*If you could pay off your mortgage today, or take that same amount of money and invest it, what would you do? (Let's share this video and get it to 10,000 likes!)*
I'm 32 and been mortgage free for over a year now. The calculations make it clear you'd "make more" by investing that money but I've always been pretty conservative on my investments.
I have a question Marko what If we are staying in US temporarily for 5-6 years And paying 2100$/ mnth as Rent ( $25k/year🥲). Should I go and Buy a house or stay in a rented apartment? And what if after 5 years I am still making payment for my house and I have to move back in that case what can I do?
90% of people don't use the extra money to invest, they just use it to go out to dinner or buy new cars, so for the majority of people - they should pay off their mortgage early!
That’s the main advantage of paying off your home. When you have a bunch of money sitting in your bank account, it burns a hole in your pocket and can be spent when you are going through a vulnerable time. Relative just passed away? YOLO and buy a new car or take an expensive vacation.
Interesting , the stock market is currently experiencing a decline while bond yields are on the rise. However, there seems to be skepticism amongst investors regarding the Federal Reserve's plan to continue increasing interest rates until inflation is stabilized. As for myself, I find myself at a crossroads, uncertain whether to liquidate my $250,000 stock portfolio. I'm seeking advice on the best strategy to capitalize on this current bear market.
We paid off our house 12 years ago following the Dave Ramsey plan. I have never regretted paying off the mortgage. The top two benefits are: 1. Not concerned when a black swan event happens and the economy drops and companies lay off workers 2. Increases cash flow to invest.
Now I have more knowledge about personal finance. I just subscribed to your channel. Big ups to everyone working effortlessly trying to earn a living while building wealth in this recession. I’m 45 and my husband is 51, we are both retired, no debts. We are planning on relocating to Thailand. We are currently living a frugal and financially savvy lifestyle and generating passive income even during this recessionary period. Our commitment to saving and investing in the financial market has enabled us to maintain this lifestyle and continue earning monthly passively through investment!"
Congratulations on your early retirement, Interesting indeed! Currently, I am in dire need of investment advice or tips. Last year, I hesitated and failed to take any action until the year concluded. However, this year, I am determined to try something new, as I am very receptive to various investment ideas. I want to be retired in my forties or fifties.
No problem at all! If you're seeking to earn substantial profits from your investment, I would suggest determining your investment horizon and implementing a long-term plan. I worked with Nolan Velden Brent to create a long-term investment strategy, and he assisted us in managing our investments while we focused on my jobs without any concerns.
Thank you for your advice. It's challenging to find a reliable investment advisor here, and I appreciate your input. Seeing the successes you've achieved through investing, I would love to have access to your investment advisor's information if you wouldn't mind sharing it.
I work with **Nolan Velden Brent** ,who is based in the United States. If you would like more information about him, you can conduct a search online. He even got featured on CNN recently.
Thailand is really a nice comfy plan to retire. Working with a skilled financial planner can be compared to having a mentor in the field of finance. I used to struggle to invest on my own and ended up losing money, but things changed once I started working with *Nolan Velden Brent* . He played a pivotal role in helping me improve my financial situation. Previously, I relied solely on my job and salary for income, but now I have found ways to generate additional income with ease, which has allowed me to leave traditional employment. Nowadays, I believe that investing is not a choice, but a necessity for anyone who desires financial independence and a good quality of life.
Paying off my mortgage was the smartest move I could have made. My peace of mind went through the roof and it freed up a lot of capital to go invest with. I would recommend it to everybody definitely for psychological reasons, regardless of the math.
Yeah, especially if you work for a company that pays into a retirement fund for you. The place I’m employed pays 8% of salary into your retirement as a benefit and profit shares another 6-8% depending on financial results. With that dynamic paying down my mortgage ASAP makes sense.
GREAT beginning! Paid it off 11 yrs ago, never looked back. Once paid off I started having real money for other investments. I sleep real well. Like DR says…” if you have a paid off house would you borrow money against it to invest?” Me? Oh no
Same here. Did you find your networth go up at a faster rate than if you had a mortgage? It did for me, I was able to buy rental properties and invest more in other things. Right now I'm am able to invest about 40k a year since paying off my mortgage.
Couldn't agree more with the comment posted earlier... No investments are guaranteed but having a home mortgage free is priceless! Amen! Pay off your home and if you lose your job... peace of mind!
My highest impact as an investor after few losses was when i started looking more critically on how professionals manage risk over generations, not seeking the instant gratification of a temporary dopamine kick
Just recently got laid off and it feels like i'm beginning from the scratch, i have been researching on investing and I came across an investor on an internet radio who mentioned making well over $450,000 in 3months with an investment of $230,000 I'm a beginner and i really would appreciate any insight or clue on how to make good results
@Doctor Professor Pablo I find she is licensed by authoritative bodies, I will be writing her mailbox shortly. I love how she presents herself on her website, I knew I could find reliable brokers. God bless you
I work in finance and owned 3 houses which are all paid off. I know I can make more money if I put the money in the market instead of paying off the mortgages. But with my wife wanting more security (in case of losing our jobs with having 2 young kids in our family), we paid off all our houses. Without mortgage payments, we can max out our ROTH 401K and ROTH IRA every year and also put money in the stock market each month. We planned to retire at 50. Either way, you can be very well off financially if you learn how to manage it.
Ramsey doesn't say to pay off the mortgage first before investing, excessive investing, or buying crypto. He says 25% of your income to the mortgage, 15% to investments(401k,mutual funds). Then do what ever with the rest. The vast majority of millionaires, don't have a mortgage payment.
Sold our out of state rental last year and paid off our main home. It is "Peace of Mind" for sure and no more rental headaches. Using the mortgage money saved to invest but we are close to 50 and felt like the right thing to do. And yes, used to listen to Dave Ramsey all of the time, not so much anymore. He always advised to sell out of state rentals because "they could be servicing their motorcycle on your living room carpet". We were lucky and had good people as renters.
Managing money is different from accumulating wealth, and the lack of investment education in schools may explain why people struggle to maintain their financial gains. The examples you provided are relevant, and I personally benefited from the market crisis, as I embrace challenging times while others tend to avoid them. Well, at least my advisor does too, jokingly
Investors should exercise caution with their exposure and exercise caution when considering new investments, particularly during periods of inflation. It is advisable to seek guidance from a professional or trusted advisor in order to navigate this recession and achieve potential high yields
Through closely monitoring the performance of my portfolio, I have witnessed a remarkable growth of $508k in just the past two quarters. This experience has shed light on why experienced traders are able to generate substantial returns even in lesser-known markets. It is safe to say that this bold decision has been one of the most impactful choi
The adviser I'm in touch with is *CAROLINA MELINA PHERSON* she works with Merrill, Pierce, Smith incorporated and interviewed on CNBC Television. You can use something else, for me she strategy works hence my result. She provides entry and exit point for the securities I focus on.
I’d pay off the mortgage just because it is a solid universally recognized asset that will always have a solid value, even if it does drop a bit. It is true freedom with a solid asset to your name
Good video, very informative. There is a huge feeling of relaxation knowing the mortgage is paid off. Also i recommend paying off the mortgage before retiring.
What should you do with discretionary income? A. invest in stock market B. invest in bitcoin C. pay off mortgage D. all the above Why can’t someone go with option D? Everyone gets so hung up on selecting the right answer. You can do “all the above” and still win in life.
*Impressive! your potential seems limitless* I'm fascinated by investing, How can I invest *$200K* sitting around doing nothing in the bank and what sector do you recommend getting into?
TH-cam has been helpful to many in making financial decisions but it's not enough as most people don't understand just by watching tutorials. Its advisable to work with a Financial Consultant with high-level investment experience for positive results
I'm glad I came across this recommendation. My wife and I invests with her too. We knew how to earn and spend but when it came to financial planning we were novices. working with her remains one the best decision we made
The journey to financial independence begins with a step and proper assistance. I understood this working with Phoebe, started investing with her some years back that was the best thing I did for myself and now success feels easier than I taught. You can do all the due diligence you want, yet it all comes down to who you invest with
Great video. Thanks. I follow Dave and agree with him for the most part. The big thing that many folks ignore is the factor of “age”. The older you are, the less risk you are (or should be) willing to take. Retiring with ANY debt, including your home, is setting yourself up to stumble. Most financial woes are due to people overextending their lines of credit and are then unable to deal with life’s inevitable circumstances. So “debt free” is never a bad spot to be in.
