"His Theory Is Ridiculous"
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- Опубліковано 25 жов 2023
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I had 3 months of emergency funds saved up. 2(single at the time) 2 yrs later I was diagnosed with cancer. I still had my job. The following year. As I was going back to the hospital and drs to check for any cancer cells. New management came in. I was let go. It wasn’t until 2 months I was cleared. Luckily I did find a job. But I decided to have a year of emergency funds. I’ve been told I’m losing in investments. But nothing gives me more peace knowing I have that money saved up. In case the cancer comes back
Good work dude that's a good ship you've built.
you're the exception, not the rule. you have a real risk of not being able to work long term
@@brad885which is why it's called personal finance, there is no one size fits all
Cant Imagine the mental strenght someone needs to have to deal both with keeping and working a job plus getting cancer treatment!
I think I would just give up...- respect!
You’re one tough SOB!!! Gold bless ya.
“How much do you owe on your home?”
“Well… uh… geez.. I… uh, well I’m just grateful to God… We lived in a 1000 sq ft home”😂
Answer the question!
j
I’ve made lots of financial mistakes in my life - but paying off a 25 year mortgage in 15 years is something I’m eternally grateful for.
Being mortgage free was a great relief. I know there is the idea to "use you equity," but we love being debt free 😊
It's so much fun to watch the interest amount go down every month.
@@georgewagner7787 Zero is your hero
@@uglybobhere I remember getting the deeds of the property through and at the same time I cleared and got rid of my credit card - what a feeling of freedom.
I'm fixing to pay my car off about a year and a half early. Then pay off my storage building at the same time. That's $600 back in my pocket every month.
When paying extra, make sure you tell them to apply the extra to principal or they just push out when the next payment is due.
Yes! This happened to us all the time. They try to protect their investment by NOT automatically applying any extra you send to principal!
Yes, I almost made that mistake 😂. I had to make sure to make my payment and then make the extra payment afterwards.
@@bluecollarjose if I do exactly what you said the extra payment go to the principal or we have to call them and let them know . ?
Applying extra payments to principal isn’t something that one should even need to “request” because it is actually straight-up fraud for them not to. You already paid the entire monthly interest in your fixed payment; the worst they should be able to do is charge you the full rather than prorated month of interest on the amount of the extra payment during the month you make the extra payment and then lessen the principal balance on the following payment date. But not applying the extra payment to the principal automatically by the end of the month at the latest is just criminal behavior. I’m surprised there isn’t a law against that.
Another thing that helps is bi- weekly and splitting amount. Works same way just multiplies frequency along with your additional funds. Plus you wind up making 13 payments as opposed to 12.
I agree with Dave and John here.
My wife and I were slowly making mortgage payments on time and I was making a great salary in a high pressure, high stress job. We paid off all non-house debt and then saved aggressively.
At some point, we found and started listening to Ramsey, and some point after that we focused on paying off the mortgage.
Once you are free from paying someone else each month so you can have a place to live, you see every life issue differently.
I retired early, we sold our old home and used the $ to buy a new home in a 55+ community. No debt. No mortgage. No stress of any kind.
HOA, Property Tax, Old people, ......
Property Tax, Utilities, HOA, Insurance… it’s still a fortune
Unless you live on the street, utilities and rent are always there. I can guarantee you that insurance+property+HOA will be cheaper than rent.
@@jml9550 oh totally agree. Just saying that with the crazy increase in utilities and taxes, it’s still a lot per month
@@RichardoBrit no doubt about that.
"100 percent of foreclosures happen on a house with a mortgage." Don't think that is true. You can also have a tax lien foreclosure. Or even an HOA fee foreclosure. My property taxes are over 2% per year and I never really feel like I own my house -- even without a mortgage.
Yep. Dave says the same thing when talking about reverse mortgages, as though the mortgage puts you at risk of losing the house if you don’t pay your taxes. You risk losing your home anyway if you don’t pay your taxes.
My first thought was this.
Don't you get an income tax deduction for your high property taxes?
@@JeanValjean875 Since they decreased the total that can be deducted to 10k and increased the standard deduction, it no longer makes sense for me to itemize. So, no, there is no deduction for high property taxes.
@@JeanValjean875 State and Local tax deduction, which includes property taxes, is limited to $10K per person and only if you itemize. So, if you are in a state that has a high state income tax or you have an expensive house, you could reach this on either one of those items. And excess is not deductible.
2:26 😂
"HOW MUCH DO YOU OWE ON YOUR HOME!? "
OWE
Whoops! I fixed it thanks.
I laughed because she was telling them how thankful she was and he went straight for HOW MUCH DO YOU OWE
Dave is absolutely correct.
Paying off you home gives you a great feeling of freedom.
Her wheezing laugh when Dave said “what does he think is going to happen, Armageddon?” got me 😂
I absolutely can't wait. My family is about to make a move that allows us to be mortgage free which is our only current debt. Really looking forward to that...sleeping in a different home, but a paid for home.
