day it’s just math. I know a lot of people love him and I love the fact that he gives advice to people that gives them something to try to do. Paying down debt will never let you go broke which is awesome but I’m talking about from a purely numbers and financial standpoint and that is it! PG

@ildemonge123 3 года назад

Everything money and Dave ramsey, both are good advise, the thing is that each one goes to 2 different groups of people. Dave ramsey is helping to the average 70% of people living pay check to pay check, with bad debt, and everything money's advice goes to group of people with more income available, but just confused about what is better in order to achieve the best results. Great video, subscribed,

@EverythingMoney 3 года назад

Great point. Thanks for the support - Seth

@EverythingMoney 3 года назад

Thabk you! I do agree that its just different perspective - PG

@samuelwilliams7331 3 года назад

Look at us. A production car that performs on super car levels, the best electric cars on the planet that will disrupt ICE transportation and the 2nd best AI company in the world. I have feeling you didn't invest in Apple or Google.

@davidpetty8695 2 года назад

Paul, you always make me smile! totally agree with the principles of not paying off your mortgage when interests remain low

@JayJay-ez4bh 2 года назад

Paying off my house early was the greatest thing I ever did. Paying zero interest and now investing heavily in a Roth and an index fund. Paying interest on anything has always driven me to pay off my debts I’d rather keep all of my paychecks, it’s working pretty well.

@olympic-ass-eater 2 года назад

What stock did you invest?

@l.gilbert666 3 года назад

wrong!!! it's not 3%, its 3% amortized. You can access an amortization calculator on google. Enter your mortgage and years of payments and see how much you will actually save.

@jaehwan123 3 года назад

Dave Ramsey didn’t miss that. Ramsey said that the 10% return from the stock market isn’t guaranteed. He’s correct. It’s much better to pay off your mortgage quickly.

@uldistube 2 года назад

Also 3% for mortage isnt guaranteed. Very optimistic calculations by Paul.

@shawnmichael777. 3 года назад

This has been my philosophy for the past 22 years. I'm a happy camper ( : Only thing you might not be considering, which Dave assumes, is that most people might not be disciplined enough to invest that extra money their getting by not paying off the mortgage. Like button smashed.

@frankmiller9802 3 года назад

Dave literally teaches to invest 15% of your pay a month while paying off your home. These guys are clowns 🤡

@inflation5196 3 года назад

You don't understand basic math

@robertparsons313 2 года назад

Depends on when you started investing that 15%. Do the math.

@tastysnack1 3 года назад

Paid off my house and then rented it out. Best thing I did with my money. As far as Ramsey's advice he is quick to say NOT to pay off the mortgage UNTIL you have your retirement and kids college in check. He does say to do 15 rather than. 30.

@pkpuk846 3 года назад

I would like to see a more realistic presentation of stock market returns. You would still come out ahead, but this a bit overstated

@X11CHASE 3 года назад

Now think about how overstated Dave Ramsey’s “gospel” is in comparison..

@matthewharrigan3568 3 года назад

10% over 30 years is a little low. Typical over the last 100 years is more like 11%

@andresjimenez3811 2 года назад

I paid off my house in five year 2019. Have zero complaints. Made it easy and stressless to navigate the pandemic and recent market turmoil.

@oodleyboo 3 года назад

Are you guys forgetting that you leave yourself in other peoples control for longer - your job and the banks for extra money? Most people get abused at work, and the banks are not that dependable!

@bolaadetiba8220 3 года назад

Listen to Jake Broe on this topic. He postulated that if you pay that extra money monthly into an investment account, as your home mortgage goes down, your extra payment investment goes up. When the balance on your mortgage and that on your extra payment investment balances out, take the money accumulated in your inv account and pay off the balance on your mortgage. That way, you can pay off your mortgage 14-16 yrs earlier.

