The best saving vehicle to buy a bigger house is your current house. Paying down your mortgage is a risk free and tax free savings plan that will make you well placed to buy a future house, whatever price you sell your current house for. I'm in a similar situation and I'm currently paying off my mortgage as much as I can.
Not always. We bought a 45 year old home as our first house and discovered many problems. That house cost alot to fix up so they equity plus realtor fees and the fixing up doesn't leave much if you want to sell in 5 years. Or 10. And housing is increasing in price fast but older homes are not as fast. So it depends.
No you aren't in a better position! You would have to do a contingent offer on the sale of your house and right now all those offers are going straight in the trash. If in two years you have $125K cash to put down, you are in a much better position.
I think they should think about putting the money in a savings account so they can get a mortgage without selling their house first. It might be tough to get a contingent offer accepted.
I generally agree with Ramsey's approach, but I think the better answer is to start by saying that both options are good options. That is the logical answer based on his focus on amount saved and invested being key. Technically speaking, I think both options have risk because house values van fluctuate just as stock prices can fluctuate.
dave's math is no good terrible return to have paid off a 2.x% mortgage since this video aired. Lost out on a ton of growth. Even the market hadn't taken off, would've still been an awesome opportunity to buy low.
That arguments is dumb. 50k making 8-10% per year is better than zero. That’s like someone denying a raise from a boss because the worried about more taxes…
He's already maxed out his tax deferred saving, so this would be after tax and since he is looking at maybe three years having $150-200K saved he only pays taxes on growth which would only be maybe $15-20K and he probably wouldn't have to touch that for the down payment.
I'd have to question do you really need a house that expensive.. It's obviously a dream, but why? For me I'd rather have a modest but paid for house and investments to create some passive cash flow in the future.
but do you need a modest house? why dont live in your car and eat ramen to save up more money? joking aside its all on the individuals case as long as they buy within their means.
@@abrahamflores2566 its whatever your mental health can take. Living in a car you struggle with hygiene and social relationships, what is that worth to you?
@@MikeMarshall1411 I live in the largest American City (500K) without Property Tax. The City gets money from Utilities: Gas, Electricity, Trash, Water, Wastewater, Recycle, ...... My utility bill is ~$800/mo
Does your pension contribution count towards our 15%? So assume you contribute 7.5% to our pension, you would need to put 7.5% towards a ROTH or something. Thoughts?
Not sure why this guy called up Dave Ramsey for a plan on how to take more risk to upscale his lifestyle. Dave is about building wealth slowly and living within your means. This guy seems to want to live in a neighbourhood he can *just* afford. Dave's never going to encourage that lol.
Guy (or his wife) knows and understands money better than Dave. 2.625% mortgage and she correctly views investing that money is better. If you understand the effects of compounding, you will KNOW why DRs constant insistence on people hurry up and paying off low rate mortgages is NOT smart or wise. You're going for a short term accomplishment at the cost of shooting your future in the foot. The younger you are the more substantial the damage of his poor advice will be.
Yeah, the irs uses the $ value of the sale of your home vs the price of which you purchased the home, and would tax you on the difference (the profit) unless you put all of the $ amount of that home into your next home
@@benzmane7564 that’s what I thought. I’m surprised Dave didn’t say that to them. I saw an interview after this episode of an real estate inventor and he just rolls all his money from house to house so he doesn’t have to pay taxes
@@herbiehusker1889 exactly. it is all about percentages of one s total net worth - personal choice varies. I am sure DR didn't need a house upgrade but he can afford it. He paid cash!
Not gunna lie, i still dont understand what to do from this session. Is dave saying he should ultimately pay off the house entirely before putting in an offer in the other neighborhood?
