You're right, but I've come to learn that on Ramsey, "debt free" is free from consumer debt. Free from credit card debt, personal loans and car loans. He's always kept that sort of debt seperate from the mortgage.
If you follow Ramsey, and you listen to them walk through the baby steps, then you know yea the mortgage is a debt but, you pay off the consumer debt, save an emergency fund, invest, kids college if applicable Baby step 6 is payoff the mortgage… it is all there…
As a tax preparer I itemize on less than 10 returns per year. I frequently have to tell people that there small donation, mortgage interest and medical bills won't change anything
Accountant here. However, I'm NOT a tax guy. I tried to explain this to my niece, and she would hear none of it. I even pulled her taxes from the previous year and showed her the lines that said "Itemized Deduction" and "Standard Deduction." Her filing showed that she received the standard deduction. So I played it out for her and showed her what would have happened if she would have elected the itemized deduction. She would have ended up owing the IRS. After all of that...She still decided not to lean into the mortgage. Some people can't be helped.
Someone at work bought a house only because his tax prep guy said they needed the tax write-off, plus he can get rid of his rent and live in his tax-write off - two birds with one stone. I tried explaining this once and stopped, because it was obvious he was going to follow the family friend's advice who did their taxes for decades.
It only works for people who have itemized deductions exceeding the standard deduction, so that's about 14,600. That's roughly a 210K loan (which is pretty low for today's mortgages, and below the cap of 750K) at 7%, and basically gets worse than the standard deduction after the first year (cause the interest decreases as you pay off more of the principle).
@@rebeltheharem7028 Yup...So let's play that out. Assuming that you have 14,600 of Mortgage interest. For this example, let's also add $5400 in property taxes (I live in Texas and taxes are very high). So that gives you $20,000 of deductions related to this mortgage. Assuming that you are in the 30% tax bracket, you will save about $6,000 on your taxes. Principal and interest on a $210K loan is about $1400 a month. Lets add the same amount for taxes of $450, your mortgage payment $1850. That's $22,200 per year. This is what Dave means when he says your are trading a dollar for a dime. You'd pay $22,200 so that you can save $6000?
@brandonbarclow3135 I don't think your math is entirely right here. You're only really getting 6k extra in deductions since roughly the first 14k would have already been yours from the standard deduction. So you only save roughly $1,800. What ultimately matters is the cost of your interest vs the return you might get on it by not paying it early. Mortgage interest deductuons merely might lower that cost to break even which may make it worth it, more worth it, or still not worth it at all. It should be a factor that is considered, but the answer itself.
@@jacobg8640 However the number of people who are investing the difference instead of paying off their mortgage faster is less than the number of people who itemize. Much better for the majority of people to pay at least an extra payment towards principal each year.( Add +10% each payment)
He explains it really well. I always thought it was a dumb idea tp pay a lot more mortgage interest so you can save a little bit of money. I paid off my home in 10 yrs in 2021 and that was the best financial decision I made.
Depends what you do with the money I guess... If you invested the difference in a tax advantaged account, it could potentially be "interest earned (approx 10%) minus "interest lost" (approx 3%) while both providing tax benefits. I know Dave hates to hear it, but opportunity cost does exist, though not without risk... But if you're saving for retirement and don't need the money in the next few years, the risk is dramatically reduced. But like Dave said, most people don't itemize... But this could be more useful in the case of let's say keeping the mortgage for an investment property... The key is simply not over-leveraging beyond your means, and only borrowing as much as you can reasonably pay in the case of worst case scenarios happening.
I'm going to go out on a limb (not really) and say that 99.9% of accountants and tax preparers never tell people or small businesses to spend money for the tax deduction. The person or small business owner ASKS them "if I buy this can I write it off..." and the accountant says "well, yes, but..." and the person stops listening to anything after the yes, because they think they just got their accountant's agreement to buy whatever toy they are wanting to justify!
This could be a case of doing the right thing for the wrong reason. Tax deduction is the wrong reason, but the opportunity cost of investing extra dollars vs paying off a low-interest mortgage is. The difference is only two years of opportunity cost & they’re in their 50s so the compounding loss over time to their retirement years isn’t that much either.
My parents had a friend who said he didn't want to pay off his mortgage because he gets the tax deduction. They tried explaining to him that the money he saves with the deduction is a fraction of what he's paying in interest to the bank. After a few attempts, they decided they'd rather be friends with him than a financial advisor. My parents dropped the issue and let him live in blissful ignorance. For all the times people rip Dave because, "Well the math actually says..." This is certainly a time where the math is the math. It's simple. There is no positive way to spin it with dollars and cents. Keep the mortgage on purpose = give away more of your money. And we're assuming he itemized. He probably took the standard deduction.
We got the house down to 10, had it in a money market account. Battled back and forth on paying the house off with it. Glad we took it out and paid off the house. We are debt free and already have that 10 back into investments. It's great owing no one nothing.😊
I used to believe the same thing, but when I ran the numbers, the so-called ‘tax benefits’ didn’t outweigh the interest I was paying. It’s easy to overlook how much extra you’re spending over time just to save on taxes.
My wife and I have itemized exactly once in 23 years (large medical expenses). Every other year, it was better for us to take the standard deduction and that’s even more true nowadays as Dave points out.
I’m thinking about starting my investment journey, but I feel a bit overwhelmed and uncertain. Do you have any tips or suggestions on who l could reach out to for guidance?
Unfortunately, not all of us were financially literate early. I was 35 when I finally educated myself and started taking steps. I went from $176,000 in debt with zero savings or retirement to now, 2 years later, fully debt-free and over $1000,000 net worth. I know that doesn't SOUND like a lot, but I'm incredibly proud of it. Now I'm fast-tracking my wealth building (investing $400,000 annually) and don't owe a dime to anyone. It's a good feeling!
Making touch with financial advisors like Elizabeth Regina Nelson who can assist you restructure your portfolio, would be a very creative option. Personal financial management will be crucial to navigating the next difficult times
I'm one of the 9% who is still itemizing on my income tax return every year. Even if I have my house paid off and had no mortgage, I would still be itemizing because my property taxes, state income taxes, and charitable contributions are so high.
You would need a $450,000 mortgage at 7% interest for itemizing to be worth anything. At 3%, your mortgage balance would need to exceed a million dollars.