@Ardarail 3 года назад

Except you end up with more money faster if you don't pay it down quickly. So at the end of the day you end up with more control, more money, and better retirement prospects. As opposed to being able to say you are "free" of your mortgage but having a much lower net worth.

@mostHumblePersonAlive 3 года назад

This 10% stock market return seems wildly optimistic. Don't returns average like 8% over time?

@drrush3421 3 года назад

So so so true

@drrush3421 3 года назад

@@mostHumblePersonAlive 3-5%

@mostHumblePersonAlive 3 года назад

This is a really good breakdown, thanks. My issue is that my debt to income ratio is very high, and it restricts my ability to borrow. This problem would be solved if I paid off one of the houses. Everyone's situation is different.

@armandoweckmann5699 3 года назад

I followed Dave Ramsey's plan and paid off my home while still in my 30's. I sleep way better at night knowing that most of my hard earned money can now be used to invest for my retirement. I value my sleep quality, to each their own. Can you guess how I sleep during a world pandemic? Like a baby!

@Corpsecreate 3 года назад

I'm sorry you were unable to understand this video.

@redeemablesoul 3 года назад

Really to each there own

@brianc9036 3 года назад

Wonder how many people say their biggest financial regret in life was paying off their house early? I don't disagree with their numbers at all and if you lived in a model where all the variables are fixed that would be the way to go. But I have a feeling the people disciplined enough to pay off their homes early have set financial goals that ripple throughout the rest of their lives both on an income and a prudent spending level. Again, I don't think they are wrong with numbers. I would still rather have the bank send me the deed for the house.

@charles2494 3 года назад

Great video. The only thing I would add is that make sure that you’re saving into a Roth account. That way you don’t pay taxes on the earnings when you start taking it out when you retire. It doesn’t count towards income. This makes a huge difference when you’re talking about Social Security and taxes in retirement.

@stuartgrantham9969 3 года назад

Just found the channel, I'm impressed... Me: I started on Dave's program and got debt free (except the house), later found "Rich Dad, Poor Dad." The one thing ill say about Dave's program is if you always live debt-free, you'll never live beyond your means... but the 30year house loan is definitely better overall - thanks for solving this problem for me!!

@EverythingMoney 3 года назад

That is very true. He definitely has some good points in that regard but he’s a little too anti-debt! Thank you for checking us out and please continue to watch and provide any feedback you have. PG

@fallen0509 3 года назад

i thank God i actively listen and seek people who have different opinions than me. i was following Dave Ramsey’s baby steps and i was at the step where i’m paying extra on my mortgage to pay it off early but thanks to this video i will be investing it on VTI and SCHD for the next 20yrs which is the length of the rest of my mortgage. thank you!

@chrishubley7849 3 года назад

It's about managing personal risk. Debt is risk. If you fall on hard times, you can sell stocks. Selling your house leaves you houseless. Unless you have enough other assets to cover your house debt, you might be a bit uncomfortable carrying a large mortgage. The key is to keep your housing costs low so that you can make investments.

@EverythingMoney 3 года назад

Love it! - timo

@marveliciousgoku4343 3 года назад

@@EverythingMoney You guys miss the part that average people are not gonna Invest the difference of that savings-in your example $700/month in a 10% investment because when people see in their bank that they have a lot of left over cash -they would be more inclined for expenditures- ending up spending if not 30% -70% of that $700 savings from their mortgage. People have the instinct to spend money if not tied up to their mortgage

@UsualCase 3 года назад

I generally agree with the principle of the video, although the risk level will vary for each individual - but doing this math without factoring in a lower interest rate for the 15-year mortgage is disingenuous, as is listing a projected (impliedly guaranteed) 10% average annual return for the stock market.