That will be the best feeling! Congratulations
Honestly, I'm that kind of person who thinks $100k emergency fund is a no brainer. This 3 to 6 month recommendation always sounded too low to me. Of course, you should do what you can given your income and starting off with just 3 months is okay
same
6 mouth is all your bills, so if you get that a min of 6 mouths you fine with no income and remember you could make that 9 mouths if you tight.
why have money just stting there, when it could be getting read of dept.
now if you home loan is 2.5 percent then yea i have that 100k earning 5 percent in high interest account.
b
Yet another idiot that thinks "debt" is "dept".@@az21bob666
I keep 1 year of take home pay in a high interest savings account.
@@az21bob666I'm assuming there's no more debt except the mortgage... Then I put away the $100k. Yes I know the math sucks just having it sit in a high yielding savings account but the same can be said for paying a mortgage early.... My mental health would always be good knowing I have that $100k in my back pocket
Assuming there's some type of 2008 massive recession in the future resulting in lots of layoffs, most folks take more than a year to get another job
I think an emergency that massive is usually covered by insurance. They need to pay a few more dollars in premiums insurance if they fear that.
Fdic covers up to 250k
So true. The feeling I have had since my house was paid off. You look at your house in a different way. Same with your cars in a lesser way.
I'm locked in at 2.625. No shot I'm paying more than the minimum.
Enjoy the theft of your future
Exactly
I paid off my 2.625% $328k mortgage in 25 month just before thanksgiving 2022. Not regretting it one bit. Now our home and rentals are all off and still have a decent tech job in the SF Bay Area. We are now saving like crazy and those rentals are cash flowing quite handsomely. Yep, we lose a couple of years of interest income but we also saved a big chunk of mortgage interest if we keep continuing paying the mortgage.
That's awesome. No doubt a paid off house just makes life easier.
@@SRD1281 it was always my goal to be debt free by 50. i was 50 and 1 month old when I made the last payment. Yeah life seems to be a little more relaxing, especially during the current inflation time.
I love her questions. Its exactly what I been discussing with my spouse ❤
Wise words. Longevity study vs. domestic debt now please, you are the best folks to do it.
John is so extreme. He always finds a way to say, "I can't breathe."
But are you safe? 😂
@@dmbgator86 Who hurt you?
weird comment. You clearly didn’t understand mine.
@@dmbgator86 Try and keep up, or go drinking with Meet Kevin
I would love to see when the data comes out on the health implications of being in debit!
Me too
I wish I had access to that information
I'm in the same boat as this caller and part of it is because my brokerage account is about to go through an acquisition where should be able to net +$30-$40k additional, but then there's tax implications that I'm trying to balance if I just threw $200k at the Mortgage. Other part of it, I'm the single provider for my family with a 2.875 interest rate on 15yr mortgage and we have majority tied up in equity in the house so I'm Ok keeping extra so we can pay a car off with our stock next year in cash. Matter of shifting money around. There's always risk with the brokerage investments but there's also a risk of paying your house off then having limited on the side if become out of work or something. I'll continue to attack it in chunks to knock down the principle while still growing our existing investments. Close to being completely debt free when there's enough available on the side - keep grinding! :)
The other point is when your house is paid for you can shrink your emergency fund by what the payment was x how many month emergency fund you decided on. Then you can invest that extra money.
Yup, you are lowering your fixed expenses.
Good point. The emergency fund is dramatically reduced once the mortgage is gone.
We have been on a recession since the beginning of 2022, but big media and governments all over the world didn’t want to admit it. We need to be wise and use our brains. Knowledge is power and I’d like all the family to be powerful! Just purchased some LVRCH CAPITAL Thanks for keeping us informed during this times of doubt?
The scammers have arrived!
Rememeber that inflation is transitory!
Dave's study of millionaires took place in 2018. The average age of his population was 63, meaning they were born in 1955 on average. The median first-time homebuyer in 1984 was born in 1955. 30-year mortgages were 13-14% in 1984. So yes, their philosophy was of course to pay off their mortgage. They were also 6.5-10.5% in the 90s, and above 5% until 2009. By that time, I assume they had their mortgage paid off (especially if they were paying extra on it) or were pretty close to paying it off. I implore everyone to understand WHY these people paid off their mortgage. You can't just follow previous generations without knowing why they did what they did.
It's kind of like the woman who cuts the ends off the pot roast and her husband asks why. She says "That's how my mom always did it." But she's curious, so she asks her mom "Why do you cut the ends off the pot roast?" And she says, "That's how my mom always did it." Still curious, she asks her grandma, "Why do you cut the ends off the pot roast?" And grandma says, it's too big to fit in my pan.
This is funny. But some truth to it. It doesn't make any sense to pay off a mortgage that's 2.5% when your money can make 5.5% in the bank right now, worry-free, FDIC insured.
YEP
Gentlemen that’s why the paying off the mortgage is a later step. It’s allocating money towards investments, family, and mortgage.
@@XennialGuyDebt always has risk. That money in the bank can evaporate in the stroke of a pen.
@@XennialGuythen borrow as much as you can at 2.5% and make 5.5% on it. Wait that doesn't seem right, seems risky no?
I totally agree with dave about paying off mortgage asap.
