The whole idea of being debt free is to avoid being backed into bad corners and letting situations dictate what decisions you make. Even if you are debt free but have zero resources and you suddenly need to fix a car or need to get medical help or or or whatever else can set you back in to debt or something worse
I implemented Dave’s advice for one month and made some radical changes and for the first time in years I actually have savings. For the past ten years I spent my money on a load of nothing. Hoping to be debt free in the next three years.
I like having a paid off house. Eighteen months ago my brother bought a bigger newer house before mortgage rates went up. His thought process was he needed to access that cheaper money before rates go up. I still like my smaller paid off house! 😎
It’s hard to not want more. I like new and big too, but when I see the estimated mortgage payment, it doesn’t make sense, I will be paying a lot more for little return. My mortgage is quite low, it’s hard to beat. My house is standard and I’m happy with it, just needs minor maintenance.
That's why I live in a small house and buy rentals. Best of both. Took advantage of low interest while keeping my monthly expenses low (obviously unless renters don't pay but haven't gotten there yet
Yeah, I'd also get nervous around $10k. What they didn't mention is that, when he does pay off his house, his monthly expenditure will drop significantly, so that $10k would stretch a bit further as an emergency fund.
Oh? Is there a big sign that gets installed on your house when you pay your mortgage off? Unless you tell them, nobody knows, or really cares, if you have a mortgage or not. Beyond self satisfaction, I don't really get your point.
@@genxretiree I know that, I've been watching this show for years... I am suggesting that in my particular financial situation, I don't see the virtues of paying off MY house.
Thank you Dave. People need to hear what you just said to this caller. Your income will be your most valuable tool when you are not giving a portion of your earnings to someone else. Great, ❤ it.
Theyre probably taking home $8-9k a month after taxes and only have monthly bills of less than $3k. So they have an extra $5k a month. They can easily pay off the remaining $45k mortgage in a year. No need to call Dave for advice on this one. Id throw an extra 4000 a month towards mortgage and 1000 in savings. In 10 months the house be paid off and theyd have an extra 10k in savings.
I make $8-$9k/month for 2 years. Have a total debt of $60k. Couldn't pay it back. Partying for 8 months with new friends. Wasted $25k in play money. Smh. I fucked up. 😢😢
@@TavernMasterAndy lolRegrets not being in debt - said no one ever (well, no one with any brains). "But wait...wat about all my GAINS I can make while in debt" You do you bro, meanwhile I will sit over here with millions in the bank and not owing a cent to anyone, and feel bad about it.
This caller is overthinking his situation. It honestly doesn’t matter how he tackles the mortgage, because his house will be easily paid off within less than a year.
Agreed. At this point in his mortgage the interest on the loan is so low why take away that much in liquidity from savings? Unless this guy is bad with money why be overly aggressive here. Do the math & figure out how much extra this will cost if you delay this by a year.
Yeah, his issue is more emotional than financial. Either way, it’s a win-win. He’s either too anxious and ecstatic or has an identity issue with money.
Yessss! I agree with all replies in this thread. It’s not like he has THAT much in savings to warrant paying off anything substantial. I would freak out if that’s all I had in savings and sure as sh*t wouldn’t be paying my mortgage off…if ONLY mine was that small haha.
Dude is just calling to brag. They built all that savings presumably over the course of a long period of time and didn't use it to pay down the mortgage and now all the sudden he's getting antsy to pay it off a few months earlier than he otherwise could?
Dude is stressing out over a few bucks in interest and doesn't think about how stressed out he will be if he loses his job and has a 3 month countdown to find a new one.
I bought a house in 2020 which is now about a little less than double in value. I have started looking for a new home that i can buy cash after selling this current home with equity and extra cash that i have saved up. Just waiting for few more months. Builders have started to offer 100k off on new inventory homes here in dfw area. The prospect of being 100% debt free is so amazing. Looking forward to make this happen in sometime next year.
i was kinda with him until he said he made 150k a year lol. he said his household monthly cost is less than $3k a month so lets call it $2,800 meaning his yearly cost is almost 34k. Even if you take away 30% of his income for taxes he's STILL saving almost 55k a year all by himself lol. This is the biggest nothing burger "problem" i've ever heard.
@@adidab14 true, his problem isn’t that big of a deal when looking at the numbers, but the emotions and dilemmas behind it is bigger than what could be expressed here.
This is my family's situation right now so I really appreciate the advice. Very similar numbers and time frame with us. Good feeling seeing the finish line getting close.
The problem we have is that we paid off our house, but in Texas, our insurance and property tax is about 1,000/month. It only cut our payment by about $700. It does feel great though, really great.
They have a healthy emergency fund. I'd throw the rest of the money, after investments at the mortgage. It's tempting to just pay it down quickly at the end, but they need to keep in mind that most of the mortgage payment at that point is principal. So no need to add so much risk just to save a few months of payments.
The reason he called Dave is the same reason he’s gonna maximize what he does make, rather than being one of the numerous high-income broke people in the US.
Hi World, I paid off my mortgage back in May 2023, and wonderful feeling for sure. Since then I’ve been spending like I’m in Congress and generally pissing it up the wall. I don’t think this last part is in Dave’s plan. I’m going to get a grip and start saving into my S&P index fund but still make plans to travel and have a good time: life is short, get out and enjoy xxx
If your mortgage has an interest offset account just park your savings in there, it will reduce the interest paid on your mortgage to close to zero, it's sort of like paying off your mortgage but the money can be transferred back to regular savings with the click of a button at any time with no penalty or need to refinance.