Agreed. Younger people view time and age differently from older folks. I'm 52. I'd like to have my home paid for before I retire. There is the peace of mind that - come-hell-or-high-water - you have a place to call yours. Making mistakes and starting over is an option for a person in their 30's. That option goes away - the older you get.
@@WhiteBoardFinance and if you rent that cost is still paid somewhere in the mix by the tenant. So getting rid of the largest portion of most people cost of living(the actual real estate cost) as quickly as possible is a good thing, right?
There is no feeling compared than not having a monthly mortgage payment. I know what it is. You will still have property taxes but you have something priceless and now you can invest more and even if you lose money you won’t worry about it.
Love the content. I split the baby. I invest about 25% of my gross salary, but I’m also paying enough extra on my mortgage to pay it off by the time I turn 50 when I can retire. If I don’t need to pay a mortgage, I wont need to draw as much from my retirement accounts.
Another factor that people should take into account is where you live. Me living in South Africa, interest rates are SUPER high, but house is cheaper than what the same house would cost for eg. in the USA, but our salaries are lower. Our cost of living is cheaper. So for me, a house bond (as we call it) interest rate is around 7-8% on average depending on your credit score. Car loans are even higher and some personal loans can go up to 30% and higher. So for me, personally, I see more value in paying off my debt as fast as possible and then investing with the money I am saving, due to to interest amount being paid being almost double than what you paid for the house after 20 years. Same with my car, I bought it for R135 000 (Rand) and my repay amount with interest was if I remember correctly R250 000 (rand).
@@Macrike If your typical policy does not cover those, you can buy separate policies that offer those types of endorsements (e.g., hurricane, etc.). If you own a house free and clear, that's the route you'll want to go!
Good take on this subject, Marko. I'm with you on finding the "golden middle". Paying your regular monthly mortgage bill while also investing in a dedicated growth portfolio can be a great way to realize the benefits of cheap mortgage rates as well as the current bull market. Over time, the balance on the mortgage will approach the value of the growth portfolio, and when it does you can liquidate the fund to pay off the mortgage (after taxes). It may take several years to accomplish this goal, but it lets you take advantage of market gains while saving a significant amount of mortgage interest.
If you told someone go back in time to 2012 and invest instead in the s&p500(very basic index fund) vs paying off the house aggressively 99.99% of people would invest instead. You can even go back to 2008 during the crash and people would still rather invest
@@abrahamflores2566 Based on hind sight yes. If you ask the same person to rather go back to March 2020 and invest instead of paying of their house, 100% of people will pay off their house. Same shit.
@@phillipkleopas7230 the point being that the average 10-15% return per year creates alot more wealth early on if you keep the mortgage vs paying it off and then investing
@@abrahamflores2566 That's really simplifying the matter. That investment could have been wiped out during the March 2020 market crush or any other market crush. Also, sometimes the returns you make on the investment is not sufficient to compensate for the interest expense you could save if you pay off the mortgage early. E.g if my mortgage payment will reduce by 25% if I pay it off early, it will only make sense to not pay it off early if I make a risk free investment that will earn me atleast 25% over the same period. Key things to consider are therefore: 1. Risk associated with investment 2. Savings on finance charges due to early settlement of the mortagge 3. Savings on mortgage vs return on investment
Millions of men all over the world regret pay off the house...once the house is paid off the chances of divorce is higher.. and they get kicked out of that house they paid for.. eventually
I'm on the conservative side and want to pay off the house as quickly as possible; maybe I've been a bit too aggressive with it but I think keeps me from spending frivolously.
I’m in the same boat! Here in UK there are hardly any 30 year mortgages, most take out 2year fixed rate. I choose to pay off as much as I can whilst on a low rate to lessen the burden if rates skyrocket (on a 10 year fixed).
I have a paid off home and it's amazing. The peace of mind at least for me has far outweighed what I could potentially make in the future. It goes well beyond money though. I'm more generous, more laid back, much healthier, sleep a solid 8 hours and have an increased sense of well being. Even during the lockdowns and layoffs, I didn't have to worry about money even if I did lose my job. WHen I still had a mortgage, I always had low key stress. Now my stress has been reduced to almost nothing.
We just bought a house for the second time (at 2.375% this time) and somebody suggested to us making a payment every other pay period, resulting in 13 payments a year instead of 12. It’s slow but can in our case would shave off three years. Add a big payment from the equity of our current house and it will be gone pretty quickly. And this is done on top of investing 20%+ of our wages.
one of the best things I ever did was take profits from high risk investments and pay off my mortgage. Now I can be way more flippant with jobs and be a little bit more free. Nothing more freeing than being able to take a few months off just because you want a break.
I do both. I split equal amount for investing and extra principle payment each month. Not sure why people attack anyone who pays off their home rather than invest. Do what you are comfortable with and gives you sleep at night.
Great video! My opinion and belief- The problem is our wages AREN’T growing along inflation! So that’s where the wrench is getting thrown at that will screw us like it does most countries
I think you should ask the question: Do you like your home? If you are going to live in your home, not just a house, but a home you enjoy. Not just some house in a neighborhood full of people you don’t know, but the place you want to retire and invest your time into, then taking that liability off the balance sheet is worth more than some dividends may pay.
@@WhiteBoardFinance 100% also i agree with what your stating in your video. however, i would say that the advice is for a small 5% of people. Everyone else arent as responsible enough to invest in things giving a higher return. Hence being debt free is better. I would at least say if everything in a persons life is paid off and only the mortgage is left, then theres wiggle room to invest while making the mortage payments.
LOL that beginning was hilarious. People get very upset on either side in these arguments without thinking about the fact that either way you are doing better financially than a large majority of people.There is definitely peace of mind and personal reasons why people want to pay off a mortgage. I am doing a bit of both, mostly investing and growing income but still paying down the mortgage a bit each month too. Since the majority of my extra income goes toward investing I'm happy with the decision and don't feel like I'm missing out but still can hedge my bets a bit with kids and unstable income.
The crowd that watches and believes in in Dave Ramsey is a different crowd. Not everyone is bad with managing money and need grandpa dave to hold their hand and tell what to do with their money. Simply just look at what kind of job you have and the risk of losing it. If you work in a field where your income flucuates then yeah pay down more of you house or keep a higher amount in an emergency fund and invest the rest. There is more than one way and more than one philosophy of managing your money. Dave just keeps it real simple for the average person yet also someone becomes more financially savvy then they can graduate from Dave's teachings. Dave's business, brand, and persona is built on his teachings. Even if Dave believes in something else it's going to affect his business and brand if he speaks honestly. At the end people should do what they feel comfortable with; some people are more comfortable with more risk. There is also a risk of your home depreicating in value due changing conditions in the market, neigborhood, or social impacts. So if times are hard someone could end up selling a house for lost. Look at the housing crisis in 2008. The crisis might not happen like it did in 2008 but homes right now just might be overpriced and there could be a pull back on pricing.
Brah, all jokes aside your Dave Ramsey voice was hilarious!! This just made my day. I love binge watching your videos!! 🤣🤣 Gain my wisdom with laughter!!
We paid off our home in 7 years. If we invested that portion we would be FIRE by now. Now we've redrawn all the available equity from the house and are investing it into the share market.
I'm 57 yrs old and am conflicted whether to pay down my 2.125% mortg. Or invest. So I've set my goal to pay extra toward my mortg and max my Roth and HSA. My goal is to pay in full by my retirement 8-10 yrs. Always enjoy ur videos and financial learning in general. Thank u!
Asked the millions of families that lost their homes in "07"-"08" what's the better choice, it's not just about spread sheets and Interest, it's more of risk management always going to need a roof over your head, I have 12 months left on my house I'm 46, have full funded roth since 25, could of made a killing in last 10 ys with the extra principle payments I put on home ($164000), in last 10 yrs made 16%on roth my mortgage is 3.4%, so on paper I totally screwed this up but in 12 months I could go work at mc d's parttime and still be perfectly fine, I'm out this paying shit your whole life, not me, did the D Ramsey plan and just about at finish line
I wanna be you when I’m in my 40s! I do plan to move to a cheap COL area, get a modest home, and live modestly. I’d love to work somewhere for fun (like when I was a teen, I worked because I liked it, never spent the $ cause college savings -btw, regret didn’t have a Roth IRA then). I just need $1000 a month for spending money, plus whatever property tax and house and car insurance (and health insurance) costs… so $4000? Lol. But also :.(
I look at it using a different perspective. In my country, If I take out a 1 mil 20 year mortgage at 7.5%, I will pay a total of 1.9 million over 20 years. If I pay off the mortgage over 10 years instead, I will only pay 1.4 million, hence saving 500k in interest (50% saving on capital). In my view, unless there is a risk free investment that will make me that amount of money at a 50% rate of return, I will rather pay off my mortgage. I don't know if any low risk investment that will give a 50% return in 10 years.