We just bought our new house with cash but the $1,800 month we now set aside for taxes and insurance doesn’t exactly feel like financial freedom. Still better than a mortgage, sure, but you better believe that if you don’t pay real estate taxes you can get your property foreclosed upon even without a mortgage on your property.
I think about this often. My actual mortgage payment is about $450 I won't be rich off that each month
My mortgage payment is $1100 and $350 of that goes into escrow for insurance and taxes.
Where do you live, and in what kind of house, that insurance and taxes alone is $1800??
@@barjrob"don't think about reality because it's not a happy thought think about paid off mortgage only, Dave says so"
My "school tax" and insurance is ~$1600/year.
I don’t pay real estate taxes, No property foreclosure.
The City gets money from Utilities: Gas, Water, wastewater, trash, recycle, electricity, ....
@@scroogemcduckismyspiritanimal I'm assuming he lives in an expensive location or a nice house, or both.
Property taxes here is about $250/mo. for homes that need serious work. $400/mo. for the average home like a town house in good shape or an old single family home that needs renovating. $650/mo. for the nicer homes. $1000/mo. for the really nice homes. It then jumps to $2.5K+ for those who enjoy the finer things in life.😅
That's just taxes. Home insurance is extra.😊 you also don't get much land. The average lot is about 1/4 acre if even that.
100k is fine. It's not just an emergency fund. It's also funds for future cars, vacations, new roof, etc. Not everything is an emergency. You still want to have the money on hand in a HYSA to pay for it. What rate is your loan? I wouldn't sell any investments to pay off a mortgage. Just start paying it down quicker. But max all your other accounts first (401, hsa, etc.) 15% toward retirement is a joke. You need to do way more.
I have such a low mortgage that i am considering a CD step ladder approach to pay off the house faster. There is no additional risk and I would pay off the house three months earlier.
I'm with the caller's husband, assuming their interest rate is super low (I have a 30 year fixed at 2.25%). Even net of taxes my savings account returns more than that. I would build up investments and savings until they exceed the mortgage. Say that takes them 5 years. By then, the mortgage is maybe $550k. At that point, the investment returns pay the mortgage. Then you can decide whether to pay off the mortgage or not. I know it's not the Ramsey way, but if a couple is otherwise responsible with money (and the ability to save $160k in cash suggests this couple is), I'm not sure paying off the house makes sense. Most multimillionaires I know have low interest mortgages on their homes because they look at it as free money.
1929 stock market crash took 21 years to recover. 2008-09 crash took 4 years to recover. Japan has never returned to their market highs of 1990s. Risk of money staying invested is there just like opportunity cost of taking money out of investments to pay off house. At least the house payoff is a guaranteed return.
@@johnkollm3243 True, but, again, savings rate net of taxes exceeds the interest rate. Build that up. If rates come back down, then that changes the calculus.
There is a good argument to be made for having cash available and being able to pay mortgage in an emergency with that money. But c'mon, what if your mortgage was paid off and you also had a lot of cash on hand? Better yet right? Without knowing your exact numbers I ran something close through an investment calculator. Over 30 years a $600k mortgage at 2.25% you will pay $225,651.58 in interest. So just simple math says that paying off your mortgage will save you a quarter of a million dollars. To me that isn't chump change. And anyone who says borrowed money is free money has no idea what they are saying.
No one sai borrowing is free money. Paying off that 2.25% mortgage and forgoing investment returns of even 5% costs far more.
@@tdaveniii Just follow Dave's logic for a second. If you make $5000 a month and your house payment is $1750 and you follow his advice and invest at least 15% of your income then you are investing $750 a month in retirement. If you work hard, pay off that mortgage in just 3 years, like my best friend did with his, take that $1750 mortgage payment and move it into investments you are now investing $2500 a month. What gives you more retirement savings, that extra 2.75% you got for 3 years or the fact that you now are saving almost 4 times as much for retirement? Your way works, don't get me wrong, but it isn't as efficient as you think it might be.
I stopped putting down on my house. I have a 2.5% rate. Fidelity is giving me 5.05% in a cash account. My extra $1500 a month is going there now. Then maybe I will make a lump sum payment if interest rates come down.
Dave truly wants you to win with money! Great guy
6 months of their current income would be $125,000. So it's not a crazy emergency fund given the lifestyle they're probably accustomed to living.
They owe 600k+ on their house after buying it two years ago. It's safe to say they have very high living expenses. I live in the same city as them, make half of what they do as a single man, but only owe 25% of what they owe on my house.
It's not 6 months of INCOME - it's 6 months of EXPENSES.
Emergency fund is based on expenses not income
We had over $100k as emergency fund. We were able to use part of that fund toward paying for our son’s college tuition and we’re able to buy our son used car with cash without tapping into our investment account. We did pay off our house in 20 years. We also do have retirement fund that we are keep adding money into. We do not have any regret for the way we did
Just subscribed to your channel lately and love what you do to help people. I am in my 70's and wish I could have got advice like you give when I was in my 20's and 30's.. My question is I live in Canada and most mortgages rates are locked in for 3/5 year terms with different interest rates depending on the length of the term and you cannot get a 25/30 year mortgage locked in at a fixed rate. So if you take a 25 year mortgage with a 5 year interest rate, its the most they'll lock in for here, with most mortgages you can only pay up to 5/10% extra per year on the original principle mortgage amount. Is it the same way in the USA. You told the caller to toss every dollar she can monthly against the mortgage , which is great advice, so I wonder is there a limit you can pay down per year or no limit. ?