Just like someone else said, pay off the mortgage so the house is yours! Whatever else happens the house is yours then. From the UK not the US, but this is one security we all need if you can afford it
It is not true that you can't get a "deduction" for charitable giving if you don't itemize, you can donate directly from a qualified account to a charity, up to $100,000 in a year, and those distributed funds do not count toward income. Normally, when you take a non-ROTH distribution from a qualified account, the amount is taxed as ordinary income, but a Qualified Charitable Distribution is an IRS approved method of making a charitable donation and not counting the income from the qualified account, and not having to itemize your deductions.
Mortgage rates are currently at an all time high since 2000(24 years) and based on statistics on inflation, we might see that number skyrocket further, a 30-year fixed rate was only 5% this time last year, so do I just keep waiting for a housing crash before buying or redirect my focus to the equity market
True, I mostly just buy and hold stocks, but my portfolio has been mostly in the red for quite awhile now. Unfortunately to be able to make good gains, you’ll need to be consistent and restructure your portfolio frequently.
in my opinion, it was much easier investing back in the 60s but it’s a lot trickier now, those making consistent profit in these times are professionals reason I’ve been using an advisor for the past 5 years to consistently build my portfolio in preparations for retirement.
“ Sophia Maurine Lanting is the coach that guides me, She has years of financial market experience, you can use something else but for me her strategy works hence my result. She provides entry and exit point for the securities I focus on.
This is the same thing that I tell people about deducting business expenses. A lot of them think that people are getting rich by deducting things as a business expense. Oh, he bought that Mercedes Benz, but it’s a tax write off. It doesn’t work that way. You have to spend the whole amount of money then can reduce your income to lower your taxes a percentage of that amount. The same thing in reverse is people in retirement that give money to charities so they don’t have to lay taxes on their RMDs. The tax would only be a percentage of whatever you gave the charity.
You are so right on this topic David! In my view, our public education systems starting at 3d grade could do better. Math is a four letter word to Department of Education.
I so much want to pay off my mortgage! This December we will put 30% of our loan in! I am so happy! And after I plan to pay the rest in coming 3 years! I hate living with a loan. Never had any loans except for mortgages and so much want out. I feel I will sleep well back only after it is out of my shoulders
As a tax preparer, thank you! I get asked this every other day. For a general rule whatever your marginal tax rate is, would be the money you get back on deductions generally. So if I deduct 1,000 and my marginal rate is 22%. You would get back $220 per $1,000 deducted / expensed. So yes you should pay off your mortgage.
Dave isn't wrong for once, but its a very specific case in which this works, which is if interest is more than the standard deduction AND the interest rate is low (anything below 5%, above that, it depends on the person and economic conditions). Any other conditions, you are generally likely to have a net loss on the interest than a net gain on the tax savings. Its the same thing as people misunderstanding what a "tax write-off" is.
I explained this to my dad and he said he’d rather keep the mortgage than send the irs the difference because he wants to “stick it to the man” by paying less taxes
True, but that is technically NOT debt. Furthermore, you can choose to pay a mortgage and property taxes OR just pay property taxes. I choose to just pay property taxes but you do it how you see fit.
You only pay the local government and that is not debt that just taxes. You never own you car you have to pay for license renewals, you never owe your bank account because the IRS can come take it if you don’t pay your taxes.
Well, yes you DO have a paid off house but you still have to pay the rent money going forward, jist like you were when you were also paying the motgage.
Not if you keep the cash in a checking account or basic savings account, or you spend the money. Which the majority of people would likely do with any extra cash. You're assuming most people would take that money and invest it at a higher rate than 2%. I worked to pay down my mortgage while my rate was low. This saved me from having to renew for another 5 years at 5%, instead of my current rate of 2%. You never know what is coming.
@@commandojay1915 literally anyone can invest at a higher rate than 2%. CDs, and even savings accounts all pay over 2% and have been for over a year now.
@@lepoj I should have been more specific. "Most people who are bad with money and need something like Ramsey to get them on track". For others who massage the numbers to maximize our savings, it doesn't apply. We just watch these videos with pop-corn
@@commandojay1915 Indeed, I don't really care about his advice and disagree with it about half the time, but I watch these videos like its realty TV. Its my guilty pleasure.
And the sad part is the number of people who actually think they are winning by somehow keeping a mortgage as astonishing. He just explained in basic math that by having a mortgage you are losing $2000 a year versus just paying 1000 more roughly in taxes, all because you have a mortgage And as he already stated most people don’t even itemize deductions they use the standard deduction which completely negates any in all interest payments anyway
My financial advisor says that I shouldn't pay off my mortgage early and instead use my extra money to invest as it will grow more than I will shave off my debt.
Well it depends. How many more years do you have left on your mortgage and at what interest rate? If you have low interest (2%) and at least 5 more years of payments, then it might make sense to invest from a mathematical standpoint. But also consider the peace of mind from being debt free earlier and anxiety over losing your job and still having a mortgage. Those should also factor into your decision.
Since you are only deducting the mortgage interest paid you can literally never benefit from keeping a mortgage. Unless you need the cash for an emergency fund it is always mathematically better to pay it off.
If you invest the amount you would have put extra on the mortgage, you are better off mathematically. My investments are making ~9% right now long-term. Mortgage Rates haven't been >9% in about 30 years. When you factor in the tax savings, it's actually almost always better mathematically to take as long as possible paying off your mortgage... ASSUMING you are disciplined to invest the extra.
with this high tax standard deduction, too many people are relying on expensive tax services who process all that data, when they know in a few seconds they will use the standard deduction on the return. The taxpayer is just being screwed due to ignorance. Most should be able to use basic tax software and do it themselves.
As an Australian, it blows my mind you can make a tax deduction on your mortgage. While we can claim interest on investment properties, as well as a bunch of other things, I've never heard of anyone being able to claim interest on their personal owner/occupier home. Crazy.
Man, no wonder housing sucks in Australia, and y'all can't afford it. The US government tries to make it as easy as possible for home buyers in the US, and even then its still hard. I can't imagine how it is when you don't even have that.
Capping SALT at $10K for S, HOH, and MFJ also made it more difficult to itemize. Funny, even though Trump put that in as a blank you to blue states with higher state income and property tax, he is now saying that they may allow that provision to expire, meaning no more cap. We'll see.
What Dave is missing is that.. even when you are itemizing you are not benefitting fully, because you have other deduction such as SALT that you will itemize first.
Thanks for the forecast! A bit off-topic, but I wanted to ask: I have a SafePal wallet with USDT, and I have the seed phrase. (alarm fetch churn bridge exercise tape speak race clerk couch crater letter). How should I go about transferring them to Binance?