@@Jumpman67 how homie above me said its funny cause dave ramsey allows no debt at all. Thats not true, he wants you to pay it off yes in baby step 6. But he allows you to take out a mortgage
Dave is ok with buying a house, as long as its doesn’t exceed more than 25% of your monthly take home, a minimum down payment of 20% and nothing more than a 15 year with a fixed rate mortgage.
I like Marko's advice about doing both - paying off the primary house and invest as much as you can. You also have to consider that most people would not take the extra money a 30 year gives you over a 15 year to invest. I know I would probably look at it and say "I'll just invest some of it." I went with the 15 year as we plan to retire shortly after and downsize the house. Yes, investing the same money over time will give you more than paying off a mortgage today. But, peace of mind is better in my eyes. Also, my house just made me 25% last year with appreciation vs only 18% on my investments. Some years you win and some you lose.
I'm sure that Mike guy is ecstatic that he kept his money in bitcoin instead of paying off his mortgage. Everyone compares actual returns of paying off mortgage to perceived returns (often quite high, even 10% or so), but they should be comparing them to risk adjusted returns like bitcoin for this example, which is down about 50% since this video was made. Now I agree that even with risk adjusted returns, if your mortgage is only 2.5% (assuming it's fixed rate not adjustable) then investing in a diversified portfolio still makes mathematical sense, but math misses out on 2 behavioural factors. One, you will probably invest more into paying off your house as there's a clear end goal and two is once you do pay off your house, you will likely see a decrease in stress levels overall which in turn will help your regular life as well as career.
Good video and I understand the point. However, don't overlook the very human need for peace of mind. I went into retirement with zero debt and a pretty good (multi-million $) nest egg. I understand the opportunity cost of not investing the money I used to pay off my mortgage but I sleep very well at night knowing that if everything blows up and my financial assets drop to nothing, i will still have a roof over my head.
Great video! The mathematical side assumes people know how to invest their money i.e. they don't make unreasonable investments or worse don't invest at all. Therefore, it is probably more viable for a person to pay down their mortgage. It's like large companies with a lot of cash on the balance sheet making bad acquisitions or not using the cash at all.
I just do both. My mortgage on a fixed rate is $915 a month and I pay $1060 each month. Then I take some extra cash and invest. Not a bad idea to fall somewhere in the middle. $72k left on my mortgage and a $400k plus networth at 36. I won't complain.
Because of my age, I’d pay it off today so that I can be debt free during retirement to be honest feeling secure supersedes making more money but if I were any younger it’ll probably be different situation
One thing that people miss to consider when comparing mortgage interest rate with S&P 500's yearly returns is how much money you have to invest. For ex. if you have 20K invested and u getting 8% average per year that's only $1,600 per year.. but if you have a 2.6% interest rate on a 250K 30 yr mortgage that's about $6,500 per year paid in interest. So, if you want to really even out, you would need that much amount invested to ATLEAST make your interest cost back in stock market returns.
For me, it will depend on my life stage. Right now in my late 20s, with interest rates so low, I’m making minimum payments on my mortgage and another loan (with the exception of credit cards) to invest as much as possible. As I near retirement age, it would probably be nice to have a paid off house. In my adult life, I had zero debt for a number of years but I leveraged debt for a better future and I’m content with my choices. I can handle the psychological aspect of owing money because I have safety nets. I listened to Dave for many years growing up and he has a great way to get out of debt. But sometimes, it makes sense to take out education loans or not pay off your mortgage early.
I have been aggressively paying down my mortgage since we went into lockdown in March 2020. I am looking forward to the tranquility of mind that paying off the mortgage will give me! I also invest because both have to be done when you are seeking financial freedom.
Solid content, thank you! Looking at switching to a first lien position HELOC on my primary residence, then pay it down until I've got enough available credit to buy an investment property, rinse, and repeat. You can pay extra on your house and still maintain the liquidity to convert your progress into an income producing asset.
If my wages went up with inflation I could see your point. When I was truck driving I had the privledge of meeting an experienced gentleman that worked for his company for 15 years! No accidents, no violations. He was making 50 cents a mile (not the worst but not the best) and bragged about it. I was a fresh couple month working driver making the same amount. A man with his experience could easily be making 65-75 cents per mile but companies will screw over anyone they can to get a profit. (For calculations a driver averages about 3,000 miles a week)
When will your school launch? I love your videos. I swear that bit of humor helps keep the subject digestible. You’re very unique in these TH-cam streets😎
I have a 15 year @ 2.25%. I was happy to refinance that when I was 7 years into a 30 year last year @ 3.25%, since I was clearly going to save on interest by cutting down the time. At this point, I do not plan to prepay anything above the payment. I feel like this gives me the best balance between investing and paying off.
sure, but what did it cost you to refinance? the costs, fees must be taken into account... there is no such thing as a free lunch. I looked into a refi for my 3.2%... to get it to a 2.7% would have cost me 12 grand... which actually wiped out the savings added up per month over the additional time added.
@@renaissanceman5847 Did you shop around? That sounds extremely high. I will not pay more than 1k, no matter what. I don't care how they make up for that difference, escrow not waived or higher interest than what I qualify for. Anyway, my cost on the refi was $0. It was all lender paid, but escrow required. At the end of the day, I knew what I was paying, because I know how to look at the disclosures and loan estimates, to not be fooled by what I will pay out of my pocket (or them sneaking it back into the loan's principal). As a matter of fact, Better is currently offering 2k American Express credit, so if your costs are less than 2k, you come out ahead. I am talking about all closing costs, not just government fees. So origination, points and all junk fees. At the end of the day, it is simple math. Total Closing costs minus Prepaids.
@@speedpakify Agreed, that seems high, while I did refi from a 3.2 to a 2.1 over 30, it cost ~$1300. Perhaps the difference is the loan product? I did a VA loan.
@@MechE11B funny thing, I did another refi last year before rates really shot up. This time I ended up with 2.15% for 15 year, with Better Mortgage, and made $400 due to their Amex statement credit of 2k for closing with them. You have an excellent rate for 30 year loan btw!
Watched a lot of videos on this topic to include DR and you answered all of my questions in a down to earth kind of way. I now know exactly what to do with my mortgage. I like that “golden middle.” Thanks!
I do exactly the same thing. I land somewhere in the middle. I pay a bit extra on my mortgages but I am not all in on early payoff. However, I am really interested in a discussion about paying off the home you occupy. To me the home you live in carries more personal risk than the investment properties. (opposite of how the bank see's it)
Paid off my mortgage back in March... took 7 years of discipline but still was able to grow my 401K and brokerage account while doing it... its not all about just dumping every penny into paying it off... haven't regretted paying it off early and wont regret it over the next 23 years of time I would have been paying if I only paid the minimum. Now I can really attack growing my Brokerage account to be able to retire at age 50 at the latest (6 years from now).
The best answer to this question is never the extreme of one or the other but a combo / “ balance” of: 1. Invest 2. Pay down further mortgage 3. Set some aside for liquid cash The ratio depends on where your portfolio is currently at. Everybody’s ratio may be slightly different.
Dave gets people who should be middle class to stop making profoundly dumb decisions that keep them poor. No one is going to get rich listening to Dave, but at least they probably won't default on their mortgage. Some people just can't handle using debt to leverage their investments without blowing it all on handbags and cars.
So many people have gotten rich on Dave's method 😂. You may not agree with all he says but you can't deny that a lot of people have become millionaires following his advice
I recently heard Robert Kiyosaki comment that Dave Ramsey, his friend, only advises his listeners to pay off their mortgage because the common person doesn't usually have much of an appetite for risk, hence, recommending the psychologically appropriate solution while not necessarily being the financially appropriate one. Like you reference, I believe it's a blend between the two and one's own circumstances and preferences.