No limit in the U.S.
Ugh... this call is painful to listen to in sooooo many ways!
Depends on the interest rate of their mortgage. If it’s 3% put all that cash to work in a high interest savings account at 5%. Pay the monthly note and invest the difference in a S&P 500 etf. Once the rates of high interest savings accounts fall below your mortgage rate (which will happen when the feds start lowering rates in the not too distant future) THEN pay off the house…
In Australia most people have mortgage offset accounts which is a savings account where the balance is used to offset/reduce you mortgage but you still have access to the cash
Most people use this as a "buffer" in case they lose their job or something drastic happens and they can't pay their monthly mortgage.
Surprised the US don't have something similar.
The average amount sitting in offset accounts is $100k
Sounds like a good plan as most people just aren't disciplined enough to save on their own. As long as it's set up by the bank and the government keeps their grubby little hands off of it I think that's a great idea!
Who puts money in that account? That would be the equivalent of an emergency fund in the US. The recommendation is 3-6 months of expenses, but like everything else, it depends.
Three months is good for people who have skills where they can find a job within a month or two if they lose their job. It's also enough for medical emergencies if you have good health insurance, or repairs of you have good home or car insurance. Its also adequate for most personal insurance, like needing to help a family member with a one time thing. However, its usually good for one of these things at a time, not multiple happening at a time. Six months provide much more coverage. 8-12 months is good for those who want extra security, or have hold jobs that can take several months to find new work. If you have a business then more can be helpful.
Its your account so you put money into it. People use it like an emergency fund but its linked to your mortgage in a way that the amount in your "emergency fund" is subtracted from the balance of your mortgage so it reduces your repayments. So you have the best of both, you have an emergency fund with cash on hand when you need it and if you don't use it, it reduces your monthly mortgage repayment @@TheFirstRealChewy
I must admit, my comfort level was comparable with this woman's husband's. I just retired last December, and just started getting social security two months ago, so I, by choice, was living off of my savings. I had one nineteen in the bank and it dwindled down to ninety eight. I just met with my financial professional last week to figure out how much I want him to send me each month, and we discussed moving some money into a high yield money market account. It was a no brainer. I went from making almost NOTHING in a bank account to what will now be well over five percent which will equate to over three thousand a year. I still have a fair amount in savings as I elected to move sixty five over, but even my guy told me to not worry so much and it's not necessary to have that much in savings. I do get it, but it's a matter of a comfort level.
I've even heard, when it comes to an emergency fund in retirement, it's recommended to have 2 years of expenses saved. The line of thinking was that, since a retiree relies heavily on their invested income, the 2-year retirement emergency fund helps to buffer against a 2-year downturn or recession in the stock market.
Of course I'm not an expert on the matter, but I think that's where your line of thinking is going.
These folks make 250k per year. They aren't retired
DAVE IS THE MAN
I feel that the last bull run was bolstered by all the money being printed. Major returns next bull run but I think they will be tamer in my humble opinion. A 10x on LVRCH CAPITAL and a 15x on polygon are fair considering how much those two coins are interwov
Just lock in extra on the AutoPay every month. I do this now.
is it lowering Principal or shortening the term?
Love it ❤
I don't think it quite works the same here. If I want to pay off a certain amount 'early', I need to go to the bank, strike a 'deal', sign paper and pay a kind of fine each time you do this (x-months of interest or something, can't quite remember exactly).
I speak from experience too, since I did it once. Paid off half my mortgage early ... yeah ... I can't just 'send them X number of EUR' all willy nilly.
Heck, I don't actually send them anything in the first place, it's automatically withdrawn from my checking account every month by the bank and one of the requirements of the mortgage with the bank is to have your checking account with them to do this.
Wow this lady can talk.
Most can, and say nothing
This is a great video I really appreciate the dedication in each video you post, I learn a lot watching your videos and it has always been helpful to me. Building a steady income is quite difficult for newbies.. Thanks to LVRCH CAPITAL for improving my portfolio. keep up with the good videos.
That's funny LVRCH CAPITAL scammed me out of all my money. BEWARE of the BOTS
@@geno4222they're always in these comments😂
My heart goes to the entire community for LVRCH CAPITAL building up something even my grandpa can understand. This is so smart by them to launch it to shatter the doubts and fears of the common folk which is not even correct to begin with. Everyone knows the state of inflation and recession now and the way out is already in progress. Now it's just about catching the big fish
That's funny LVRCH CAPITAL scammed me out of all my money. BEWARE of the BOTS
3:39 You're telling me not one millionaire in a study of 10,000 had any investments in non retirement accounts before paying off their home? I'm calling BS on that. He always uses these blanket statements when the question was never asked like that
It's bs totally
What I love most about Dave's advice is interest rates do not matter. As a thought exercise, if someone had a billion dollars in debt and a billion dollars in cash and a 0.0001% interest rate on that debt but had an investment opportunity of a guaranteed 1000% return, DR would recommend the person pay off the 0.0001% debt instead of make the investment.