He is saying put 15% in your retirement, throw everything extra at their current mortgage. When they find a house they like in the new neighborhood, sell the current house and use the money towards the new house. He is advocating paying off the current mortgage as fast as possible
@@AtomicQuotient got it but if they find a house they love in the other neighborhood, don’t they then have to bank on a quick sale of their current house? In that scenario, Isn’t that a risk that they end up double dipping by putting an offer in on their dream house while not securing a buyer for their existing home
@@ruxp12 That would only be true if they bought prematurely. Really what they should do is pay off the current house, then save up for a minimum down payment on the next house, and ONLY THEN buy. Then they can sell the current house with less time stress, and roll the proceeds from the sale into the new mortgage.
Goofy that they ignore all multimillionaire youtubers that would say invest that money if you can handle the risk of the house upgrade being delayed for the chance to get it sooner. Not all of them are some poor blogger in a moms basement.
Lol "we owe over 200k on our current house, now how do we upgrade to an even more expensive house??" Lol, I think you pay off the first one as it already appears that you have over-upgraded already
I’m in the same boat as this guy and I’ve had this same question. I’m in BS2. It seems confusing which to do. But I feel like it’s be a good mental boost to pay off a cheaper house before buying a larger house so at least you know how it feels. So maybe you don’t keep yourself in debt longer or whatever
@@conureron3792 But dude, if you sink 200k into a mortgage and then your house is only worth 120k, you just lost 80k. If you put it into a savings account, you dont lose that money.
@@daltonbrasier5491 - true, but they weren’t talking about a savings account- their premise was to invest the money presumably in a higher yielding, but riskier product. So, they likely lose their funds….and now, they are underwater when it comes to their housing/mortgage: house’s value is below what they still owe.
The best saving vehicle to buy a bigger house is your current house. Paying down your mortgage is a risk free and tax free savings plan that will make you well placed to buy a future house, whatever price you sell your current house for. I'm in a similar situation and I'm currently paying off my mortgage as much as I can.
Not always. We bought a 45 year old home as our first house and discovered many problems. That house cost alot to fix up so they equity plus realtor fees and the fixing up doesn't leave much if you want to sell in 5 years. Or 10. And housing is increasing in price fast but older homes are not as fast. So it depends.
This is our exact situation right now and Dave just confirmed what I was already thinking. Thanks!
Good discussion. Dave always sides with mitigating risk/paying off debt over potential investment reward.
Dave should have just asked about their annual income and the price of the house.
When does he ever ask pertinent questions?
No you aren't in a better position! You would have to do a contingent offer on the sale of your house and right now all those offers are going straight in the trash. If in two years you have $125K cash to put down, you are in a much better position.
That's what I was thinking too. Plus once they sell their current home they can turn around and put those proceeds towards the new mortgage.
I think they should think about putting the money in a savings account so they can get a mortgage without selling their house first. It might be tough to get a contingent offer accepted.
Yeah you lose money to inflation on a savings account tho.
As my brilliant self said before I think we need to invest it. Not only safely but I think we should take some risk and maximize gains.
Save an extra 50k to 70k, i don't even make that😂
Same bro 😂
Not yet!
I thought that too 😭😭😭
I generally agree with Ramsey's approach, but I think the better answer is to start by saying that both options are good options. That is the logical answer based on his focus on amount saved and invested being key. Technically speaking, I think both options have risk because house values van fluctuate just as stock prices can fluctuate.
Rate of return is never a guarantee. A paid off house is.
As is property taxes
not true unless you think 20 years from now the U.S. will collapse. in the short term you are correct, in the long term you are not
What’s guarantee is your equity in the home is making you no money this year either…
Well, unless the real estate values drop again
Basically yes 💯
This guy can easily have another few hundred k saved up if he keeps doing what he’s doing right now compared to just investing 15%
The Financial Peace babies is a whole new generation that will benefit the most.
dave's math is no good
terrible return to have paid off a 2.x% mortgage since this video aired. Lost out on a ton of growth. Even the market hadn't taken off, would've still been an awesome opportunity to buy low.
If you invest the money and pulled out you will owe taxes. If you put it towards your own house and buy a bigger more expensive house., NO TAXES!!!
That arguments is dumb. 50k making 8-10% per year is better than zero.