@EverythingMoney 3 года назад

Thanks for commenting on the video! - Timo

@Trotliners1 3 года назад

If you actually follow Dave, he says to pay extra to your mortage after you have maxed out all of your investments. You have to remember his audiance is primarily the financially illiterate. If you are good with your finances you are probably not watching Dave, lol

@AnthonyAlvarado78 3 года назад

He also says he has a financial advisor and has a network of them for people to hire when out of debt. So the idea he pitches is all about getting that weight off your head....and man foes it feel good when it's not there.

@braceyourselvesfortruth2492 3 года назад

You don't "max out" your investments, you can always invest more. What you pay into your mortgage beyond the minimum is investment return lost. That's as complicated as it gets.

@elliotjames5172 3 года назад

@@braceyourselvesfortruth2492 There are too many factors to clearly give a single answer with mortgage vs investing as there are a lot of factors that can't be predicted, but you are absolutely correct. If you max out your tax deferred/tax-free investments, then you should be pumping money into a taxable account. The Podcast "Talking Real Money" speaks about that, says instead of putting all the extra money you have toward your mortgage, put into a taxable account and then when you have the amount to pay off your mortgage you can do it (though there will be taxes obviously, so it would need to be a fair bit above the payoff), which is an interesting idea.

@quesohusker 3 года назад

"Following" Dave is the problem. You think he's some kind of guru. He's a fucking talk radio host who know how to get people out of debt but that's about it. I don't follow anyone. I use my head to make good decisions about my money.

@AnthonyAlvarado78 3 года назад

@@quesohusker I'm happy you make good decisions with your money and don't need help but Dave has a lot to teach to help people out. Once you're out of debt he recommends basic investment strategies but insists on a financial advisor to help with investments, estate planning and retirement. So...Not a guru...but people do find his plan helpful.

@tylerblais9296 3 года назад

Best vid you two made. Props when props are due. Try discussing lease vs buying cars. I bet that bud would rocket. Also try gob college loans vs private loans. People are dumb, they need you guys to explain it. I’m the guy who ripped you on OCUGEN, I’m still heavy but let’s go this week!!!!

@ivabasquill5764 3 года назад

Yes, but reducing risk is better. I’d pay the house off early. Less stress on your marriage in case of job loss. Or in case of death of a spouse, it’s better not to leave debt behind for your spouse. Peace of mind is more valuable to me than an extra $800,000 when I’m old.

@EverythingMoney 3 года назад

Thanks for sharing! Love -AP

@quesohusker 3 года назад

Said someone who is a long way from being 'old'.

@scott1696 3 года назад

Dave Ramsey also stresses term life insurance @10x your yearly income which would cover the death of a spouse/house.

@karlrovey 3 года назад

It works better if you already have assets. For example, the presenter has the assets to pay for it without the loan. That results in a situation where losing a job isn't an immediate financial disaster. The idea is to have as much of your financial assets earning money for as long as possible.

@ALazyImmigrantInUS 2 года назад

Uncle Paul thanks for it. It really helped me to take the decision. Age 35, Booked a house 5 Bhk with 450k in Texas, DFW. All my friends are giving 20% down payments with 15 years of mortgages. I was so frustrated that thought to let that go as I am unable to give 20% down & taking 30 years plan. The closing of house is on next 2 months. I locked my interest at 5.25% today with 30 years. I really appreciate your video to clear the fog. This is the only debt , I am going to have. Cleared my Car loan on 2021. No Student loan as Bachelors & Masters both did at public universities with side gigs and tutoring. This is definitely a 50K advice.

@lopezhansel 3 года назад

This is the only channel that gets me excited about investing! Thanks Uncle Paul!

@EverythingMoney 3 года назад

Youre welcome Hansel! - PG

@joeytrubnick 2 года назад

One thing this example doesn’t reflect is equity. Your equity in the house increases faster with the 15 yr mortgage. Let’s say you plan on moving houses in 5, 7.5, or 10 years. You are debating between renting, a 15 yr mortgage, or 30 yr mortgage and then moving to a new house after that 5, 7.5, or 10 yr period. Which works out better after that time period?