I had a couple coworkers that never got the tax write off thing. They were telling me how much they were saving by not paying off the mortgage and student loans and when they finished I said "If you give me a dollar I'll give you a quarter, wanna trade?" And I got a dumb look and a "why would I do that?" in response. My reply, "exactly!". And they'd walk away looking confused. And yeah, I don't itemize. I've got enough expenses related to some farmland I have that most years I could save a few bucks if I did itemize. But only a very few dollars and it's not worth the hassle to me.
Great video, I've been interested in investing ever since I came across articles of people making up to $150,000 and more in this period, thanks for the video but is it really possible for a retail investor to achieve this in months?
I've purchased numerous stocks in individual firms. Because there are so many stocks that will skyrocket in the long run, it is currently safe to buy in on ETF and ride it out. Due to fud, I sold out early, but then retraced my ways and re-invested $350,000 with a financial advisor who manages my account. I received an 82% return last year and will see where it goes this year.
I don't comfortably throw recommendations around on the internet, but I've been working with Caroline Suzan Olson. God! She's brilliant! I'm sure there are others who are good.
Can't lie This is mind blowing indeed the name sounds too familiar I've come across individuals talking about her great service I guess this is a sign to try her out.
Dave is right, but only partially. If mortgage rate is relatively low, I would sell the car and invest the money in mutual fund that averages 8-10 per cent profit annually.
There is a lot more to it than what Dave is saying. And for those who itemize, myself included, we understand the substantial benefits of leveraging secure, low-interest, fixed-rate debt to free up capital we can invest for much higher rates of return AND an additional tax deduction as a bonus. Paying off the house would be a the "dumb trade". The tax code is written to incentivize certain behaviors and actions. You can either take advantage of those incentives or not. The vast majority of the C-Suite executives managing the companies in all of Dave's mutual funds are among the 9% doing exactly this.
The key word here is low interest mortgage which creates an arbitrage opportunity when market returns are higher. For most folks, a lot more needs to be true for leverage to be beneficial i.e. Low mortgage rate + Itemizing Returns + Longer investments timeline (typically folks farther away from retirement)
the only way that could be beneficial is if you are right on the cusp of being in the highest income tax bracket AND you live in a state with very high state income tax like california. for most people it's not saving you money to give the bank more in interest payments.
If you own a house in Massachusetts, California or any other very expensive state, you most definitely should be itemizing on your tax returns. My mortgage payments / interest were almost $24,000 for the year and I am single. 2.75% fixed interest rate.
Hmm, I also live in MA but just paid off my mortgage 20 years early. Oh well, at least I can take that $20k a year now and start pumping another investment account up.
So far I'm still in the minority where itemizing is the better option. Not sure how the upcoming return will be. I know at some point the mortgage interest won't be high enough for itemizing.
So should I stop investing to pay off my mortgage? I currently put 28k a year in my 401 (I’m over 50). I owe 200k on mortgage and would like to retire within 5yrs. Mortgage rate is 4.25 but my 401 had a 21% return this year so far.
@@asama6647 Well yes, but no. They owe $90k on the mortgage. So they would have to pay $90k to avoid paying $3000 -$720. Meaning they would have to net around 2.6% after-tax to come out ahead.
I've never once been able to itemize. Even if you time your property taxes to pay 2 years' worth during 1 calendar year and 0 during the next, I still couldn't itemize.
Hmmm is that even before 2018? The standard deduction was much lower prior to 2018 and for those that had SALT and mortgage interest and some charitable deductions, it was common to itemize.
Hello, Dave. I am a new follower and have a question 🙋🏼♀️ I have a mortgage of $114,000 at 3% I also have a HYSA @5% All my friends say NOT to pay extra to my mortgage but, to add it to my HYSA. Thoughts? I do pay $125 towards the Principal and $25 to the escrow. Thank you in advance for your help. Have a Blessed Day 😊 💰
How much tax are you paying on the 5% High Yield Savings Account? Most people do not know that all of that interest you earn is taxable. Your total return on your High Yield Savings account is actually less than 5% because of taxes on the interest. You can look up Schedule B on 1040 IRS tax form and learn about Dividend & interest income and how it is taxed.
The only reason to keep a mortgage is if its low interest, below 3%, as you can easily make higher returns in guaranteed products. If your mortgage is 5% or higher, then its less likely you can find a guaranteed return, but market investments may be worth it. If your rate is 7.5% or higher..pay it off after making your other retirement investments.
@@alinatamashevich3354 Managing debt smartly is an aspect to becoming wealthy. Obsessively paying down debt when it is of no financial benefit, and indeed create a loss is stupid. There is a time to eliminate debt, then there is a time to simply make payments as your money has better uses. Ramsey clients, on average, don't possess the knowledge and self-control to handle debt, or money, well. For those individuals, such a simplistic approach is better than trusting their own poor decision making.
Dave no need to be an Ass. It was a very good question. I thank you for answering it and letting us know the facts on this but you could have answered it without implying it was dumb.
It makes sense carrying a mortgage on a rental property, since everyone itemizes those, and they do not get a standard deduction. If your LTV ratio is high and your rental income is steady, having that cash on hand to invest in other things makes sense.
@@USMC6976 As opposed to a bunch of cash out of your pocket if you pay it off? If your interest rate is sub 4 percent, you are a good portion of the way through the amortization schedule, and you can take that cash somewhere else and make MORE than 4 percent, it makes no sense to pay it off, plus you can have that cash on hand AND deduct the interest.
@@Cucumberflavoredmustard you do not factor the risk of debt or a bank calling your loan suddenly. That is why Dave does cash only. The cash out of your pocket is just converted to real estate, the cash you pay in interest is cash lost. You start investing the cash you were paying the bank with little amount going to the principle on your mortgage, investing it, and it's ALL yours, will pay off in the end. The stress the debt creates is not quantifiable. The risk that debt allows others to control your life is not quantifiable, but you do you.
@@USMC6976 It's illegal for the bank to "call the loan" without payment delinquency. Even then the borrower has a right to cure. The real estate you have equity in is also appreciating just like cash- and outsize of your current cash investment as well, since there is a loan. There is no stress whatsoever if the property is insured, and with tenants being so easy to find.
8:02 - way to move the goal post Dave. No, netting the difference between your mortgage rate and investment return won’t make you a millionaire. However, using some 6th grade math, it makes sense.
@@USMC6976 yes, but I can quantity my net of tax return on a 4.5% money market over the cost of my 2.75% mortgage. And, to be blunt, if having a mortgage stresses you out that much then I’m not sure how you function in other areas of life.
@@v-2010 And after you pay the taxes, you're left with maybe1% or 1.2%. Yeah, keep telling me how much that is going to make you. And when the economy tanks, and it will, enjoy the slide.
