Should You Pay Off Your Mortgage?

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If you listen to the finance videos on YouTube you've likely seen this guy. Dave Ramsey. He's the largest finance persona in the world. With his massive following, Ramsey makes one thing very clear. Pay off all your debts as early as possible including your mortgage. On its surface, it's a simple time-tested philosophy that you would think makes complete sense. Having your mortgage paid off in America used to be a badge of honor. In today's video, we examine how the truth has changed and view the concept of debit through a different prism, one that will shatter your perception of the American dream.

[mellyhedge]

Very well put! Ramsey often gets a lot of flack for this. This is why I love the 15 year mortgage. My primary home is paid off and the second home is getting close to paid off because of this. I can't imagine keeping that debt for 30 years, but that's just me, I hate debt.

[WhiteBoardFinance]

Personal finance is a balance of math and emotion. No correct blanket answer.

[NS-ptrr]

Totally right, pay off loans then all earned money is free to do as you please.. Wise people will agree with me in future years.. once you get stuck in debt, it never goes away, forget what the Kiyosaki camp say, the faster you clear up debt, you feel good, especially when sh*t hits the fan !!

[viscabarcaa]

Pay off your mortgage...if after a year you find that you miss having a mortgage, go get another one then

[dustinkatiehastings]

I’m glad I watched to the end. Something you touched on, but don’t go deep enough into is risk. It’s not just about holding out through a time like 2008, it’s also if you even have a job to continue to pay the bill. There’s a lot more to personal finance than numbers and that’s because the person at the center of it all making the decisions and most people aren’t going to take the money they could have used to pay off there home early to invest it. They blow it. Awesome video and glad to see some common sense in this financial climate. Love the videos, keep up the great work 👍

[cheetahobx]

I stated this a thousand times....

IT ALL DEPENDS ON YOUR SITUATION, CASH ON HAND, ROI, CASHFLOW, ETC.

NOT a blanket statement....

[linkbelt]

In the long run, it is always best to stay debt free!!

[perrywidhalm]

Holding too much debt is not only a financial liability, it is an emotional liability as well. Excessive debt causes stress which can ruin the best years of your life (20 to 60 years).

[benjirexx]

Do you know if Ramsey has changed his tune on inflation? Last I heard, he seemed to believe it was transitory due to supply chain issues, but never touched on the fact that we added something like 40% to the money supply during COVID, which is kind of an important variable..

[ownsilver]

I did watch it to the end, when we paid my home off in 2009 I went all in on my 401-K using the catch up plan and non taxed deduction until early 2019 then I went back to company match amount, in 2002 we started buying physical silver our all in cost is around $14 an ounce, I retired in july 2019, my wife and I are both retired we draw $615 a month from my IRA we can do this withdrawal until we reach our mid 90's and still have inheritance for our kids

[sheabilladeau]

Whenever people talk about investing for the 30 years in the S&P, they forget to talk about what you can do with your money when you pay off your house early, as if all that money doesn't go anywhere. If I am 34, and pay off my house in 6 years. I still invest from age 40-70 before I retire. Then I am insulated from financial markets collapsing or me losing my job. It is not as if by paying off my house in 5-10 years I will not invest. I will delay investing, but I will have a great benefit of financial independence and housing security which is worth the most anyway.

[danieln]

That was a very good video. It's easy to assume that because something is mathematically correct means it's best, but you also need to consider how your own psychology will interfere in decision making. Dave doesn't always give perfect advice but he seems to have a knack for understanding financial psychology, and paying off debt can be a powerful incentive for a lot of people.

[nexusfg]

WRONG.
YOU FORGOT TO ADJUST FOR CHANGING INTEREST RATES (fed just raised rates).

And you didn't account for this unique variable either: Home prices have NEVER been higher relative to income.
This is especially concerning during a historically high inflationary period.
And wages continue to lag behind the increased cost of living.

There is a breaking point, a threshold at which people cannot carry their debt loads.
Personal debt is so high for so many people that we are reaching a point where there may be mass foreclosures, worse than 2008/2009.

You're also assuming that house prices can continue to go up, and that people can continue to afford buying them, just because our parents generation bought their homes for 1/10 the price of what they are today. You can't possibly think that houses will be worth 10x in 30 years from now?! It is mathematically impossible for wages to keep up, there isn't enough money in circulation to facilitate this.

What good is investments in a stock market if you lose you house and become homeless? You'll have wished you paid down your mortgage. And if there are massive foreclosures, the stock market will tank as well.

[lesliecas]

Ramsay is right. Having as few bills in retirement as possible just makes retirement easier. Other monthly house related monthly bills that increase over time are home insurance payments (which many mortgage companies require mortgage holders to have), property taxes, and homeowner association fees. Being a renter instead of a homeowner is not a good.option because rents increase over time.

[adamwest]

I have another 12 months left on my mortgage fixed at 1.5%. Then I will be mortgage free at age 45 with ZERO debts.

I guess I’ll find out if it’s a good thing next year.. I have no financial dependents, no blood sucking leeching wife or kids so will be free to take my foot off the gas work wise and will probably spend a bit of time travelling.

Will be aiming to retire well before I’m 50.

[uumn]

I paid off early, 4 years total mortgage life, I would recommend eliminating any debt. One caveat I'd like to address concerning prepaying mortgage debt is that all of the money converted into equity is very illiquid so whether you have 1% or 99% of your house paid off, it's the same percentage of ownership to you as the occupier which is 0%. If you burry all of your pre-payments in equity in your house, until you own your house you are essentially locking your liquidity into an illiquid asset. You don't own the house until you do. I guess you could HELOC but that's asinine if you are motivated to being debt free.

[jarrettpierce]

Wow what a great video very thoughtful content

[isazux]

This only works in the US where you have fix interest rate for 30 years. Other countries can only fix their interest rate up to 5years. I am re-fixing my home loan now in New Zealand and the interest rate has doubled.

[patostickar]

Capital and confidence, you could loose both if you make the wrong move during a tough market environment, or even if you're unlucky and the correction arrives at the wrong time (when you want to finally pay the mortgage)

[hackit]

I would like to see Ramsey's study about this and the incomes of these people and the growth of their income. It's easy to have a correlation of a couple making $400k/yr that pay off their house and have $1mm in retirement. I want to see if that's also the case with people making $50k, but it won't be. Ramsey's study and client base really are people making 100k+ if I had to bet. Correlation is not causation.