@hitardo 3 года назад

Cheers from Portugal! Finally! I see a person talk about "smart debt", and really thinking about the relation between mortgage and investing. Thank you.

@EverythingMoney 3 года назад

Anytime! - PG

@Marco70943 3 года назад

From Portugal as well @hitardo!!! We are rocking at this channel...

@EverythingMoney 3 года назад

Ha yes Portugal is coming in hot! - PG

@adrianjones5521 3 года назад

I paid off my house in six years...then saved up and dumped money equivalent to the price of my house in the stock market...I am 41 and don't regret that decision for a second.

@MrSamdabeast 2 года назад

If you get lucky and enter during a lull in the market, this is the way to go. Unfortunately that's blind gambling. Realistically the best bet is to average into the market starting early

@buckybadger2780 3 года назад

Another great video, but Paul you are missing a very important assumption, that those people who take the 30 versus 15, will be disciplined enough to save that money. I don't know a single person or friend, who can set aside that money and invest it according to Paul's analysis. Either they don't have the money or they just spend it or a life event costs them $$$. Dave Ramsey's scenario for the 15 year mortgage, nobody has that extra money. I only know 1 or 2 people who had a 15 year mortgage, and I think that was after they refinanced. Reality of the situation, both Dave and Paul fail in this financial analysis because it does not have a people/life factor in the equation. BTW, I like both Paul and Dave, both give great advice. I would be a millionaire if I knew them earlier.

@DrJoe378 3 года назад

Fantastic, this guy can guarantee me a 10% return. Zero risk. Where do I sign up?

@snooter28 3 года назад

There's also the situation of a high interest 30 year going to a low interest 15 year sometimes has equal payments. Mine specifically was 765 a month and only moved to like 840 a month. In that case, I was happy to refinance to a 15 year and pay the difference. The numbers ended up matching what I was going to get in returns from investing.

@snooter28 3 года назад

Also wanted to add, the interest rate differences at my bank meant that a refinance of my 30 year was only going to save the difference of about $250 over the 15 year I chose. That situation would have resulted in more money if invested, but the psychology of that one out weighed the numbers for me. Low cost of living situations definitely make less and less of a difference in this scenario.

@Bluegrassbets 2 года назад

You can’t lose your house if you owe 0 on it …. Unless you mess the taxes up but I wanna have a zero payment but I love how you all analyze things differently

@57podcast59 3 года назад

I think this is a great video but this information barely takes inflation into account. The value of the dollar will probably go down by then that could possibly make a 730,000 house the same as a 250,000 30 yrs prior. You also have to get a minimum return of 10% back for 30 yrs.

@saiyjin98 3 года назад

Factoring in inflation means paying 3% in interest now is equivalent to paying 9% after 30 years.

@robertprice9052 3 года назад

I have several friends who do Ramsey. I tell them I agree with most of what he says, but I believe you should invest as soon as possible. Even paying off crazy debt, makes psychological and mathematical sense to invest early. Why give up 5 or 10 years of paying on debt just to get to Zero. Many of Daves followers are not financially astute. I was taught by my dad, he by his mom, how to manage my money. There's no substitute for time when you are investing. I was also taught to invest all "found money." Found money is any money you didn't budget for your expenses; things like tax returns, stimulus checks, rebates, gifts, and investments. Two days after investing it you will forget you have it. Great video! thanks

@isaacwilson2240 3 года назад

This is not an apples to apples comparison. You show that you don’t really listen to DR’s advice, you just have a problem with the concept. Re-run your comparison with getting a second job, paying off the house in 5 years instead of 15, and then going back to 1 job and saving 50 percent or more of your income toward retirement. Then let’s talk.

@EverythingMoney 3 года назад

Well yeah we have a problem with the concept hence why we made the video. There can be more effective ways but if you feel Dave’s way will work for you then try it then we’ll talk, and in 50 years when it pays off. thanks for the input -SH

@Nsix4 2 года назад

Oh trust me, Dave Ransey is not missing the fact that you can make more on the 30 year, he just knows the risk of it outways the increase. Very informative for the people who haven't already learned this, but I'm in the safety camp.