@@reese85 Well you should take a little time and effort to learn the basics. I don't expect people to be tax experts, but there is no excuse for not learning and understanding the basics. This video of standard vs itemized deductions is a basic concept. Fyi... I'm not a mechanic but I can change a flat tire. Basics!!
Why do big corporations lease or rent buildings and do nothing with them then? I’ve seen buildings sit empty for years that are being paid for by the businesses. There has to be some sort of benefit from paying on properties. Same for some landlords I know. They have rentals sitting empty for years at insane prices and don’t care at all. There is some benefit they are getting from that if they’re not concerned about them being paid for.
You are right that there is a benefit for holding empty buildings. The business situation is different: they can claim the interest as a business expense and every dollar of interest reduces taxable income dollar for dollar. Itemizing on a personal return only 'saves' taxes to the extent of the marginal tax rate times the total annual interest payment (so you save 28-32 cents in taxes for every dollar of interest paid).
You are NOT crazy. When I refinanced for 15 years several years ago with a 2.75 interest rate, I put crazy money towards the principle and paid my house in 6 years and 10 months. When you become totally debt free you can invest more, save more, and do many things without having debt. Some people are so attached to and comfortable with debt, they keep it around like its their best friend!!!🙄
@@AndreaJames-dv1rr If you put that money into an S&P index fund you would have done much much better. Peace of mind is the only benefit of paying off a 2.75% interest rate. As he says in the video what you are saying does not math.
@@domatnyc Peace of mind is very important, especially when one is a lower-income retiree. I know I could keep the $116K in my 4.5 % interest- bearing savings account instead of using it to pay off the mortgage (3.75 %), but that small mathematical benefit does not outweigh the feeling of relief I get from cutting $700 off my monthly expenses and having no debt. I'd rather lose that little benefit and have the big benefit of peace of mind 😌 Others have different situations and opinions of course 😊
The more I hear Dave talk about "None of the millionaires we surveyed do/dont do..." the more I think this study (1) doesnt actually exist or (2) cherry picked candidates to support his methods. Theres more than one oath to becoming wealthy and the Ramsey method is but a single and conservative way to do so.
![สาวเมืองเพชร - ธีเดช ทองอภิชาติ [Official MV]](http://i.ytimg.com/vi/kEt7F9PvO3I/mqdefault.jpg)
"Debt free" but still owe "90k on mortgage" lol. They are not debt free.
You're right, but I've come to learn that on Ramsey, "debt free" is free from consumer debt. Free from credit card debt, personal loans and car loans. He's always kept that sort of debt seperate from the mortgage.
If you follow Ramsey, and you listen to them walk through the baby steps, then you know yea the mortgage is a debt but, you pay off the consumer debt, save an emergency fund, invest, kids college if applicable Baby step 6 is payoff the mortgage… it is all there…
As a tax preparer I itemize on less than 10 returns per year. I frequently have to tell people that there small donation, mortgage interest and medical bills won't change anything
Accountant here. However, I'm NOT a tax guy. I tried to explain this to my niece, and she would hear none of it. I even pulled her taxes from the previous year and showed her the lines that said "Itemized Deduction" and "Standard Deduction." Her filing showed that she received the standard deduction. So I played it out for her and showed her what would have happened if she would have elected the itemized deduction. She would have ended up owing the IRS.
After all of that...She still decided not to lean into the mortgage.
Some people can't be helped.
Someone at work bought a house only because his tax prep guy said they needed the tax write-off, plus he can get rid of his rent and live in his tax-write off - two birds with one stone. I tried explaining this once and stopped, because it was obvious he was going to follow the family friend's advice who did their taxes for decades.
It only works for people who have itemized deductions exceeding the standard deduction, so that's about 14,600. That's roughly a 210K loan (which is pretty low for today's mortgages, and below the cap of 750K) at 7%, and basically gets worse than the standard deduction after the first year (cause the interest decreases as you pay off more of the principle).
@@rebeltheharem7028 Yup...So let's play that out. Assuming that you have 14,600 of Mortgage interest. For this example, let's also add $5400 in property taxes (I live in Texas and taxes are very high). So that gives you $20,000 of deductions related to this mortgage. Assuming that you are in the 30% tax bracket, you will save about $6,000 on your taxes.
Principal and interest on a $210K loan is about $1400 a month. Lets add the same amount for taxes of $450, your mortgage payment $1850. That's $22,200 per year.
This is what Dave means when he says your are trading a dollar for a dime. You'd pay $22,200 so that you can save $6000?
@brandonbarclow3135 I don't think your math is entirely right here. You're only really getting 6k extra in deductions since roughly the first 14k would have already been yours from the standard deduction. So you only save roughly $1,800.
What ultimately matters is the cost of your interest vs the return you might get on it by not paying it early. Mortgage interest deductuons merely might lower that cost to break even which may make it worth it, more worth it, or still not worth it at all. It should be a factor that is considered, but the answer itself.
@@jacobg8640 However the number of people who are investing the difference instead of paying off their mortgage faster is less than the number of people who itemize.
Much better for the majority of people to pay at least an extra payment towards principal each year.( Add +10% each payment)
Dave is absolutely correct on this one!
He explains it really well. I always thought it was a dumb idea tp pay a lot more mortgage interest so you can save a little bit of money. I paid off my home in 10 yrs in 2021 and that was the best financial decision I made.
I agree that since the standard deduction is so high now that only a very few people really need to itemize any longer.
What is that phrase stepping over a dollar to save a dime, that's what keeping a mortgage for tax benefits is like.
Right I was like I must be living under a rock cuz I haven't never gotten much of any tax benefit 🤦🏼♀️
Penny wise , pound foolish ?
Depends what you do with the money I guess... If you invested the difference in a tax advantaged account, it could potentially be "interest earned (approx 10%) minus "interest lost" (approx 3%) while both providing tax benefits.
I know Dave hates to hear it, but opportunity cost does exist, though not without risk... But if you're saving for retirement and don't need the money in the next few years, the risk is dramatically reduced.
But like Dave said, most people don't itemize... But this could be more useful in the case of let's say keeping the mortgage for an investment property... The key is simply not over-leveraging beyond your means, and only borrowing as much as you can reasonably pay in the case of worst case scenarios happening.
Very hard to go bankrupt when you dont owe any money
I'm going to go out on a limb (not really) and say that 99.9% of accountants and tax preparers never tell people or small businesses to spend money for the tax deduction. The person or small business owner ASKS them "if I buy this can I write it off..." and the accountant says "well, yes, but..." and the person stops listening to anything after the yes, because they think they just got their accountant's agreement to buy whatever toy they are wanting to justify!