He has about 5 minutes per caller. Sorry he didn't get into every detail of every millionaire that was interviewed, that wouldn't take that long. You are the types of idiots who would complain that the doctor who cures their cancer didn't mention that one or two former patients out of thousands had allergic reactions. MORONS!
Not saying that “not one” did that. Most did that.
I can't find the raw data to his study anywhere. It's presented in however way makes his points sound like they have more credence. Even the raw data is pretty meaningless as its a biased sample of people who listen to Dave Ramsey. Of course most of them are going to do it his way.
The stress relief of living debt-free is incredible. I wake up every morning with a smile.
Can't deny the fact that LVRCH CAPITAL is the strongest bet to bring power back to this industry after we suffered FTX, Celsius, Tera and so on. Sure if they fail it's done for good, but I don't see that the biggest tech company in the world would put everything at risk just for that.
That's funny LVRCH CAPITAL scammed me out of all my money. BEWARE of the BOTS
3-6 months of expenses. Like if you lose your job, for instance? I did that and it saved me from being homeless.
John knew she was gonna ramble after “how much do you owe on your home” 😂
Money is a medium of exchange and isn't designed to be held. You should hold assets. Savings is for emergencies and expenses, but the majority of excess savings should be producing income in assets.
With inflation the mortgage gets devalued automatically just by paying the interest. Selling investments to accelerate the downpayments doesn't seem smart unless you have to.
If my mortgage is 3% or less does it really make sense to pay extra when I can stuff my cash in a high yield savings account and earn 4-5% right now?
It comes down to your risk tolerance and goals. Notice that they say you should still save 15% instead of 0% towards retirement.
If you want more money by retirement, then invest more money for a longer period of time. 15% is a good number, but it doesn't have to be your number. You can invest more if you want. There is nothing wrong with that. Use what's left to payoff any debt faster.
Our goal changes depending on milestones. We pay a little extra with the goal of paying off the mortgage by 60 the latest. The rest is invested. If we reach the minimum invested milestone earlier than expected, then we'll put more towards paying off the house. Who knows, maybe we end up realizing that a simplier life is the way to go, so we end up moving to a smaller place in a cheaper location, hence negating the need to pay off the house.
I was wondering. If your goal is to pay off your mortage fast. Why is everyone taking an annuity over a linear mortage? Your principal is the same over the whole period and your interest will go down with every payment you make.
They've said the quote "No one ever pays off their house and wishes they hadn't" I just don't believe that. For example - I guarantee someone has finally pulled the plug and dropped $50k of their savings on paying off the mortgage and then wanted to do renos or had a medical emergency or something and wished they had that cash back. You can't use the equity of your home unless you take on debt again or sell it.
Welp, if you need it, you can always go out and get another mortgage.
Paying off your house means now you have extra money on a monthly basis. You make plans for that money. Now, a certain percentage can go toward giving, another towards investing, another towards 'fun'. If you want to do renovations, sell an investment. PAY CASH FOR IT!!!!
What if I paid off my 3% mortgage and had a significant life events suddenly happen, requiring a lot of money the mortgage I’d have to take out would be more like 7%
@@joannae3723 i mean you keep an emergency fund for that? if not, i do think that life would just as likely throw that wrench even before putting the money towards such a thing. anything can happen i suppose, but im not sure what could happen without it sounding like an extremely specific scenario.
@@omegazeroINFI this was more of a response to it being safer to pay down a mortgage than put that same money into savings and investments. If I had a 7% interest mortgage,I’d pay it down in a heartbeat. But at 3.5% the math is saying it would be better in a 5.5 hysa
I appreciate you and your content < Technical Analysis is good but I find It truly baffling that major crypto youtubers just look mostly at pure T.A and completely ignore the bigger narrative of why BTC is pumps/pumped and why the future outlook will be even rosier than it seems. It's kinda irresponsible to ignore the fact that each ETF launch so far has caused a major dump at the peaks of BTC. We were already on shaky footing with historically low volume and almost pure whale pumps, narrowly avoiding a long-term bear market. More emphasis should be put into day trading as it is less affected by the unpredictable nature of the market. I have made over 27 btc from LVRCH CAPITAL insights and charts, its been one step ahead of other analysis….
goof spam - scammers!
Another thing that doesn’t get mentioned enough: Let’s say you bought your home for $250,000 and sell it for $750,000 later. You owe ZERO TAXES on that gain from the sale of your home (exempt up to $500,000 if you’re married)
Consult with a CPA before doing that
You don’t need a cpa for that
As long as you live in it as your primary residence for a minimum of 2 years before selling
@@baysin5309 Bingo
@@truckingmoney485 Al Capone thought the same thing
You need to make sure you tell the bank to apply additional payments to the principle, otherwise they will apply it as a regular payment including interest.