That’s like someone denying a raise from a boss because the worried about more taxes…
Or you could just not be oblivious to tax laws, only pull out 80k a year and pay NO LONG TERM CAPITAL GAINS TAXES!!! 🙄
Unless you have property taxes?
He's already maxed out his tax deferred saving, so this would be after tax and since he is looking at maybe three years having $150-200K saved he only pays taxes on growth which would only be maybe $15-20K and he probably wouldn't have to touch that for the down payment.
I'd have to question do you really need a house that expensive.. It's obviously a dream, but why?
For me I'd rather have a modest but paid for house and investments to create some passive cash flow in the future.
but do you need a modest house? why dont live in your car and eat ramen to save up more money? joking aside its all on the individuals case as long as they buy within their means.
Chris V - I agree with you but it is their money and house.
@@abrahamflores2566 its whatever your mental health can take. Living in a car you struggle with hygiene and social relationships, what is that worth to you?
@@HarmlessX I was making fun of the original comment.
@@abrahamflores2566 well made pointb
Pay off the house !! 😃
"whats the best to upgrade my house?"
Dave "Sell the house!!"
2:25 that’s when you didn’t do math Dave😂
Yep, Dave was wrong about that. An extra 50k put down on the principle of the home makes nothing. Could easily be making 8-10% per year if invested.
That's what I thought. Thanks for confirming
@@dianecelento4974 ? Ok
Upgrading homes sounds great if its paid off... until you realize now you owe the county several hundred per month in property taxes.
Thats why you should move to a state with out property taxes.
@@daltonbrasier5491 No such state.
@@MikeMarshall1411 Not for them. But in 13 states(i think) there is no PT for senior citizens.
@@MikeMarshall1411
I live in the largest American City (500K) without Property Tax.
The City gets money from Utilities: Gas, Electricity, Trash, Water, Wastewater, Recycle, ......
My utility bill is ~$800/mo
Her eyes are gorgeous😍
I disagree. She has a very harsh face
Does your pension contribution count towards our 15%? So assume you contribute 7.5% to our pension, you would need to put 7.5% towards a ROTH or something. Thoughts?
If you find a new home in less than a year you will lose money when you pull your investments out. Taxes will kill you.
Its called FOMO - Fear Of Missing Out
Oh dear, I sure hope he gets in that "prized" neighborhood! 🤣
Do you think it’s Celebration?
Not sure why this guy called up Dave Ramsey for a plan on how to take more risk to upscale his lifestyle. Dave is about building wealth slowly and living within your means. This guy seems to want to live in a neighbourhood he can *just* afford. Dave's never going to encourage that lol.
Guy (or his wife) knows and understands money better than Dave. 2.625% mortgage and she correctly views investing that money is better. If you understand the effects of compounding, you will KNOW why DRs constant insistence on people hurry up and paying off low rate mortgages is NOT smart or wise. You're going for a short term accomplishment at the cost of shooting your future in the foot. The younger you are the more substantial the damage of his poor advice will be.
We need a UK version of the baby steps
They transfer across anyway... the main differences are cost of housing vs wages ratio is different. The steps still work
"""LET S PRAY For Those children's who does not have their parents they are real legend 💋💔
Most annoying call of the year thus far!
Isn’t there some tax benefit to using the profits of the sale of the house to purchase a new home?
Yeah, the irs uses the $ value of the sale of your home vs the price of which you purchased the home, and would tax you on the difference (the profit) unless you put all of the $ amount of that home into your next home
@@benzmane7564 that’s what I thought. I’m surprised Dave didn’t say that to them. I saw an interview after this episode of an real estate inventor and he just rolls all his money from house to house so he doesn’t have to pay taxes
@@Cbv1914 he basically did. Dave basically told them to pay off their existing house, then sell it to then buy a bigger house
Why am I so distracted by the cohost frowning the whole time.
Pay off the current house and buy a boat, far more enjoyment if living there.
The best way to do it is to not do it.
If you can afford it, why not?