It's along the same lines as people who think a tax write off means it is free (when all it really does is decrease your taxable income...)
Love the elegant, brutal simplicity of the explanation.
Glad to know a mentor like Mr Ramsey and I say this as someone who never comes from a wealthy or rich family
This could be a case of doing the right thing for the wrong reason. Tax deduction is the wrong reason, but the opportunity cost of investing extra dollars vs paying off a low-interest mortgage is. The difference is only two years of opportunity cost & they’re in their 50s so the compounding loss over time to their retirement years isn’t that much either.
the money is in the car so it's depreciating right now....
@@comment_account2343 Yeah, its a specific use case. Obviously, it only works if they do the alternative investment.
My parents had a friend who said he didn't want to pay off his mortgage because he gets the tax deduction. They tried explaining to him that the money he saves with the deduction is a fraction of what he's paying in interest to the bank.
After a few attempts, they decided they'd rather be friends with him than a financial advisor. My parents dropped the issue and let him live in blissful ignorance. For all the times people rip Dave because, "Well the math actually says..." This is certainly a time where the math is the math. It's simple. There is no positive way to spin it with dollars and cents. Keep the mortgage on purpose = give away more of your money.
And we're assuming he itemized. He probably took the standard deduction.
We got the house down to 10, had it in a money market account. Battled back and forth on paying the house off with it. Glad we took it out and paid off the house. We are debt free and already have that 10 back into investments. It's great owing no one nothing.😊
Paid off my house years ago...i have not once regretted it due to my taxes 😂
so true. The chances a w2 employee at $150k combined overwhelms the standard deduction would be incredibly rare.
9% of people is still millions of people.
@@Darlhim89he said w2 employee at $150k combined. Not all the people in America. So it is very very rare.
I used to believe the same thing, but when I ran the numbers, the so-called ‘tax benefits’ didn’t outweigh the interest I was paying. It’s easy to overlook how much extra you’re spending over time just to save on taxes.
I paid our mortgage off as soon as the standard deduction was higher than what I could itemize. Plus the improvement in sleep quality is priceless!
My wife and I have itemized exactly once in 23 years (large medical expenses). Every other year, it was better for us to take the standard deduction and that’s even more true nowadays as Dave points out.
I’m thinking about starting my investment journey, but I feel a bit overwhelmed and uncertain. Do you have any tips or suggestions on who l could reach out to for guidance?
The retirement crisis is getting worse and the economy is so messed up to start investing right now.
My advice to everyone is that saving is great but investment is the key to be successful imagine investing $15,000 and received $472,700.
Unfortunately, not all of us were financially literate early. I was 35 when I finally educated myself and started taking steps. I went from $176,000 in debt with zero savings or retirement to now, 2 years later, fully debt-free and over $1000,000 net worth. I know that doesn't SOUND like a lot, but I'm incredibly proud of it. Now I'm fast-tracking my wealth building (investing $400,000 annually) and don't owe a dime to anyone. It's a good feeling!
Making touch with financial advisors like Elizabeth Regina Nelson who can assist you restructure your portfolio, would be a very creative option. Personal financial management will be crucial to navigating the next difficult times
Life is easier when the cash keeps popping in, thanks to Elizabeth Regina Nelsen's services. Glad she's getting the recognition she deserves
3:39 Rachel is trying so hard not to laugh right here after Dave says "DUMB. TRADE."
Wow - Papa Dave on the set!
My brain is busting from not hearing "are you safe", "what's for lunch" and "go back to work at 86".
even John Wick is missing from the chat. dayum
That's the future of the show.. before they go woke.. o ce dave passes
I’m so tired of John. Smmfh.
agree
no one comes close
@@jeffreywhitaker5154you and me both
I'm one of the 9% who is still itemizing on my income tax return every year. Even if I have my house paid off and had no mortgage, I would still be itemizing because my property taxes, state income taxes, and charitable contributions are so high.
Charitable contributions 😂
What state do you live in?
@@jeffreywhitaker5154 probably NJ.
The fact that you're able to give that much to itemize it is awesome of you.
@@judiumstead5484 Thank you. I'm in Cali so NJ is probably higher?? I'm just guessing.
I, along with millions of Americans l, haven’t itemized since 2017.
Agree, unless you donate several thousand, it’s very hard to exceed the SD.
You would need a $450,000 mortgage at 7% interest for itemizing to be worth anything. At 3%, your mortgage balance would need to exceed a million dollars.
Just like someone else said, pay off the mortgage so the house is yours! Whatever else happens the house is yours then. From the UK not the US, but this is one security we all need if you can afford it
It is not true that you can't get a "deduction" for charitable giving if you don't itemize, you can donate directly from a qualified account to a charity, up to $100,000 in a year, and those distributed funds do not count toward income.
Normally, when you take a non-ROTH distribution from a qualified account, the amount is taxed as ordinary income, but a Qualified Charitable Distribution is an IRS approved method of making a charitable donation and not counting the income from the qualified account, and not having to itemize your deductions.
Mortgage rates are currently at an all time high since 2000(24 years) and based on statistics on inflation, we might see that number skyrocket further, a 30-year fixed rate was only 5% this time last year, so do I just keep waiting for a housing crash before buying or redirect my focus to the equity market
The stock market is no different, to maintain profit, you need to have some in-depth knowledge on the market
True, I mostly just buy and hold stocks, but my portfolio has been mostly in the red for quite awhile now. Unfortunately to be able to make good gains, you’ll need to be consistent and restructure your portfolio frequently.
in my opinion, it was much easier investing back in the 60s but it’s a lot trickier now, those making consistent profit in these times are professionals reason I’ve been using an advisor for the past 5 years to consistently build my portfolio in preparations for retirement.
my partner’s been considering going the same route, could you share more info please on the advisor that guides you.
“ Sophia Maurine Lanting is the coach that guides me, She has years of financial market experience, you can use something else but for me her strategy works hence my result. She provides entry and exit point for the securities I focus on.
This is the same thing that I tell people about deducting business expenses. A lot of them think that people are getting rich by deducting things as a business expense. Oh, he bought that Mercedes Benz, but it’s a tax write off. It doesn’t work that way. You have to spend the whole amount of money then can reduce your income to lower your taxes a percentage of that amount.
The same thing in reverse is people in retirement that give money to charities so they don’t have to lay taxes on their RMDs. The tax would only be a percentage of whatever you gave the charity.
You want To get rid of debt as soon as you can.