Love the into! The problem with taking out a loan is that most people don't invest the extra money. They end up buying junk they don't need to impress people they don't like. So in my opinion if you know yourself and you know your disciplined enough to invest, then take out the loan. If your not, then pay off your mortgage early. Dave's plan typically works well for people who aren't disciplined.
In Mexico they want to implement a plan where you can take the cash of a mortgage loan in the hopes that you would build a better House for less yourself, what I think is really gonna happen is FEW people will do the homework and build a better cheaper house and MOST people will just spend half on stupid shit and build a half assed two rooms structure.
Lack of financial/investment education had me payoff my house last year. In a hindsight, I’d be a millionaire now if I was two invest payoff amount in Tesla or BTC. But we’re all investment geniuses in a hindsight. On a positive note, I’m debt free at 35. To each it’s own would be the most appropriate comment to your video
I'm splitting the difference: 15yr, 2.5% mortgage and maxing out 401k, anything left over each month is an extra payment on the mortgage. Now it's just about finding a good side hustle as a developer to make a ton of extra money and retire early!
How about a bit of both? Not everyone's goals is to be a millionaire but to secure financial independence and one huge step to succeed is to pay off a mortgage.
I need to take Finance again 🤣🤣🤣🤣 very informative.. thanks for your time! Why i was crying laughing at your Dave impersonation!! Spot on!! Lmbo better than I deserve
The home prices in Canada are insane. I doubled the value of my house in 4 short years. I now have $560,000 in equity and my current mortgage rate is 1.98% locked in for 5 years. We are not paying down the mortgage but buying a couple properties to sit on for a few years. Using the banks money to make money not my own.
The problem is the physiological one you mention. Most people will spend all the money in their paycheck before it gets to the investment. For the disciplined invenstor, the numbers make sense, but for the majority they will do better by getting the guaranteed ROI of paying down / off the mortgage.
Marko. Your video hits the nail on the head. Unfortunately for me, I can pay off my $350k mortgage easily with my portfolio. And I fear my portfolio may melt away from wealth distribution by our lawmakers. Stated clearly, should I pay while I still have the means to do so? If my portfolio drops $300k in two years but I could have amortized today then I should have done it. It is emotional Fighting the logic. I have 2.25% apr. And Phoenix appreciation is stellar. At 73, I can see your point easily. So I do not disagree . I think Ramsey deals with people sans financial background.
It all comes to risk tolerability. I have too much responsibility to risk on additional investing. My wife and I invest 15% of our annual salary to our retirement accounts, we have $200k in 529’s, and soon additional income from the sale of our rental properties. It works better for us to have no debt.
I think for most folks whose primary income is a job, it makes sense to achieve the security of having no mortgage to worry about. Yes, it's emotion vs math and I tend to side with math but in this case there are immense emotional benefits. The PEACE (as you say) of mind of not having a mortgage and been able to withstand losing your job (primary form of income for most) is super liberating. I am in the middle, as you are, building a portfolio of passive income that is still not more than what I make in my job but I also have an insanely low rate and a 15 year mortgage to start with (those make even less sense to pay off as they already have accelerated amortization schedules). As such, instead of paying the mortgage too early (I am targeting to pay off in 11 years total), I invest what I would be otherwise using to pay down the mortgage in an account used exclusively for trading options with The Wheel Strategy. But again, for most people like when my family asks for my opinion, I just say "pay it early if you can".
I like the way Dave Ramsey puts it. "Why would borrow money to invest?" That's why I am in the pay off the house as fast as you can camp. After I am done paying off this house it will become a rental and I'll get another.
Can’t agree more. I have 2 houses in the SF Bay Area already paid off and debt free. Money keep piling in as long as I have a job and no payments on anything.
Love what you have to say about finding a middle ground! Unfortunately historically low mortgage rates has led to historically high market prices! So families are taking on mortgages in the past they could never afford, and if they do happen to lose their job or a health crisis happens, they are stuck with mortgages they can no longer afford. It’s a good idea to pay off the mortgage sooner than later, while investing in my opinion
I paid off my mortgage at 31. From a strictly returns standpoint stock market is a better investment. From a more money now, not waiting till retirement, from not worrying about paying bills, from the freedom that zero debt gives you paying off the mortgage early is the better plan. I’ll also add I’ve never heard ANYONE with a paid off house they regret it. The only people saying paying off your house is a bad idea are people with mortgages. Survey people with no mortgage you’ll find the real answer.
I'm torn between paying off the house early and investing aggressively. The house is our only debt. Valued at $910k, remaining mortgage $250k @ 3.75% fixed with 20 years left. I'm trying to pay it off in 5 years with just paying more towards the principal while maxing out Roth contributions. Wondering if I should refi to a 15yr or 10yr mortgage with a lower interest rate and concentrate on aggressive investing. I'm married in my mid 40's with 3 older kids. I love the idea of having a paid off mortgage and the peace that comes along with that as mentioned in your video. Any advice?
bUt iNfLaTiOn iS tRaNsItOrY. I stopped paying my mortgage early. I have a 3% mortgage. I think as long as I have a 12month emergency fund, i'm okay. great video as always Marko.
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*If you could pay off your mortgage today, or take that same amount of money and invest it, what would you do? (Let's share this video and get it to 10,000 likes!)*
Pay it off and invest the same amount I was paying towards the mortgage.
I'm 32 and been mortgage free for over a year now. The calculations make it clear you'd "make more" by investing that money but I've always been pretty conservative on my investments.
Barely bought a little first home, paying the normal mortage and investing extra extra.
I have a question Marko what If we are staying in US temporarily for 5-6 years And paying 2100$/ mnth as Rent ( $25k/year🥲).
Should I go and Buy a house or stay in a rented apartment? And what if after 5 years I am still making payment for my house and I have to move back in that case what can I do?
@@shivarally6171 either find a cheaper apartment or be willing to keep that money wrapped up in a house after you leave.
90% of people don't use the extra money to invest, they just use it to go out to dinner or buy new cars, so for the majority of people - they should pay off their mortgage early!
That’s the main advantage of paying off your home. When you have a bunch of money sitting in your bank account, it burns a hole in your pocket and can be spent when you are going through a vulnerable time. Relative just passed away? YOLO and buy a new car or take an expensive vacation.
Interesting , the stock market is currently experiencing a decline while bond yields are on the rise. However, there seems to be skepticism amongst investors regarding the Federal Reserve's plan to continue increasing interest rates until inflation is stabilized. As for myself, I find myself at a crossroads, uncertain whether to liquidate my $250,000 stock portfolio. I'm seeking advice on the best strategy to capitalize on this current bear market.
We paid off our house 12 years ago following the Dave Ramsey plan. I have never regretted paying off the mortgage. The top two benefits are: 1. Not concerned when a black swan event happens and the economy drops and companies lay off workers 2. Increases cash flow to invest.
Now I have more knowledge about personal finance. I just subscribed to your channel. Big ups to everyone working effortlessly trying to earn a living while building wealth in this recession. I’m 45 and my husband is 51, we are both retired, no debts. We are planning on relocating to Thailand. We are currently living a frugal and financially savvy lifestyle and generating passive income even during this recessionary period. Our commitment to saving and investing in the financial market has enabled us to maintain this lifestyle and continue earning monthly passively through investment!"
Congratulations on your early retirement, Interesting indeed! Currently, I am in dire need of investment advice or tips. Last year, I hesitated and failed to take any action until the year concluded. However, this year, I am determined to try something new, as I am very receptive to various investment ideas. I want to be retired in my forties or fifties.
No problem at all! If you're seeking to earn substantial profits from your investment, I would suggest determining your investment horizon and implementing a long-term plan. I worked with Nolan Velden Brent to create a long-term investment strategy, and he assisted us in managing our investments while we focused on my jobs without any concerns.
Thank you for your advice. It's challenging to find a reliable investment advisor here, and I appreciate your input. Seeing the successes you've achieved through investing, I would love to have access to your investment advisor's information if you wouldn't mind sharing it.
I work with **Nolan Velden Brent** ,who is based in the United States. If you would like more information about him, you can conduct a search online. He even got featured on CNN recently.