@@herbiehusker1889 exactly. it is all about percentages of one s total net worth - personal choice varies. I am sure DR didn't need a house upgrade but he can afford it. He paid cash!
I'm growing my hair out. I will not be taking Dave's advice on that. But I will take his advice on building wealth.
Not gunna lie, i still dont understand what to do from this session. Is dave saying he should ultimately pay off the house entirely before putting in an offer in the other neighborhood?
He is saying put 15% in your retirement, throw everything extra at their current mortgage. When they find a house they like in the new neighborhood, sell the current house and use the money towards the new house. He is advocating paying off the current mortgage as fast as possible
@@AtomicQuotient got it but if they find a house they love in the other neighborhood, don’t they then have to bank on a quick sale of their current house? In that scenario, Isn’t that a risk that they end up double dipping by putting an offer in on their dream house while not securing a buyer for their existing home
@@ruxp12 exactly.
@@ruxp12 That would only be true if they bought prematurely. Really what they should do is pay off the current house, then save up for a minimum down payment on the next house, and ONLY THEN buy. Then they can sell the current house with less time stress, and roll the proceeds from the sale into the new mortgage.
@@Kaktus965 agree
Goofy that they ignore all multimillionaire youtubers that would say invest that money if you can handle the risk of the house upgrade being delayed for the chance to get it sooner. Not all of them are some poor blogger in a moms basement.
Lol "we owe over 200k on our current house, now how do we upgrade to an even more expensive house??"
Lol, I think you pay off the first one as it already appears that you have over-upgraded already
What happened to her ?
If you live in New York State?? leave immediately this by far is the greatest financial house upgrade one can do PERIOD!
It makes zero sense to prioritize paying off a house that you plan to sell within a few years.
I’m in the same boat as this guy and I’ve had this same question. I’m in BS2. It seems confusing which to do. But I feel like it’s be a good mental boost to pay off a cheaper house before buying a larger house so at least you know how it feels. So maybe you don’t keep yourself in debt longer or whatever
Wife and I wonder who's idea this is 🤔
This guy is trying to sound to smart he needs to just listen and stop stumbling with words and numbers that's why u called for advice just listen
Sure hope they didn’t actually invest
The beat way to upgrade in house is have Dave pay for it.
With student loan money, cause those you won't have to pay back. 👌
You most definitely will have to pay them back.
What is home prices come down or maybe a housing crash? Then he potentially may be losing a lot of money in his home.
And, the target home price in the neighborhood they covet also drops.
@@conureron3792 But dude, if you sink 200k into a mortgage and then your house is only worth 120k, you just lost 80k. If you put it into a savings account, you dont lose that money.
@@daltonbrasier5491 - true, but they weren’t talking about a savings account- their premise was to invest the money presumably in a higher yielding, but riskier product. So, they likely lose their funds….and now, they are underwater when it comes to their housing/mortgage: house’s value is below what they still owe.
You’re doing math and calling Dave Ramsey.
Casey the Spammer doesn’t know how to do math. Very stubborn Spammer!
Look everyone, Casey the Spammer! See you tomorrow and I’ll see you on Monday on Minority Mindset! Be gone Spammer!
I want to pay off my house early. I'm just not sure how to do it. Suggestions?
This is going to be really difficult to follow and I'm sorry.... pay more than the minimum payment.
Set up a biweekly mortgage.
Sounds like this guy just called to brag
Better then I deserve
Than*
Put the money all-in on Tesla stock and buy with cash proceeds in a year.
@@korbyn49 lol
@@korbyn49 😂
Harry Chu, better stick to your day job.
Is Harry a bot?
@@nezra3514 You don't want to miss these steep discounts, get your Tsla shares before the deals run out!
why do Americans have such weird names for stuff , compared to us up here in Canada?
Ottohrt
😁👍🖖👌✌😎
His wife has no common sense.
She’s smart.
Keeping up with the jonses
why do Americans have such weird names for stuff , compared to us up here in Canada?