@mathewwong4349 3 года назад

Dave suggests doing baby steps 4, 5 and 6 - paying off a mortgage, saving for education and investing at the same time. It can be a BALANCED approach. Using leverage to invest is not for everyone. Many people prefer to have the peace of mind of having no or little mortgage. The stock market does not always go up 10% every year. It dropped 25% to 30% in March 2020 when the pandemic hit. We can split the fund into three pots - investing, paying down the mortgage and investing for kids' college. The allocation can be different for each person, depending on their risk tolerance.

@AndreMcclendon 3 года назад

When ppl say they make 10% a year, i laugh at that. They dont talk about the market crashing or the individual losing their job or currency and purchasing power being 3%. Inflation is above 3% many gov stats a fake or lies

@NWOALERT 2 года назад

With 7.5% inflation, I’ll take a 3% mortgage for 30 years

@Sdelgado0267 3 года назад

Risk is not been taken into account. Peace of mind over math!!

@johnbrion4565 3 года назад

Yes but if you understand what he’s saying and have the stomach as an investor to handle the downturns in the market then his strategy is correct.

@quesohusker 3 года назад

Stop parrotting Dave if you don't know what you're talking about. What 'risk' are they ignoring?

@mblair001 3 года назад

100% of all foreclosures happen on houses with a mortgage...

@CapitalWorksPro 3 года назад

You guys are talking about risk, but not acknowledging the risk of locking your money into a 3% return when you could easily earn 10% and stay relatively liquid. Not much different than the risk of CDs giving up return for safety, which you don't need until around retirement. You know what you WILL need in retirement? Liquidity.

@johnbrion4565 3 года назад

@@michaelpalumbo4880 investing is personal and if you are a point in your life where you want stability and don’t want to have to go through and downturn in the market and portfolio then makes sense. For those however who are younger and have longer time horizon and can stomach a downturn and keep dollar cost averaging then the strategy in the video is correct if your goal is higher long term returns. Again investing is personal though and not everyone is in the same place in life or has the same financial goals.

@paolofroiio 2 года назад

I overpay my mortgae but only with a portion of my savings: For instance, If i save £1000 a month i normally do this: - £200 into building an emergency fund (until i have reached the desired amount and i will then increse the amount paid into the investement account) - £200 into my trading account - £200 into my investment account (i also have 2 private pensions and a Junior account for my baby which i pay separately) - £200 into my mortgage account - £200 into a different account (saving to open another business) I do the same with income coming from other businesses. Paul, Mo, Seth, what do you think?

@sceek561 3 года назад

Ive been prepaying my mortgage for 15 years - this makes total sense. I'm 49 now, late but going forward I am following this strategy. Makes total sense to me. I wish I could have a do over but it's ok I'll just do better. Thank you Paul!

@Genevieve8002 3 года назад

Same! Makes so much sense to me. Wish I came across this knowledge and principles back when I was starting out. Can't go back in time, doing the best I can with what I have and can do now, really enjoying the journey and the insights too. :-)

@keithrichardson9127 2 года назад

@sceek561 2 года назад

@@keithrichardson9127 thanks for your input. I will try to cut down my mortgage faster as well, in case of a tragedy. Thanks for taking the time to give a stranger some advice!

@bobbybrown870 3 года назад

yeah...this argument is mathematically correct, full agree. what is left out is under Dave's plan...the homeowner is investing 15% of income ALL DURING the 15 years of payoff and that is left out of this presentation. Huge difference. After the mortgage is paid off, the owner can invest more in 401k or other investments. The math basically puts them both at about the same place at the end of 30 years....but huge difference in having choice and ability to invest $1700 after the mortgage is paid off. Plus, like others have said...risk. In many typically cases, too many people are stretched too thin and they are forced to choose the 30 year mortgage because that's the only way to get into the house, which means they likely don't have the extra $700 (difference between the 15 year and 30 year) to invest, at all. If that's the case...game over if the 15 year mortgage owner is investing ANYTHING at the start.