Thailand is really a nice comfy plan to retire. Working with a skilled financial planner can be compared to having a mentor in the field of finance. I used to struggle to invest on my own and ended up losing money, but things changed once I started working with *Nolan Velden Brent* . He played a pivotal role in helping me improve my financial situation. Previously, I relied solely on my job and salary for income, but now I have found ways to generate additional income with ease, which has allowed me to leave traditional employment. Nowadays, I believe that investing is not a choice, but a necessity for anyone who desires financial independence and a good quality of life.
Paying off my mortgage was the smartest move I could have made. My peace of mind went through the roof and it freed up a lot of capital to go invest with. I would recommend it to everybody definitely for psychological reasons, regardless of the math.
Agree with you completely. I'm mortgage free at 27 and the peace of mind I have for the future is insane
Yeah, especially if you work for a company that pays into a retirement fund for you. The place I’m employed pays 8% of salary into your retirement as a benefit and profit shares another 6-8% depending on financial results. With that dynamic paying down my mortgage ASAP makes sense.
I agree, I’m letting my investments set for now as I pay off my house.
GREAT beginning! Paid it off 11 yrs ago, never looked back. Once paid off I started having real money for other investments. I sleep real well. Like DR says…” if you have a paid off house would you borrow money against it to invest?” Me? Oh no
Same here. Did you find your networth go up at a faster rate than if you had a mortgage? It did for me, I was able to buy rental properties and invest more in other things. Right now I'm am able to invest about 40k a year since paying off my mortgage.
Couldn't agree more with the comment posted earlier... No investments are guaranteed but having a home mortgage free is priceless! Amen! Pay off your home and if you lose your job... peace of mind!
My highest impact as an investor after few losses was when i started looking more critically on how professionals manage risk over generations, not seeking the instant gratification of a temporary dopamine kick
An absolute point...
Just recently got laid off and it feels like i'm beginning from the scratch, i have been researching on investing and I came across an investor on an internet radio who mentioned making well over $450,000 in 3months with an investment of $230,000 I'm a beginner and i really would appreciate any insight or clue on how to make good results
@@tequiladrops2269
well you didnt have to be mean about it. It is a good time to buy in on stock, so just buy in on stocks and dividend.
@Doctor Professor Pablo I find she is licensed by authoritative bodies, I will be writing her mailbox shortly. I love how she presents herself on her website, I knew I could find reliable brokers. God bless you
@@tequiladrops2269 did that investor tell you to bet on red or black?
I work in finance and owned 3 houses which are all paid off. I know I can make more money if I put the money in the market instead of paying off the mortgages. But with my wife wanting more security (in case of losing our jobs with having 2 young kids in our family), we paid off all our houses. Without mortgage payments, we can max out our ROTH 401K and ROTH IRA every year and also put money in the stock market each month. We planned to retire at 50.
Either way, you can be very well off financially if you learn how to manage it.
Ramsey doesn't say to pay off the mortgage first before investing, excessive investing, or buying crypto. He says 25% of your income to the mortgage, 15% to investments(401k,mutual funds). Then do what ever with the rest. The vast majority of millionaires, don't have a mortgage payment.
@x Check Ronald J. Read...He was a janitor and made $8 millions.
Sold our out of state rental last year and paid off our main home. It is "Peace of Mind" for sure and no more rental headaches. Using the mortgage money saved to invest but we are close to 50 and felt like the right thing to do. And yes, used to listen to Dave Ramsey all of the time, not so much anymore. He always advised to sell out of state rentals because "they could be servicing their motorcycle on your living room carpet". We were lucky and had good people as renters.
Managing money is different from accumulating wealth, and the lack of investment education in schools may explain why people struggle to maintain their financial gains. The examples you provided are relevant, and I personally benefited from the market crisis, as I embrace challenging times while others tend to avoid them. Well, at least my advisor does too, jokingly
Investors should exercise caution with their exposure and exercise caution when considering new investments, particularly during periods of inflation. It is advisable to seek guidance from a professional or trusted advisor in order to navigate this recession and achieve potential high yields
Through closely monitoring the performance of my portfolio, I have witnessed a remarkable growth of $508k in just the past two quarters. This experience has shed light on why experienced traders are able to generate substantial returns even in lesser-known markets. It is safe to say that this bold decision has been one of the most impactful choi
The adviser I'm in touch with is *CAROLINA MELINA PHERSON* she works with Merrill, Pierce, Smith incorporated and interviewed on CNBC Television. You can use something else, for me she strategy works hence my result. She provides entry and exit point for the securities I focus on.
I’d pay off the mortgage just because it is a solid universally recognized asset that will always have a solid value, even if it does drop a bit. It is true freedom with a solid asset to your name
But that you have to annually pay taxes and land rates on, and can lose it if you don't.
Good video, very informative. There is a huge feeling of relaxation knowing the mortgage is paid off. Also i recommend paying off the mortgage before retiring.
What should you do with discretionary income?
A. invest in stock market
B. invest in bitcoin
C. pay off mortgage
D. all the above
Why can’t someone go with option D? Everyone gets so hung up on selecting the right answer. You can do “all the above” and still win in life.
Agreed and as mentioned in the video
*Impressive! your potential seems limitless* I'm fascinated by investing, How can I invest *$200K* sitting around doing nothing in the bank and what sector do you recommend getting into?
@yung I'm interested and need to start now. If you don't mind how can I get in touch with your financial consultant?
TH-cam has been helpful to many in making financial decisions but it's not enough as most people don't understand just by watching tutorials. Its advisable to work with a Financial Consultant with high-level investment experience for positive results
I'm glad I came across this recommendation. My wife and I invests with her too. We knew how to earn and spend but when it came to financial planning we were novices. working with her remains one the best decision we made
The journey to financial independence begins with a step and proper assistance. I understood this working with Phoebe, started investing with her some years back that was the best thing I did for myself and now success feels easier than I taught. You can do all the due diligence you want, yet it all comes down to who you invest with
Great video. Thanks. I follow Dave and agree with him for the most part. The big thing that many folks ignore is the factor of “age”. The older you are, the less risk you are (or should be) willing to take. Retiring with ANY debt, including your home, is setting yourself up to stumble. Most financial woes are due to people overextending their lines of credit and are then unable to deal with life’s inevitable circumstances. So “debt free” is never a bad spot to be in.
Agreed ty sir
Spot on. Try not to retire with debt. Though I know a few people who sold their homes and rent during retirement who are living the high life
Agreed. Younger people view time and age differently from older folks. I'm 52. I'd like to have my home paid for before I retire. There is the peace of mind that - come-hell-or-high-water - you have a place to call yours. Making mistakes and starting over is an option for a person in their 30's. That option goes away - the older you get.
It’s literally never yours. You’re renting from the municipality via property taxes unfortunately
@@WhiteBoardFinance and if you rent that cost is still paid somewhere in the mix by the tenant.
So getting rid of the largest portion of most people cost of living(the actual real estate cost) as quickly as possible is a good thing, right?
There is no feeling compared than not having a monthly mortgage payment. I know what it is. You will still have property taxes but you have something priceless and now you can invest more and even if you lose money you won’t worry about it.
Love the content. I split the baby. I invest about 25% of my gross salary, but I’m also paying enough extra on my mortgage to pay it off by the time I turn 50 when I can retire. If I don’t need to pay a mortgage, I wont need to draw as much from my retirement accounts.
Another factor that people should take into account is where you live. Me living in South Africa, interest rates are SUPER high, but house is cheaper than what the same house would cost for eg. in the USA, but our salaries are lower. Our cost of living is cheaper. So for me, a house bond (as we call it) interest rate is around 7-8% on average depending on your credit score. Car loans are even higher and some personal loans can go up to 30% and higher. So for me, personally, I see more value in paying off my debt as fast as possible and then investing with the money I am saving, due to to interest amount being paid being almost double than what you paid for the house after 20 years. Same with my car, I bought it for R135 000 (Rand) and my repay amount with interest was if I remember correctly R250 000 (rand).
No investments are guaranteed but having a home mortgage free is priceless!
Until something happens to the home.
@@Macrike then you still have the mortgage 😂
@@Macrike Like what? Burned down or hit by a tornado? That's what your homeowner's insurance policy is for!
@@Darwinq84 Most home insurance policies don’t cover common natural disasters.
@@Macrike If your typical policy does not cover those, you can buy separate policies that offer those types of endorsements (e.g., hurricane, etc.). If you own a house free and clear, that's the route you'll want to go!