You can’t pay more interest than it is due that month. Anything extra is principal.
@@dan.b yes and no. They will count it for the following months. So if you pay Jan. and then send 10k in to them also in Jan. --they will apply it to the interest/principle of Feb, Mar, Aprl. etc. UNLESS you tell them to only appy it to the principle.
If you had your whole mortgage amount in the market right before Covid, you’d have made about 25% growth since then, not bad at all compared to a 3% mortgage rate
I have no problem with paying off your house early especially with higher interest rates.
But it's definitely not the only way to become a millionaire.
But he didn’t claim that.
it more one most poeple can make extra payment to pay off house but most dont invest the same
and to when thing go bad, a payed of house or the same in stock when the stock value drop 50 percent like in 2008
and then you lose your job.
Name 3 other ways a regular Joe can do it, I will wait.....
@@alinatamashevich3354 the data also shows, “regular joes” don’t typically become millionaires - whether or not they pay off their mortgage early, even tho, with inflation, it is a lot easier to do these days. One suspects Dave is using the study to elicit compliance, by regular joes, with his baby steps.
@@alinatamashevich3354 I follow Dave's plan to the letter. But he always states that the "Fastest Way to Build Wealth" is with his plan, not the only way. My best friend is 55 years old and has paid off 3 houses in his lifetime. His method is to never borrow money on any assets that depreciate and pay a mortgage as fast as possible. But he has a credit card. It is his security blanket. He and his wife have plenty of money in real estate, savings and a few minor investments. The stock market scares them so they refuse to invest in it. In our working lives I have earned 3 times as much as my friend but he has a net worth of over $1 million while I have about half that. I have been listening to Dave for about 7 years and he turned my life around with a simple and effective plan. My friend just started listening a couple of years ago but not real religiously. As he said to me, "I've been doing most of what Dave Ramsey preaches my whole life, but not everything." So there are other ways and even with very modest incomes.
I'm probably opposite! My emergency fund will be $2,500 x 3. Purely for 4-walls expenses, not income.
I don't think it's ridiculous. Ridiculous would be being in debt and not having cash at all. Holding $160k in cash is more conservative than the way I do it, but there is a lot of value in liquidity, and if their mortgage interest is below 3% (which it probably is if they refinanced before 2022), it makes sense to just build up cash until you can pay it off.
Dang, we do have a $100,000 soon to be “emergency”… which to me means a totally unavoidable, non-choice repair on our house and it’s a horrible feeling, especially with a home where the repair cost is equal to the mortgage balance. It’s far from the value of the home though, so we’ll have to do it, but it’s freakin’ painful.
If you have a 100k repair that has to be done to your house, insurance should be involved.
What on earth kind of repair costs 100k
A roof might cost $40,000.00, and our house is not large. While it seems excessive, there is wisdom in having a pile of cash laying around. I would try opening an interest-bearing account that does not penalize for an annual withdrawl.
@@user-mv9tt4st9k Unless you live in San Francisco roofs do NOT cost 40k. If someone quotes you 40k they are FULL OF SHIT!!! Get 5 more quotes and get some NOT from people that advertise on TV.
You would need a MAJOR foundation issue to be 100k for just 1 repair.
Earthquake maybe ?
Has Dave ever published the study of millionaires he keeps referring to?
Has that study ever been read by others?
I typed “Dave Ramsey millionaire study” into google and found it in 2 seconds you donut
You need less in your emergency fund if you don’t have debt. No house payment means you that’s less money you need month over month.
I’m on baby step four yippee 🥳
I’ve tried talking sense into people who’ve filed bankruptcy before, you’d think after filing once that maybe you should stop giving away all their money. But of course they don’t ever learn. They have more excuses why you’ve gotta give away your money. You can see the gears grinding in their head when you explain you can actually keep your money. That’s all they know is “who can I send my money to”
I disagree with the whole humongous emergency fund idea. I say keep a smallerish amount, like say $5k, and put the rest into something like 4 week t -bills or whatever. It is stupid to put $50k or some huge amount into a savings account for it to just sit there. I can't think of a big expensive emergency that you would need the money to pay immediately.
Crazy you can pay off your house, completely “own” your land but not really because property taxes. Weird.
I couldn't care less about paying off my house. $1144 a month. No other debt
Need a little nuisance on the advice, but if your interest rate is 4% and you’re 35 you can probably do better in mutual funds. If you’re older then taking the house debt risk off the table is the right move. Liquid assets in cash or easily salable mutual funds is very different wealth than a bunch of equity in a house.
For what it’s worth I hesitated pulling from investments (non IRA/401k). Once we did I have not regretted once.
You aren't going to regret getting rid of a loan and reducing your fixed expenses.
Remember, the discussion isn't really about paying off the mortgage, its about when to pay off the mortgage.
I can focus on paying off the mortgage early, or focus on investing, and if I do both then both take longer. I know for sure that I won't regret paying off the mortgage early. However, will I feel like I missed out? For example, I wish I invested more when I was younger.