@adamm2716 3 года назад

also assuming house prices go up 3% a year is like redditors saying "stonks only go up", its a bad assumption. Plenty of people in 2008 lost 30-50% value on their homes and there is plenty of reason to believe the housing market can burst again

@braceyourselvesfortruth2492 3 года назад

Still has nothing to do with your debt at all.

@braceyourselvesfortruth2492 3 года назад

@Kris Shumard unless they couldn't afford their property taxes. I pay over $3k/year here in Texas. Not paying that can cause the state to seize your assets, ie your house. Also, nobody with hundreds of thousands of dollars in the stock market got foreclosed on either, unless they wanted to be.

@braceyourselvesfortruth2492 3 года назад

@Kris Shumard apparently you didn't hear about the guy in Vegas who chose to be homeless rather than take on debt. But in all seriousness, this means it doesn't matter from the foreclosure stand point, but I'll stick with the option that pays out more in the long run. I might even be able to itemize and deduct my mortgage interest as well.

@vildachaya6462 3 года назад

@Kris Shumard Na but they can get Liens

@phildurre9492 3 года назад

the longer the timeframe over which you consider it. the closer the houseprice appreciation is equaling inflation.... so on a 30 year period thats pretty good

@alexcancio5860 3 года назад

I've been in the cash out refinance process for about a month now. I'm getting back 30K and my first idea was to pay off my solar panels (9K), the solar deffered loan(4K), and a new AC unit(8K). The interest rates are 3, 11, and 5. I've been set on paying these all off for a while. But your calculations really break down the fact that if I use these funds to jumpstart my retirement (I turn 29 this December) I would be so much better off! At this point I'm only pondering paying off the deferred solar loan as that one is 11% but the rest I'm definitely gonna keep paying and give my retirement fund the boost it needs. This channel ducking rocks!!

@jamesp9998 3 года назад

Yea but in the beginning of the mortgage loan you are paying a lot of interest . I was paying 650 bucks in interest . That’s a lot of money . Maybe a good compromise would be to pay down alot of mortgage in the beginning and then coasting till then end while investing . Cause as we all know the mortgage Interest is all front loaded on the loan .

@tipnyo 3 года назад

I've thought about that as well. $650 interest is in today's dollar while the compound earnings is 10-15 years down the road with inflation.

@As_A________Commenter 3 года назад

It’s a misnomer that interest is “front loaded” on the loan. This would only be true if early payment was not allowed. The loan amortization being heavier on interest in the beginning (especially on 30yr) is simply because your loan balance is so high. Say your mortgage rate is 3%, well that’s not 3% a year, or .25% a month, but .00008219 times the loan balance *per day*. So that’s about $20.50 a day in interest on a $250,000 loan. Over a month that’s $616 in interest. The interest is not “front loaded”, it is consistently .00008219 times your loan balance for the life of the loan, no matter how much is left. It looks front loaded because you agree with the bank on a fixed payment amount, so after the interest is calculated for the month, the remaining amount is principal. So the balance doesn’t go down by much for a long time, unless you make extra payment, which saves you money every single day when the .00008219 is multiplied by the lower balance.

@As_A________Commenter 3 года назад

That is why paying extra principal early in the loan is much more valuable than paying it down later, because you are charged less interest every single day the loan balance is less

@carolynbailey4530 3 года назад

@@As_A________Commenter 🤯 thank you for that!

@clintperry7359 2 года назад

Best of both worlds. I am debt free except for my mortgage. I knew this was the right thing do, I just didn't know why until watching this video. Thanks.