Brother listen here, that cold open was so absolutely fantastic that no matter the content that follows I'm liking this video🤣🤣🤣
Good take on this subject, Marko. I'm with you on finding the "golden middle". Paying your regular monthly mortgage bill while also investing in a dedicated growth portfolio can be a great way to realize the benefits of cheap mortgage rates as well as the current bull market. Over time, the balance on the mortgage will approach the value of the growth portfolio, and when it does you can liquidate the fund to pay off the mortgage (after taxes). It may take several years to accomplish this goal, but it lets you take advantage of market gains while saving a significant amount of mortgage interest.
I have yet to find someone regretting to paid off his house 🏡.
If you told someone go back in time to 2012 and invest instead in the s&p500(very basic index fund) vs paying off the house aggressively 99.99% of people would invest instead. You can even go back to 2008 during the crash and people would still rather invest
@@abrahamflores2566 Based on hind sight yes. If you ask the same person to rather go back to March 2020 and invest instead of paying of their house, 100% of people will pay off their house.
Same shit.
@@phillipkleopas7230 the point being that the average 10-15% return per year creates alot more wealth early on if you keep the mortgage vs paying it off and then investing
@@abrahamflores2566 That's really simplifying the matter. That investment could have been wiped out during the March 2020 market crush or any other market crush.
Also, sometimes the returns you make on the investment is not sufficient to compensate for the interest expense you could save if you pay off the mortgage early.
E.g if my mortgage payment will reduce by 25% if I pay it off early, it will only make sense to not pay it off early if I make a risk free investment that will earn me atleast 25% over the same period.
Key things to consider are therefore:
1. Risk associated with investment
2. Savings on finance charges due to early settlement of the mortagge
3. Savings on mortgage vs return on investment
Millions of men all over the world regret pay off the house...once the house is paid off the chances of divorce is higher.. and they get kicked out of that house they paid for.. eventually
I'm on the conservative side and want to pay off the house as quickly as possible; maybe I've been a bit too aggressive with it but I think keeps me from spending frivolously.
I’m in the same boat! Here in UK there are hardly any 30 year mortgages, most take out 2year fixed rate. I choose to pay off as much as I can whilst on a low rate to lessen the burden if rates skyrocket (on a 10 year fixed).
I have a paid off home and it's amazing. The peace of mind at least for me has far outweighed what I could potentially make in the future. It goes well beyond money though. I'm more generous, more laid back, much healthier, sleep a solid 8 hours and have an increased sense of well being. Even during the lockdowns and layoffs, I didn't have to worry about money even if I did lose my job.
WHen I still had a mortgage, I always had low key stress. Now my stress has been reduced to almost nothing.
@@yavenay good work! Sounds like a great position to be in 🙂, I’m with you on that one.
I’d pay off the mortgage just because it is a solid universally recognized asset that will always have a solid value, even if it does drop a bit.
You cannot live in a stock portfolio can you?
Mortgage or Invest. Just do both....done. End of video.
Perfectly explained. You just retracted everything I learned in my first year college finance class.
We just bought a house for the second time (at 2.375% this time) and somebody suggested to us making a payment every other pay period, resulting in 13 payments a year instead of 12. It’s slow but can in our case would shave off three years. Add a big payment from the equity of our current house and it will be gone pretty quickly. And this is done on top of investing 20%+ of our wages.
Everyone should do biweekly payments like this, if their lender allows it
one of the best things I ever did was take profits from high risk investments and pay off my mortgage. Now I can be way more flippant with jobs and be a little bit more free. Nothing more freeing than being able to take a few months off just because you want a break.
I love that train of thought!! Exactly how I wanna live!!
Thank you for confirming my plans. We got some inheritance, and I've gone back and forth with investments vs paying down mortgage. We'll just do both
I do both. I split equal amount for investing and extra principle payment each month. Not sure why people attack anyone who pays off their home rather than invest. Do what you are comfortable with and gives you sleep at night.
Great video! My opinion and belief- The problem is our wages AREN’T growing along inflation! So that’s where the wrench is getting thrown at that will screw us like it does most countries
When I was a kid, my single mother made the house payment, car payment, and supported me while making minimum wage. Can't do that today.
The real problem
wages have been stagnant since the 80s essentially
@@EpicFinance Truth!
*Agree 100%. I found my peace of mind came with just going with a 15 year fixed instead of 30 in my forever home.*
I think you should ask the question: Do you like your home?
If you are going to live in your home, not just a house, but a home you enjoy. Not just some house in a neighborhood full of people you don’t know, but the place you want to retire and invest your time into, then taking that liability off the balance sheet is worth more than some dividends may pay.
Having a paid off home/car/loans/ etc.. Means GUARANTEED more money going in your pocket.
being debt free is a wonderful thing
@@WhiteBoardFinance 100% also i agree with what your stating in your video. however, i would say that the advice is for a small 5% of people. Everyone else arent as responsible enough to invest in things giving a higher return. Hence being debt free is better. I would at least say if everything in a persons life is paid off and only the mortgage is left, then theres wiggle room to invest while making the mortage payments.
@@daprinceomar It’s true most people aren’t that responsible or disciplined. Those who are, are what the Money Guy dubs “financial mutants.” 💰 🤣
LOL that beginning was hilarious. People get very upset on either side in these arguments without thinking about the fact that either way you are doing better financially than a large majority of people.There is definitely peace of mind and personal reasons why people want to pay off a mortgage. I am doing a bit of both, mostly investing and growing income but still paying down the mortgage a bit each month too. Since the majority of my extra income goes toward investing I'm happy with the decision and don't feel like I'm missing out but still can hedge my bets a bit with kids and unstable income.
Exactly
The crowd that watches and believes in in Dave Ramsey is a different crowd. Not everyone is bad with managing money and need grandpa dave to hold their hand and tell what to do with their money. Simply just look at what kind of job you have and the risk of losing it. If you work in a field where your income flucuates then yeah pay down more of you house or keep a higher amount in an emergency fund and invest the rest. There is more than one way and more than one philosophy of managing your money. Dave just keeps it real simple for the average person yet also someone becomes more financially savvy then they can graduate from Dave's teachings. Dave's business, brand, and persona is built on his teachings. Even if Dave believes in something else it's going to affect his business and brand if he speaks honestly. At the end people should do what they feel comfortable with; some people are more comfortable with more risk. There is also a risk of your home depreicating in value due changing conditions in the market, neigborhood, or social impacts. So if times are hard someone could end up selling a house for lost. Look at the housing crisis in 2008. The crisis might not happen like it did in 2008 but homes right now just might be overpriced and there could be a pull back on pricing.
The stock market isn’t a guarantee. Your paid off mortgage is guaranteed extra money in your pocket to invest worry free.
Brah, all jokes aside your Dave Ramsey voice was hilarious!! This just made my day. I love binge watching your videos!! 🤣🤣 Gain my wisdom with laughter!!
We paid off our home in 7 years. If we invested that portion we would be FIRE by now.
Now we've redrawn all the available equity from the house and are investing it into the share market.
I'm 57 yrs old and am conflicted whether to pay down my 2.125% mortg. Or invest. So I've set my goal to pay extra toward my mortg and max my Roth and HSA. My goal is to pay in full by my retirement 8-10 yrs. Always enjoy ur videos and financial learning in general. Thank u!
Asked the millions of families that lost their homes in "07"-"08" what's the better choice, it's not just about spread sheets and Interest, it's more of risk management always going to need a roof over your head, I have 12 months left on my house I'm 46, have full funded roth since 25, could of made a killing in last 10 ys with the extra principle payments I put on home ($164000), in last 10 yrs made 16%on roth my mortgage is 3.4%, so on paper I totally screwed this up but in 12 months I could go work at mc d's parttime and still be perfectly fine, I'm out this paying shit your whole life, not me, did the D Ramsey plan and just about at finish line
I wanna be you when I’m in my 40s! I do plan to move to a cheap COL area, get a modest home, and live modestly. I’d love to work somewhere for fun (like when I was a teen, I worked because I liked it, never spent the $ cause college savings -btw, regret didn’t have a Roth IRA then).
I just need $1000 a month for spending money, plus whatever property tax and house and car insurance (and health insurance) costs… so $4000? Lol. But also :.(
Absolutely brother. I think of it as an insurance policy.
And bitcoin is down 40k so you definitely made the right choice!
I look at it using a different perspective.