It's not a bad goal. In my case, paying my mortgage off anytime in the next 5 years would cause me to lose money in intrest payments. It's not for everyone. Make sure you know what you're doing before you sink everything into your home. Also, you can have home foreclosure from Home Owner Associations or even the IRS just so you know. Our government has set it up to where you never truly own a piece of land.
I paid off my 2.625% $328k mortgage in 25 month just before thanksgiving 2022. Not regretting it one bit. Now our home and rentals are all off and still have a decent tech job in the SF Bay Area. We are saving like crazy. Yep, we lose a couple of years of interest income but we also saved a big chunk of mortgage interest if we keep continuing paying the mortgage.
Online savings accounts are making over 4% right now. My house is 2.25%. If I have a lot of cash, shouldn't I keep it in savings?
It depends on your marginal tax rate. Let's assume your in the 32% tax bracket, you have 9.3% in state income taxes. Your 4% savings nets you about 2.4% after taxes, so it's a slightly better return than paying off the mortgage. [You might consider shopping around on that savings account - I have a 4.30% online savings and have seen up to 4.60% with known providers.]
@@tdaveniii Nope, that 2.25% is being stolen , never to return!
@@alinatamashevich3354Stolen? Not at all. I have to pay something for the privilege of access to capital.
@@alinatamashevich3354do you even math bro?
@@thedopplereffect00 Do you speak English?
We have our home paid for and we are socking money into retirement now.
I'm all for paying off your house, but I've lived in a paid-for house for years and it doesn't honestly feel that different to me. For one thing you still owe property taxes, and the government can still take the house away from you if you don't pay them.
My husband was recently in the hospital for 3 1/2 days unexpectedly. He had a surgery. Before leaving the finance department told us we currently owed $300k and asked if we wanted to pay our share of 30%. We told them to bill the insurance. Even with insurance discount I fear how much we will owe. Thinking $100k in an emergency fund is a good idea now.
Whoa, that is nuts! I guess your policy doesn’t have an out of pocket max? 😮 I highly recommend the book Never Pay the First Bill so that you can go through a list of strategies to ensure you don’t have to overpay for care. That truly sounds like you should have some options to lower your costs. 😬
Dave advises. It's how much you normally make a year. Dave has said in the past minimum 6 months. Maximum a year or 2. If you make 100K a year and your debt free. Yeah you can have 50-100K in the bank.. anymore then 2 years. You'd be better off just putting it in a S&P 500 index fund in fidelity or something.
Nothing wrong with having that much out to the side
Cash is King, all else Jokers
Only way I'm getting a home, is through inherentence. Average house around me, and throughout Canada is $800k, so I'll never be able to buy.
I love my 3% mortgage.
Why not 2%?
I paid off my 2.625% $328k mortgage in 25 month just before thanksgiving 2022. Not regretting it one bit. Now our home and rentals are all off and still have a decent tech job in the SF Bay Area. We are now saving like crazy and those rentals are cash flowing quite handsomely. Yep, we lose a couple of years of interest income but we also saved a big chunk of mortgage interest if we keep continuing paying the mortgage.
@@jml9550 A zero risk high yield savings account pays me 5% interest. why should I give the money to the bank and pay off the mortgage if I can keep my money in the bank and earn more in interest then I pay on the mortgage?
@@0_1_2 2% would be even better but it wasn’t worth me refinancing it to go from 3% to 2+%
I paid off my 3% mortgage in May 2023 and never gonna look back.
Ultimately, safety is an illusion.
Most people don't even make it retirement. Just pay off the debt. Buy toys and have fun. Life is short. I have seen this scenario happen to at least 15 close friends that are no longer here.
What I think Dave and most people miss, is the idea you're SUPPOSE to get a loan/debt that beats inflation or almost beats inflation. Then the bank is losing the yearly % on the money not you, you have cash that can let you live life (within your budget), make all your payments(and pay off revolving credt aka credit cards) and the money you should have been "saving" is now being invested WHILE you keep your 10k, 50k, 100k+ emergancy fund.
You don't get into debt or a loan and then spent all the money you saved, you use it with thought, and keep enough on hand that you can go talk to the bank or any group and work something out.
Americans are incapable of doing anything with thought.
$550k @ 10-12% > $260k @ 2.6%
Nope. Not paying off our mortgage early. Would rather grow our brokerage account. We have 6 months living expenses set aside, so unless we both lose our income indefinitely...
How to pay your house off quickly: Isn't it true that if you pay an additional $10,000 on the loan Principle, instead of just on the mortgage balance, you would be better off than applying the extra $10,000 on mortgage?
It is so depressing listening to people who make orders of magnitude more money than me managing it so badly.
Then stop being a simp and make more money
I don’t think stockpiling cash is managing money poorly. Maybe they’re not leveraging their cash to make more money, but being able to save and accumulate cash isn’t bad.
@@zippoc04 Leverage, what a joke
Why is it the broke people always know more about money than the ones that have it?
I set an annual goal. My goal for 2023 is $20,440.39. As of November 06, I’m $280 away from my goal.