You might be not wrong
@@Wqghfxz😂😂
That’s the BOTTOM LINE. 💪🏽👍🏽🙏🏽
not always
Not necessary
You are so right on this topic David! In my view, our public education systems starting at 3d grade could do better. Math is a four letter word to Department of Education.
I so much want to pay off my mortgage! This December we will put 30% of our loan in! I am so happy! And after I plan to pay the rest in coming 3 years! I hate living with a loan. Never had any loans except for mortgages and so much want out. I feel I will sleep well back only after it is out of my shoulders
As a tax preparer, thank you! I get asked this every other day. For a general rule whatever your marginal tax rate is, would be the money you get back on deductions generally.
So if I deduct 1,000 and my marginal rate is 22%. You would get back $220 per $1,000 deducted / expensed. So yes you should pay off your mortgage.
Dave isn't wrong for once, but its a very specific case in which this works, which is if interest is more than the standard deduction AND the interest rate is low (anything below 5%, above that, it depends on the person and economic conditions).
Any other conditions, you are generally likely to have a net loss on the interest than a net gain on the tax savings.
Its the same thing as people misunderstanding what a "tax write-off" is.
I explained this to my dad and he said he’d rather keep the mortgage than send the irs the difference because he wants to “stick it to the man” by paying less taxes
Here in Canada, this is a non-factor as we can't deduct mortgage interest at all.
I stopped itemizing about 3 years ago. In the last 10 of my mortgage and no longer pay enough interest.
Bro, i bought XAI213K in November after your video. i'm up 379%.
You never have a paid for house, we continue to pay rent to the local state and federal government.
True, but that is technically NOT debt. Furthermore, you can choose to pay a mortgage and property taxes OR just pay property taxes. I choose to just pay property taxes but you do it how you see fit.
You only pay the local government and that is not debt that just taxes. You never own you car you have to pay for license renewals, you never owe your bank account because the IRS can come take it if you don’t pay your taxes.
Well, yes you DO have a paid off house but you still have to pay the rent money going forward, jist like you were when you were also paying the motgage.
Cheaper than renting forever
Taxes are not rent. I own my house. Period.
I agree with all said, except if he has a 2% rate. That is trading quarters for dollars.
Not if you keep the cash in a checking account or basic savings account, or you spend the money. Which the majority of people would likely do with any extra cash. You're assuming most people would take that money and invest it at a higher rate than 2%. I worked to pay down my mortgage while my rate was low. This saved me from having to renew for another 5 years at 5%, instead of my current rate of 2%. You never know what is coming.
@@commandojay1915 literally anyone can invest at a higher rate than 2%. CDs, and even savings accounts all pay over 2% and have been for over a year now.
@@commandojay1915 what "most people do" is irrelevant. Just because "most people" don't invest the difference doesn't mean I don't .
@@lepoj I should have been more specific. "Most people who are bad with money and need something like Ramsey to get them on track". For others who massage the numbers to maximize our savings, it doesn't apply. We just watch these videos with pop-corn
@@commandojay1915 Indeed, I don't really care about his advice and disagree with it about half the time, but I watch these videos like its realty TV. Its my guilty pleasure.
I love how Rachel chooses emails she knows will fire up her dad.
@2:14 Rachel's sweet smile is like: Thanksgiving conversation again?
Like I told my daughter, if you lose your job, you have a paid off house to live in. You can work at McDonalds to pay the bills.
💯
@@diceportz7107 Yea, and according to John you can just walk in and make $25 an hour starting tomorrow. 😂
@@diceportz7107 You can make $25 per hour easy per John.
@@diceportz7107 Yea, she's gonna love working there...😅
and then she's gonna be doing OF on the side
And the sad part is the number of people who actually think they are winning by somehow keeping a mortgage as astonishing. He just explained in basic math that by having a mortgage you are losing $2000 a year versus just paying 1000 more roughly in taxes, all because you have a mortgage And as he already stated most people don’t even itemize deductions they use the standard deduction which completely negates any in all interest payments anyway
My financial advisor says that I shouldn't pay off my mortgage early and instead use my extra money to invest as it will grow more than I will shave off my debt.
Dave said fire him
Well it depends. How many more years do you have left on your mortgage and at what interest rate? If you have low interest (2%) and at least 5 more years of payments, then it might make sense to invest from a mathematical standpoint. But also consider the peace of mind from being debt free earlier and anxiety over losing your job and still having a mortgage. Those should also factor into your decision.
2:58 - how is he coming up with a 32% rate? That’s really high.
Didn’t they say 150k gross income?
Yeah, this would be 22%. Not 32%
22% would mean you’re getting back even LESS money
@@michaelcerean1990 Yes.
I wanna keep my mortgage because we'll never see 3% interest on a loan again
Smart. I hope you invest extra money.
Wait until you hear about the interest rates on paid off mortgages!
@@jdtreharne😅😅😅
What’s with all the bot comments lately?
Since you are only deducting the mortgage interest paid you can literally never benefit from keeping a mortgage. Unless you need the cash for an emergency fund it is always mathematically better to pay it off.
If you invest the amount you would have put extra on the mortgage, you are better off mathematically. My investments are making ~9% right now long-term. Mortgage Rates haven't been >9% in about 30 years. When you factor in the tax savings, it's actually almost always better mathematically to take as long as possible paying off your mortgage... ASSUMING you are disciplined to invest the extra.
with this high tax standard deduction, too many people are relying on expensive tax services who process all that data, when they know in a few seconds they will use the standard deduction on the return. The taxpayer is just being screwed due to ignorance. Most should be able to use basic tax software and do it themselves.
Love how they actually print out the stories vs looking at a computer
As an Australian, it blows my mind you can make a tax deduction on your mortgage. While we can claim interest on investment properties, as well as a bunch of other things, I've never heard of anyone being able to claim interest on their personal owner/occupier home. Crazy.
Man, no wonder housing sucks in Australia, and y'all can't afford it. The US government tries to make it as easy as possible for home buyers in the US, and even then its still hard. I can't imagine how it is when you don't even have that.
Capping SALT at $10K for S, HOH, and MFJ also made it more difficult to itemize. Funny, even though Trump put that in as a blank you to blue states with higher state income and property tax, he is now saying that they may allow that provision to expire, meaning no more cap. We'll see.
In your opinion, XAI213K for $10? 1 year or so?
What Dave is missing is that.. even when you are itemizing you are not benefitting fully, because you have other deduction such as SALT that you will itemize first.