In my country, If I take out a 1 mil 20 year mortgage at 7.5%, I will pay a total of 1.9 million over 20 years.
If I pay off the mortgage over 10 years instead, I will only pay 1.4 million, hence saving 500k in interest (50% saving on capital).
In my view, unless there is a risk free investment that will make me that amount of money at a 50% rate of return, I will rather pay off my mortgage.
I don't know if any low risk investment that will give a 50% return in 10 years.
Dave Ramsey's advice is helpful to people addicted to using debt to support a lifestyle that is beyond their means.
Funny, one of his principles is having NO debt
@@AZTLANSOLDIER13 other than a mortgage. He clearly states this if you've payed attention.
@@johnjimmy1104 I think you're the one who needs to pay more attention. Baby Step #6 is "pay off the house".
@@Jumpman67 how homie above me said its funny cause dave ramsey allows no debt at all. Thats not true, he wants you to pay it off yes in baby step 6. But he allows you to take out a mortgage
Dave is ok with buying a house, as long as its doesn’t exceed more than 25% of your monthly take home, a minimum down payment of 20% and nothing more than a 15 year with a fixed rate mortgage.
I like Marko's advice about doing both - paying off the primary house and invest as much as you can. You also have to consider that most people would not take the extra money a 30 year gives you over a 15 year to invest. I know I would probably look at it and say "I'll just invest some of it." I went with the 15 year as we plan to retire shortly after and downsize the house. Yes, investing the same money over time will give you more than paying off a mortgage today. But, peace of mind is better in my eyes. Also, my house just made me 25% last year with appreciation vs only 18% on my investments. Some years you win and some you lose.
Agreed, totally a personal preference whether to pay off that mortgage. Love the breakdown here though, very simply explained 👍
Ty!
I'm sure that Mike guy is ecstatic that he kept his money in bitcoin instead of paying off his mortgage. Everyone compares actual returns of paying off mortgage to perceived returns (often quite high, even 10% or so), but they should be comparing them to risk adjusted returns like bitcoin for this example, which is down about 50% since this video was made. Now I agree that even with risk adjusted returns, if your mortgage is only 2.5% (assuming it's fixed rate not adjustable) then investing in a diversified portfolio still makes mathematical sense, but math misses out on 2 behavioural factors. One, you will probably invest more into paying off your house as there's a clear end goal and two is once you do pay off your house, you will likely see a decrease in stress levels overall which in turn will help your regular life as well as career.
Investing in good stocks, keeping healthy, & living in mortgage-free home are the ways to enjoy life.
Good video and I understand the point. However, don't overlook the very human need for peace of mind. I went into retirement with zero debt and a pretty good (multi-million $) nest egg. I understand the opportunity cost of not investing the money I used to pay off my mortgage but I sleep very well at night knowing that if everything blows up and my financial assets drop to nothing, i will still have a roof over my head.
🌟🌟Txt me🌟
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Great video! The mathematical side assumes people know how to invest their money i.e. they don't make unreasonable investments or worse don't invest at all. Therefore, it is probably more viable for a person to pay down their mortgage. It's like large companies with a lot of cash on the balance sheet making bad acquisitions or not using the cash at all.
I just do both. My mortgage on a fixed rate is $915 a month and I pay $1060 each month. Then I take some extra cash and invest. Not a bad idea to fall somewhere in the middle. $72k left on my mortgage and a $400k plus networth at 36. I won't complain.
Because of my age, I’d pay it off today so that I can be debt free during retirement to be honest feeling secure supersedes making more money but if I were any younger it’ll probably be different situation
Marko, congrats on kid coming! I'm with you on the middle part. Pay off for the piece of mind, invest for the opportunity of high return
One thing that people miss to consider when comparing mortgage interest rate with S&P 500's yearly returns is how much money you have to invest. For ex. if you have 20K invested and u getting 8% average per year that's only $1,600 per year.. but if you have a 2.6% interest rate on a 250K 30 yr mortgage that's about $6,500 per year paid in interest. So, if you want to really even out, you would need that much amount invested to ATLEAST make your interest cost back in stock market returns.
I payed off my house after selling my rental...thank God...now i can rest easy as i insured my kids wont be homeless.
For me, it will depend on my life stage. Right now in my late 20s, with interest rates so low, I’m making minimum payments on my mortgage and another loan (with the exception of credit cards) to invest as much as possible. As I near retirement age, it would probably be nice to have a paid off house. In my adult life, I had zero debt for a number of years but I leveraged debt for a better future and I’m content with my choices. I can handle the psychological aspect of owing money because I have safety nets. I listened to Dave for many years growing up and he has a great way to get out of debt. But sometimes, it makes sense to take out education loans or not pay off your mortgage early.
I have been aggressively paying down my mortgage since we went into lockdown in March 2020. I am looking forward to the tranquility of mind that paying off the mortgage will give me! I also invest because both have to be done when you are seeking financial freedom.
"I'm gonna go give them a _piece of my mind_ because I'll have _peace of mind_ once I do".
Exactly
Going to do both. My first house I will pay off and use the straight cash flow from renting It and other income to buy more properties.
Intro was PURE GOLD! 😂
A buddy of mine and I have this debate all the time! Sending him this video now.
haha ty
lol that intro.
I love Dave, but I think I love that impression just as much lol
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Solid content, thank you! Looking at switching to a first lien position HELOC on my primary residence, then pay it down until I've got enough available credit to buy an investment property, rinse, and repeat. You can pay extra on your house and still maintain the liquidity to convert your progress into an income producing asset.
If my wages went up with inflation I could see your point. When I was truck driving I had the privledge of meeting an experienced gentleman that worked for his company for 15 years! No accidents, no violations. He was making 50 cents a mile (not the worst but not the best) and bragged about it. I was a fresh couple month working driver making the same amount. A man with his experience could easily be making 65-75 cents per mile but companies will screw over anyone they can to get a profit. (For calculations a driver averages about 3,000 miles a week)
Mortgages in my home country are 11% interest a year. So paying the mortgage early is a no brainer decision.
When will your school launch? I love your videos. I swear that bit of humor helps keep the subject digestible. You’re very unique in these TH-cam streets😎
I have a 15 year @ 2.25%. I was happy to refinance that when I was 7 years into a 30 year last year @ 3.25%, since I was clearly going to save on interest by cutting down the time. At this point, I do not plan to prepay anything above the payment. I feel like this gives me the best balance between investing and paying off.
Good balance sir
sure, but what did it cost you to refinance? the costs, fees must be taken into account... there is no such thing as a free lunch. I looked into a refi for my 3.2%... to get it to a 2.7% would have cost me 12 grand... which actually wiped out the savings added up per month over the additional time added.
@@renaissanceman5847 Did you shop around? That sounds extremely high. I will not pay more than 1k, no matter what. I don't care how they make up for that difference, escrow not waived or higher interest than what I qualify for. Anyway, my cost on the refi was $0. It was all lender paid, but escrow required. At the end of the day, I knew what I was paying, because I know how to look at the disclosures and loan estimates, to not be fooled by what I will pay out of my pocket (or them sneaking it back into the loan's principal). As a matter of fact, Better is currently offering 2k American Express credit, so if your costs are less than 2k, you come out ahead. I am talking about all closing costs, not just government fees. So origination, points and all junk fees.
At the end of the day, it is simple math. Total Closing costs minus Prepaids.
@@speedpakify Agreed, that seems high, while I did refi from a 3.2 to a 2.1 over 30, it cost ~$1300. Perhaps the difference is the loan product? I did a VA loan.
@@MechE11B funny thing, I did another refi last year before rates really shot up. This time I ended up with 2.15% for 15 year, with Better Mortgage, and made $400 due to their Amex statement credit of 2k for closing with them.
You have an excellent rate for 30 year loan btw!
Watched a lot of videos on this topic to include DR and you answered all of my questions in a down to earth kind of way. I now know exactly what to do with my mortgage. I like that “golden middle.” Thanks!
Hey Marko! Love your content, I'd love to see you revisit this with the new interest rate environment.
I do exactly the same thing. I land somewhere in the middle. I pay a bit extra on my mortgages but I am not all in on early payoff. However, I am really interested in a discussion about paying off the home you occupy. To me the home you live in carries more personal risk than the investment properties. (opposite of how the bank see's it)
Same
Paid off my mortgage back in March... took 7 years of discipline but still was able to grow my 401K and brokerage account while doing it... its not all about just dumping every penny into paying it off... haven't regretted paying it off early and wont regret it over the next 23 years of time I would have been paying if I only paid the minimum. Now I can really attack growing my Brokerage account to be able to retire at age 50 at the latest (6 years from now).