Part of my issue is that the Fauci quarantine was more than 6 months. Nobody predicted it. So even if you were paying ahead and I don’t have income due to COVID layoff, my emergency fund won’t last because I still need to pay the mortgage out of the emergency fund to avoid foreclosure. Now I have $0. There’s something to be said to have “a little more” in your fund, maybe 12 months. Meanwhile still paying ahead.
You need to make sure that you are not quarantined again. Many, many of us were not and our lives continued on without a hit to our finances like that.
I've heard it said "It doesn't matter to the bank if you have $100k or $500k on your mortgage. They'll foreclose either way." So having $100k left on your mortgage and 3-6 months of cash is WAY riskier than having a $500k mortgage and $400k cash. But then a paid for house is less risk.
An emergency fund is to cover 3-6 months of living expenses. Your mortgage payment is a living expense. If you’re not budgeting for your home payment or rent in your emergency fund, you don’t have a true emergency fund.
I left my house everyday and had no issues. My wife and I worked everyday. What industry and where do you live that you were in lock down
@@emoney1231 The different is first of all, you want to have less than a 80% LtoV ratio, but foreclosure is a long process. If you have a lot of equity in your house, you should be able to sell it and come out ahead before a foreclosure situation ever happens.
Time Value of Money > Fear of Debt
I don't think $100K emergency fund is insane because it depends on your circumstances. Let's say he's the primary earner and he gets in an Armageddon type car crash and is in a coma for a year and then rehab for another year with no income. Assume she's a stay at home mom with two little kids and no possibility of replacing his income. Medical bills alone could break the fund and then add living expenses. Granted, the odds of that happening are pretty slim, BUT it is possible. So I sympathize and respect the husband's concern. This couple has a mortgage of $633K so that alone would justify a more generous emergency fund. My emergency fund is one year of living expenses.
Agreed. Some of what Ramsey says makes sense, but some things are off. For those who want savings strategies and not worried about paying off debt (or don’t have any), his advice doesn’t really work.
In the scenario you gave, your own emergency fund is not enough. Better start saving! All the best!
That's when you better have a good health and auto insurance would come into play. I think of an emergency fund more for things that need repairs and possible unemployment for 6 months. If you have that situation your lifestyle will tighten up alot so what you need to survive now will be alot less with no job.
100k is a great emergency fund! They could buy CDs or keep it in a high yield savings account. Take new money and put it to the mortgage.
@@o0usf0o Wouldn't have An emergency fund in a CD...high yield savings sure.
I understand the premise, but due to property taxes, very few people (100% disabled veterans) truly own their homes. There always exists a concept that if you stop paying your house will be removed from you.
I feel like this is what entitled Boomers say. Yeah you gotta pay a few thousand a year in taxes. Boo Hoo. The average rent/house payment in America right now is like $2,800 A MONTH. Not A YEAR. Stop acting like the taxes are holding people back.
@@puthyx Wow, triggered much. I was just pointing out that there is never true psychological safety in ownership of real estate due to taxes. I never made any claims that taxes are more expensive than mortgages, but I know people in Texas paying $1400/month in property taxes for no frills single family homes in middle class neighborhoods.
You can defer property tax until transfer, (transfer on death)
Property tax exempt.
I live in the largest American City (500K) without a property tax
???There always exists...
@@puthyxI totally agree with on this. as a landlord for 20+ years I always encourage my tenants to save and buy their own home. An average 3+2 in my area is $3.5K per month. That’s $42K a year. Yet property tax is ~$8K a year and insurance is $1k a year. That’s less than 3 months of rent. Buy a home and pay it off early if possible. Long term home ownership always win. Rent will continue to increase.
@@puthyx I would jump for joy if my property taxes were only a few thousand a year, but they are closer to $20k a year and go up every year. Rent is high and so are property taxes. Unfortunately no one gets out cheap.
Why pay down the mortage faster than needed when larger gains can be made with investments?
The Money guy would like to have a conversation with out about closing an investment to pay towards your house.
Yup. Around age 45 is when they suggest paying off low interest debt, so debt less than 4%. Afterall, time in the market beats timing the market.
When I paid off my house my actual payment was 331.34 a month well to that. I. Put. 400.00 making a total of731.34plus out of my social security ck I would put 1200more on the mortgage for a total of1931.34now I can save 2000 a month but I sat home many weekend and beans. N rice
D O E S E V E R Y O N E F E E L S A F E
Bad advice to pay off mortgage. $100k into principal might save you $200 month by not paying interest. But now you can put $100k into 6% mutual funds and make $600month and it compounds
If they make this much money how can they not answer simple questions
"Almost 0" and "less than 10%" are VERY different dave. Clearly like 9% of milionars they interviewed did keep their mortgage with it's 2% interest rate and instead invested into things that yielded 10%+.
Southern people really are not into the ranting lifestyle they cut right to the chase😂 us northern peeps can rant and rant for hours. I recently did a Gamblers anonymous zoom meeting in Dublin Ireland and my lord I thought I was the king ranter. The Irish have us beat by light years. Great people and was a great experience and didn’t mind their rants . Actually enjoyed it but I was baffled and almost funny how they can just keep going and going lol
"100% of foreclosures happen on a house with a mortgage" 6:44