Thanks for the forecast! A bit off-topic, but I wanted to ask: I have a SafePal wallet with USDT, and I have the seed phrase. (alarm fetch churn bridge exercise tape speak race clerk couch crater letter). How should I go about transferring them to Binance?
Dont let that knowledge lead to arrogance and egotism brother Dave. 1 Cor 8:1
Another stupid idea about mortgages is, a friend has an interest only mortgage on her house to pay the property taxes and homeowners insurance.
Do it. XAI213K already in my bags. I had a XAI213K after ( your should I buy ) and I agreed and bought. I'm looking to stack more, too.
Ive never been able to deduct more than the standard deduction, and 1 year I had two mortgages. Pay it off!
Doesn’t Robert Kiyasaki say to leverage debt to invest?
The certainty of the debt is always higher than the likelihood of a better return in the stock market.
I had a couple coworkers that never got the tax write off thing. They were telling me how much they were saving by not paying off the mortgage and student loans and when they finished I said "If you give me a dollar I'll give you a quarter, wanna trade?" And I got a dumb look and a "why would I do that?" in response. My reply, "exactly!". And they'd walk away looking confused. And yeah, I don't itemize. I've got enough expenses related to some farmland I have that most years I could save a few bucks if I did itemize. But only a very few dollars and it's not worth the hassle to me.
Great video, I've been interested in investing ever since I came across articles of people making up to $150,000 and more in this period, thanks for the video but is it really possible for a retail investor to achieve this in months?
I've purchased numerous stocks in individual firms. Because there are so many stocks that will skyrocket in the long run, it is currently safe to buy in on ETF and ride it out. Due to fud, I sold out early, but then retraced my ways and re-invested $350,000 with a financial advisor who manages my account. I received an 82% return last year and will see where it goes this year.
That's quite impressive, you surely made a good bit of money. I myself invested in warren's BRK-A stock quite pricey but totally worth it.
I just started a few months back, I'm going for long term, I'm still trying to wrap my head around it, who's this advisor you work with?
I don't comfortably throw recommendations around on the internet, but I've been working with Caroline Suzan Olson. God! She's brilliant! I'm sure there are others who are good.
Can't lie This is mind blowing indeed the name sounds too familiar I've come across individuals talking about her great service I guess this is a sign to try her out.
There's a lot of things I agree with Dave and there's a lot of things I disagree with Dave on but in this case hes 100% correct.😊
“We are debt free”
You are not if you still have a mortgage.
😂😂😂. Exactly.
I'd rather be in debt with a 2.65% mortgage and home equity than being a "debt free" renter.
@@jonathantaylor6926 Yes I'd agree with that.
Dave is right, but only partially. If mortgage rate is relatively low, I would sell the car and invest the money in mutual fund that averages 8-10 per cent profit annually.
Like Dave said, y'all can't math
No ideas this was a thing, I don’t own a home but this is good info for the future
The worst part of Trumps tax cut plan was not providing a way to write off mortgage interest and proprty taxes in addition to the standard deduction.
80% TURBO 14% XAI213K 2% FLOKI 2%BONK 2%PEPE 🎉
There is a lot more to it than what Dave is saying. And for those who itemize, myself included, we understand the substantial benefits of leveraging secure, low-interest, fixed-rate debt to free up capital we can invest for much higher rates of return AND an additional tax deduction as a bonus. Paying off the house would be a the "dumb trade".
The tax code is written to incentivize certain behaviors and actions. You can either take advantage of those incentives or not. The vast majority of the C-Suite executives managing the companies in all of Dave's mutual funds are among the 9% doing exactly this.
No you're not
The key word here is low interest mortgage which creates an arbitrage opportunity when market returns are higher. For most folks, a lot more needs to be true for leverage to be beneficial i.e. Low mortgage rate + Itemizing Returns + Longer investments timeline (typically folks farther away from retirement)
That is stupid, just pay cash. Oh you don't have it, so debt is your solution. Still stupid
Good advice
Is it wise for a down payment of 50 percent of 278000? And have monthly payment of 1200 with property taxes? But ill be left with about $8000 after?
the only way that could be beneficial is if you are right on the cusp of being in the highest income tax bracket AND you live in a state with very high state income tax like california. for most people it's not saving you money to give the bank more in interest payments.
If you own a house in Massachusetts, California or any other very expensive state, you most definitely should be itemizing on your tax returns. My mortgage payments / interest were almost $24,000 for the year and I am single. 2.75% fixed interest rate.
Hmm, I also live in MA but just paid off my mortgage 20 years early. Oh well, at least I can take that $20k a year now and start pumping another investment account up.
So staying in debt is your idea of smart. Do you get a Christmas card from your banker?
@ wasnt saying stay in debt. If you read my comment i said a lot of people should absolutely be itemizing on their tax returns.
@@logdon17 wasnt saying stay in debt. If you read my comment i said a lot of people should absolutely be itemizing on their tax returns.
So far I'm still in the minority where itemizing is the better option. Not sure how the upcoming return will be. I know at some point the mortgage interest won't be high enough for itemizing.
“Cash!” - Dave Ramsey voice
My XAI213K is still pumping...thank you
So should I stop investing to pay off my mortgage? I currently put 28k a year in my 401 (I’m over 50). I owe 200k on mortgage and would like to retire within 5yrs. Mortgage rate is 4.25 but my 401 had a 21% return this year so far.
Their tax bracket is not 32%... MFJ at $150k income is the 24% tax bracket
So it's way worse. You give the loan company 3000 to avoid paying government 720.
@@asama6647 Well yes, but no. They owe $90k on the mortgage. So they would have to pay $90k to avoid paying $3000 -$720. Meaning they would have to net around 2.6% after-tax to come out ahead.
Isn’t standard deduction 7k for single filer?
I've never once been able to itemize. Even if you time your property taxes to pay 2 years' worth during 1 calendar year and 0 during the next, I still couldn't itemize.
Hmmm is that even before 2018? The standard deduction was much lower prior to 2018 and for those that had SALT and mortgage interest and some charitable deductions, it was common to itemize.
Hello, Dave. I am a new follower and have a question 🙋🏼♀️ I have a mortgage of $114,000 at 3% I also have a HYSA @5% All my friends say NOT to pay extra to my mortgage but, to add it to my HYSA. Thoughts? I do pay $125 towards the Principal and $25 to the escrow. Thank you in advance for your help. Have a Blessed Day 😊 💰
How much tax are you paying on the 5% High Yield Savings Account? Most people do not know that all of that interest you earn is taxable. Your total return on your High Yield Savings account is actually less than 5% because of taxes on the interest. You can look up Schedule B on 1040 IRS tax form and learn about Dividend & interest income and how it is taxed.