Nice!
The best answer to this question is never the extreme of one or the other but a combo / “ balance” of:
1. Invest
2. Pay down further mortgage
3. Set some aside for liquid cash
The ratio depends on where your portfolio is currently at. Everybody’s ratio may be slightly different.
Dave gets people who should be middle class to stop making profoundly dumb decisions that keep them poor. No one is going to get rich listening to Dave, but at least they probably won't default on their mortgage. Some people just can't handle using debt to leverage their investments without blowing it all on handbags and cars.
Great comments. Thanks.
So many people have gotten rich on Dave's method 😂. You may not agree with all he says but you can't deny that a lot of people have become millionaires following his advice
I recently heard Robert Kiyosaki comment that Dave Ramsey, his friend, only advises his listeners to pay off their mortgage because the common person doesn't usually have much of an appetite for risk, hence, recommending the psychologically appropriate solution while not necessarily being the financially appropriate one. Like you reference, I believe it's a blend between the two and one's own circumstances and preferences.
Love the into! The problem with taking out a loan is that most people don't invest the extra money. They end up buying junk they don't need to impress people they don't like. So in my opinion if you know yourself and you know your disciplined enough to invest, then take out the loan. If your not, then pay off your mortgage early. Dave's plan typically works well for people who aren't disciplined.
Agreed!
In Mexico they want to implement a plan where you can take the cash of a mortgage loan in the hopes that you would build a better House for less yourself, what I think is really gonna happen is FEW people will do the homework and build a better cheaper house and MOST people will just spend half on stupid shit and build a half assed two rooms structure.
What a such a great Video, I totally agreed with you.
Lack of financial/investment education had me payoff my house last year. In a hindsight, I’d be a millionaire now if I was two invest payoff amount in Tesla or BTC. But we’re all investment geniuses in a hindsight. On a positive note, I’m debt free at 35. To each it’s own would be the most appropriate comment to your video
Personal finance is a constant struggle between math and emotion
personal finance is personal
I think the same way but I know I would never have had the heart to put 100k on Tesla when it was only 200 per share per split lol
Or you could have lost the payoff amount in those single stocks.
You can always sell it or rent it and are debt free so i think it was a good decision
Completely agree with you Marko. Great job on the video
Glad you enjoyed it
I'm splitting the difference: 15yr, 2.5% mortgage and maxing out 401k, anything left over each month is an extra payment on the mortgage. Now it's just about finding a good side hustle as a developer to make a ton of extra money and retire early!
this is basically what I'm doing. splitting it down the middle.
Max out the Roth, too.
Good idea. Do a little of both
You forgot to stack sats. That's the perfect side hustle with your excess
How about a bit of both? Not everyone's goals is to be a millionaire but to secure financial independence and one huge step to succeed is to pay off a mortgage.
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I need to take Finance again 🤣🤣🤣🤣 very informative.. thanks for your time!
Why i was crying laughing at your Dave impersonation!! Spot on!! Lmbo better than I deserve
haha ty!
The home prices in Canada are insane. I doubled the value of my house in 4 short years. I now have $560,000 in equity and my current mortgage rate is 1.98% locked in for 5 years. We are not paying down the mortgage but buying a couple properties to sit on for a few years. Using the banks money to make money not my own.
Thanks for providing nuance to this conversation. I'm on the invest side! Have your investments pay your mortgage.
The problem is the physiological one you mention. Most people will spend all the money in their paycheck before it gets to the investment. For the disciplined invenstor, the numbers make sense, but for the majority they will do better by getting the guaranteed ROI of paying down / off the mortgage.
Marko. Your video hits the nail on the head. Unfortunately for me, I can pay off my $350k mortgage easily with my portfolio. And I fear my portfolio may melt away from wealth distribution by our lawmakers. Stated clearly, should I pay while I still have the means to do so? If my portfolio drops $300k in two years but I could have amortized today then I should have done it. It is emotional Fighting the logic. I have 2.25% apr. And Phoenix appreciation is stellar. At 73, I can see your point easily. So I do not disagree . I think Ramsey deals with people sans financial background.
Agreed, thank you sir
Do it
Thank you so much. I grow ears in my heart to listen to your teachings.
Thank you so much.
Peace of mind worth gold to me. You do what is best for you.
Agreed
My sentiments exactly!!!
You proved Dave's biggest point. When it comes to this mortgage debate. People forget to calculate risk.
So your math is incorrect.
Im 6 years into my 200k 30-year loan with 150k left on the principal. I plan on paying it off in 5 years.
It all comes to risk tolerability. I have too much responsibility to risk on additional investing. My wife and I invest 15% of our annual salary to our retirement accounts, we have $200k in 529’s, and soon additional income from the sale of our rental properties. It works better for us to have no debt.
I agree with Dave on one thing. A bank can't repo a home that doesn't have a mortgage. 😉
Agreed. Stop paying your property taxes and see who really owns your house lol 😝
@@WhiteBoardFinance hahaha so true. If people are worried about their home getting repo'd then they need to get their Sh*t together.
I think for most folks whose primary income is a job, it makes sense to achieve the security of having no mortgage to worry about. Yes, it's emotion vs math and I tend to side with math but in this case there are immense emotional benefits. The PEACE (as you say) of mind of not having a mortgage and been able to withstand losing your job (primary form of income for most) is super liberating. I am in the middle, as you are, building a portfolio of passive income that is still not more than what I make in my job but I also have an insanely low rate and a 15 year mortgage to start with (those make even less sense to pay off as they already have accelerated amortization schedules). As such, instead of paying the mortgage too early (I am targeting to pay off in 11 years total), I invest what I would be otherwise using to pay down the mortgage in an account used exclusively for trading options with The Wheel Strategy.
But again, for most people like when my family asks for my opinion, I just say "pay it early if you can".
debt free is always better, imagine the amount of MONITORING you have to DO just to feel that you are winning in life .
I like the way Dave Ramsey puts it. "Why would borrow money to invest?" That's why I am in the pay off the house as fast as you can camp. After I am done paying off this house it will become a rental and I'll get another.
Nothing wrong with that approach, may take longer though
Can’t agree more. I have 2 houses in the SF Bay Area already paid off and debt free. Money keep piling in as long as I have a job and no payments on anything.
Love what you have to say about finding a middle ground! Unfortunately historically low mortgage rates has led to historically high market prices! So families are taking on mortgages in the past they could never afford, and if they do happen to lose their job or a health crisis happens, they are stuck with mortgages they can no longer afford. It’s a good idea to pay off the mortgage sooner than later, while investing in my opinion
I paid off my mortgage at 31. From a strictly returns standpoint stock market is a better investment. From a more money now, not waiting till retirement, from not worrying about paying bills, from the freedom that zero debt gives you paying off the mortgage early is the better plan.
I’ll also add I’ve never heard ANYONE with a paid off house they regret it. The only people saying paying off your house is a bad idea are people with mortgages. Survey people with no mortgage you’ll find the real answer.
I'm torn between paying off the house early and investing aggressively. The house is our only debt. Valued at $910k, remaining mortgage $250k @ 3.75% fixed with 20 years left. I'm trying to pay it off in 5 years with just paying more towards the principal while maxing out Roth contributions. Wondering if I should refi to a 15yr or 10yr mortgage with a lower interest rate and concentrate on aggressive investing. I'm married in my mid 40's with 3 older kids. I love the idea of having a paid off mortgage and the peace that comes along with that as mentioned in your video. Any advice?
Look at a recast.
Being debt free is worth whatever "cost" of not leveraging my home is. I'm glad you argued both sides.
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You give someone a piece of your mind in order to have peace of mind! 11:35
Lol this was funny Dave 🤣. Did you also do a survey of millionaires. . glad you said you were doing both investing and repaying the loan .
bUt iNfLaTiOn iS tRaNsItOrY.
I stopped paying my mortgage early. I have a 3% mortgage. I think as long as I have a 12month emergency fund, i'm okay.
great video as always Marko.
this is a great strategy. some people get so excited to pay off debt that they have no liquidity!
Couldn’t agree more!