@mct8888 3 года назад

Ramsey also recommends donating to church. The most useless option for money.

@jonathanarias6240 3 года назад

I been listening, for the past 4 months. You have no idea how much I I learned thank you so much,

@Summyrlosingit 3 года назад

I'm not a Dave fan, but in this example you are assuming there won't be any money invested while paying the mortgage. Dave says to invest while paying off the house.

@EverythingMoney 3 года назад

Thanks for the comment. Any extra funds put towards a low interest will cost you tons on the backend. We want to stress that. We appreciate you watching - Seth

@zachtretbar7817 2 года назад

You have convinced me. I'm going to take out as big of a loan as possible at 3% interest. Then invest all that money into the stock market so I can have a 10% return. If you are not doing the same thing you are wasting money.

@antoniopesare1 3 года назад

Isn't it better to rent instead of buying a house and invest the rest?

@EverythingMoney 3 года назад

Do you know what’s funny? I used to disagree with that but once you’re on the numbers, it’s not always better to buy especially in expensive markets. That’s a really good observation Antonio. It’s something that we will be discussing in a future video. - PG

@SicSemperTyrannisx9 3 года назад

No. Just buy a more modest house. People waste money on home furnishings and upgrades they don’t need and cannot really afford. In my first home I rented out two of the rooms tow friends which covered $600 of my $720 payment.

@EverythingMoney 3 года назад

Yes, we definitely do a lot of over buying in terms of house. But if you plan on being there for a very long time, it may not be the worst idea if you’re young and have a lot of income upside - PG

@mra0ul 3 года назад

In my country Holland rent is higher then mortgage

@EverythingMoney 3 года назад

How much higher? Thats awesome. Holland is pretty beautiful isnt it? - PG

@thomasschellberg8213 2 года назад

I used the same reasoning when I took my social security when I retired at age 64. In vesting an extra $1600/month in my TIAA accounts conservatively earning 5% rate (50% in TIAA traditional and 50% in CREF stock). It still pays more than the extra social security I would have earned by waiting to age 70. The 10% return seems optimistic for retirees, but it still pays to keep the additional money invested.

@betweencoffeeandsleep2713 3 года назад

This popped up in my feed about 2 weeks after I had this conversation with my wife. Thankfully, she picked up on it very quickly and was willing to step outside her Dave Ramsey approach in this area.

@sanjaylamsalufl 2 года назад

Guys - I agree and you are right on math, and I am a Data Scientist. But this diligent investing does not work for large segment of US consumers - that’s where Dave Ramsey is right.. rather have Americans spend those extra Savings from longer term loans going toward spending - he says go for shorter term loans. Plus being debt free is a huge psychological benefit. So u guys and Dave Ramsey are both right but make sure the advise goes to the right audience. For example, I prefer longer term loans and if I can get that without down payment, that’s double whammy ..

@gillian32 3 года назад

I'm paying off my mortgage early. I will be debt-free during my golden years. I won't need $2 million when I'm 90. 👴

@EverythingMoney 3 года назад

Congrats. Glad you’re so confident. Hopefully you’re correct

@JustinMarchegiani 3 года назад

It’s going to cost you millions for that emotional security…

@Katsuya89 2 года назад

This is a great video. I used to pay extra every month on my mortgage too, until the pandemic hit and i realized that my returns on stocks and crypto were potentially going to be much higher than my 3.5% mortgage rate i was paying. So i took the gamble and so far it had paid off handsomely for me.

@nickstevenson9592 2 года назад

How’s that going?

@mylapasaporte8594 3 года назад

I don't want to work until I'm 70 years old. And I don't want a chain and a ball called debt attached to my leg until I'm 70 years old

@saiyjin98 3 года назад

If you're trying to FIRE, interest rates and investing have almost no part of it since there is little time for compounding to take place. You just need to adjust your lifestyle to live FAR below your means and you'll eventually reach financial independence.