Aren’t taxes and insurance deductible regardless on a primary residence?
No
Hahaha! I remember my tax filling after my first year of ownership. Was I in for a rude awakening?!
The only reason to keep a mortgage is if its low interest, below 3%, as you can easily make higher returns in guaranteed products. If your mortgage is 5% or higher, then its less likely you can find a guaranteed return, but market investments may be worth it. If your rate is 7.5% or higher..pay it off after making your other retirement investments.
Nope, being in debt is not a strategy for being wealthy. That is a fools game.
@@alinatamashevich3354 Managing debt smartly is an aspect to becoming wealthy. Obsessively paying down debt when it is of no financial benefit, and indeed create a loss is stupid. There is a time to eliminate debt, then there is a time to simply make payments as your money has better uses. Ramsey clients, on average, don't possess the knowledge and self-control to handle debt, or money, well. For those individuals, such a simplistic approach is better than trusting their own poor decision making.
Dave no need to be an Ass. It was a very good question. I thank you for answering it and letting us know the facts on this but you could have answered it without implying it was dumb.
EXACTLY , because USA tax deductns,,are REAL and not virtual .
I DISAGREE Dave Ramsey...must itemize to receive MORTGAGE deductions.
It makes sense carrying a mortgage on a rental property, since everyone itemizes those, and they do not get a standard deduction. If your LTV ratio is high and your rental income is steady, having that cash on hand to invest in other things makes sense.
No it doesn't. That's cash out of your pocket.
@@USMC6976 As opposed to a bunch of cash out of your pocket if you pay it off? If your interest rate is sub 4 percent, you are a good portion of the way through the amortization schedule, and you can take that cash somewhere else and make MORE than 4 percent, it makes no sense to pay it off, plus you can have that cash on hand AND deduct the interest.
@@Cucumberflavoredmustard you do not factor the risk of debt or a bank calling your loan suddenly. That is why Dave does cash only.
The cash out of your pocket is just converted to real estate, the cash you pay in interest is cash lost.
You start investing the cash you were paying the bank with little amount going to the principle on your mortgage, investing it, and it's ALL yours, will pay off in the end.
The stress the debt creates is not quantifiable. The risk that debt allows others to control your life is not quantifiable, but you do you.
@@USMC6976 It's illegal for the bank to "call the loan" without payment delinquency. Even then the borrower has a right to cure. The real estate you have equity in is also appreciating just like cash- and outsize of your current cash investment as well, since there is a loan.
There is no stress whatsoever if the property is insured, and with tenants being so easy to find.
@@Cucumberflavoredmustard you keep telling yourself that.
someone doesn’t do their own taxes
8:02 - way to move the goal post Dave.
No, netting the difference between your mortgage rate and investment return won’t make you a millionaire.
However, using some 6th grade math, it makes sense.
No, because you can't quantify the stress level you experience when owing money. It takes its toll, whether or not we recognize it.
So staying in debt is your idea of sound financial planning?
@@alinatamashevich3354 Depending on the circumstances, yes. The “6th grade math” is in favor of it.
@@USMC6976 yes, but I can quantity my net of tax return on a 4.5% money market over the cost of my 2.75% mortgage.
And, to be blunt, if having a mortgage stresses you out that much then I’m not sure how you function in other areas of life.
@@v-2010 And after you pay the taxes, you're left with maybe1% or 1.2%. Yeah, keep telling me how much that is going to make you. And when the economy tanks, and it will, enjoy the slide.
I have always itemized.
It's sad that so many people don't understand the basics of taxes.
The government wants it that way, to catch more people and take more money
@compendiousperspicacity Maybe so, but in my opinion, there is no excuse for not understanding the basics and this video was a very basic concept.
I’m def one of those ppl who don’t understand taxes at all.
@@reese85 Well you should take a little time and effort to learn the basics. I don't expect people to be tax experts, but there is no excuse for not learning and understanding the basics. This video of standard vs itemized deductions is a basic concept.
Fyi... I'm not a mechanic but I can change a flat tire. Basics!!
I don’t think my taxes are as basic as changing a tire is but I can be wrong! But where or how would I go about learning the basics?
So you would rather pay the bank $1 in interest to save .22cent in taxes?
Just another example of why our tax system needs a complete overhaul.
I itemized last year, airbnb host.
Why do big corporations lease or rent buildings and do nothing with them then? I’ve seen buildings sit empty for years that are being paid for by the businesses. There has to be some sort of benefit from paying on properties.
Same for some landlords I know. They have rentals sitting empty for years at insane prices and don’t care at all. There is some benefit they are getting from that if they’re not concerned about them being paid for.
You are right that there is a benefit for holding empty buildings. The business situation is different: they can claim the interest as a business expense and every dollar of interest reduces taxable income dollar for dollar. Itemizing on a personal return only 'saves' taxes to the extent of the marginal tax rate times the total annual interest payment (so you save 28-32 cents in taxes for every dollar of interest paid).
@@jerimorgan4114 Your comment is spot on. Personal and Business deductions have varying degrees of impact
And people think I am crazy for pushing to pay off my 3% mortgage...
You are if you would just invest that money instead. In your case paying it off is for peace of mind. but the Math says you should invest that money.
You are NOT crazy. When I refinanced for 15 years several years ago with a 2.75 interest rate, I put crazy money towards the principle and paid my house in 6 years and 10 months. When you become totally debt free you can invest more, save more, and do many things without having debt. Some people are so attached to and comfortable with debt, they keep it around like its their best friend!!!🙄
@@AndreaJames-dv1rr If you put that money into an S&P index fund you would have done much much better. Peace of mind is the only benefit of paying off a 2.75% interest rate. As he says in the video what you are saying does not math.
@@domatnyc Peace of mind is very important, especially when one is a lower-income retiree. I know I could keep the $116K in my 4.5 % interest- bearing savings account instead of using it to pay off the mortgage (3.75 %), but that small mathematical benefit does not outweigh the feeling of relief I get from cutting $700 off my monthly expenses and having no debt. I'd rather lose that little benefit and have the big benefit of peace of mind 😌 Others have different situations and opinions of course 😊
The more I hear Dave talk about "None of the millionaires we surveyed do/dont do..." the more I think this study (1) doesnt actually exist or (2) cherry picked candidates to support his methods.
Theres more than one oath to becoming wealthy and the Ramsey method is but a single and conservative way to do so.
She was quoting Seinfeld not Schitts Creek
Robert Herjavec recently mentioned in an interview that his mind freed up to become a better entrepreneur once his house was paid off.