Savings rates are starting to rise to offset inflation, house debt will become more expensive, unless you happen to be fixed into a lower rate at the moment - pick a payoff date, say 12 months, where you figure interest rates will be +2-3% and then you can reassess saving debt free
Almost everyone doing Dave's Plan will encounter this situation on their way to being fully debt free. So hearing Dave's advise on this call should be heard by everyone doing Dave's plan. Baby step 3 - Emergency fund 3 to 6 months of house hold expense. It's the matter of 4 to 5 months and he pays the mortgage off if they really work the plan. But even then your building your Emergency fund back up again. I love that this guy gets it and wants so bad to pay off the house. What a great way to start 2024, to slap the home loan out and start building wealth.
sitting on a 2.25% 15 year mortgage, if I were to pay off my full mortgage of $228K I would save 32K of interest, Instead I put the money into low-risk mutual funds and CD's, which earn me an average of $1350 a month at an avg. rate of 5.35%. I will not be trading $430 for $1350 - Sorry mortgage stays.
I applied a non-retirement mutual fund cash out/savings but it wasn't the last of our money. Also I kept paying down the mortgage enough that the savings withdrawal would pay it off. So if there was some emergency, our next month would be only basic bills: food, utilities, taxes & insurance. It worked out especially good because 2 months later, our mutual fund value took a nosedive, as well as all of our investments. We invested $17k. In 3 years it grew to $33 k. Then pulled out before it dropped. We got lucky. It wasn’t skill at all but I’m so glad we did that!!
@@96ej All of them. For example this family makes 190k a year gross income and Dave is making the calculations based on that income, when the reality is that they probably make less than 150 after taxes.
Cash is king... I could probably pay off my house pretty easily, but I worked pretty hard to accumulate savings and my 401k... I just can't let that go.
@@Kaktus965 I'm sorry, I should have shared a tiny bit more information. I'm 69 twice retired, two full pensions and two ss coming in. No bills, cars paid for. I don't really need my 401K at the moment, I take (used to) some of the earnings periodically for projects around the house. I know this flies in the face of what Dave advocates, but it works for me. Have a good evening!
I certainly read the different comments, ie cash is king, yes l could pay off my mortgage just like that!!!!, l have quite a bit in savings and things are spread out so l wouldn’t have to deplete 1 or the other completely, l would still have plenty leftover etc, it sort of hard to pay off the mortgage with what l have in 1 fund but again it took years to get to where I’m at ( I’m retired with 2 retirement checks from 2 careers I’ve had plus as) l don’t have to work anymore unless l chose too, the funds are guaranteed, l don’t see any situation where the companies I’ve worked for say we cannot send your retirement $ to you anymore-l have no other debt except the mortgage, its around 39,000 owed, but l hear Dave saying pay it off, be done with it invest etc
When you pay off your house, your savings don’t need to be as high, since you won’t have to cover a mortgage expense, right? Then you can save the “mortgage payment” into savings the month after you pay off your house…
That's like renting a car to drive to work everyday when you have one in your driveway that you already own. Why are you paying interest every month on $68k when you have more than that in savings. You are paying money to borrow something that you already have. And $26k is plenty for an emergency fund if you just pay the house off.
My emergency savings liquid fund comfort zone is 40K which is 10K more than the annual mortgage payment including escrow. Why not have enough for one year?
Hold cash, pay extra each month and pay it off over the next 12 months. Awesome. Congratulations!! Dont forget your property taxes and insurance are part of your mortgage amount which will remain.
Comes down to what you can afford, I sold my company stock all of it. Paid my house from 160k down to 50k. I’m throwing everything but the kitchen sink at it. Never regret my decision
I pay off my Dec 2020 refi’d 2.625% 15 years $328K loan before thanksgiving 2022. Not regretting for a second now with no debt and still have a decent tech job.😊
I paid down my mortgage whenever I could. Now interest rates are rising ( approx 4 times the rate it was a couple of years ago ) I am so glad that I did so, as the capital left is only 14k. It means the extra interest each time the interest rate rises is only a few pounds per month. However if I had been able to pay the mortgage off conpletely I would be several hundred pounds better off each month as no mortgage to pay, plus no more interest payments steadily rising. At the moment I am still paying extra and scheduled to have mortgage paid off in 3 years ( the Lord willing), but if I had enough savings I would definately pay it off ( keeping back £1000 emergency fund!)) I am In uk so National Insurance that I paid during working life means healthcare is free at point of need and provides pension, so huge savings ( in my eyes) of 10k not needed if house is fully paid for !
This is not a black/white situation. I have 80k left on mortgage at 3.25% and I am getting 5.4% on my cash in Betterment. Also, mutual funds made over ~20% last year and individual stocks over 40%. It does not make financial sense to pay off mortgage. If you are responsible and know what you are doing, debt is fine. If it helps your well-being then that is a separate issue..0ne size does not fit all.
I’ve wondered this same thing for years. I’m also surprised how little money high earners have saved. But they are likely driving expensive cars and prolly have other expensive toys in the yard or garage.
I will be paying my house off in less than 4 months. I WILL probably be at zero in my bank account, but I HAVE to have it paid off before the September insurance extortionist bill arrives. Then the mortgage company will be sending ME the check for 10k instead of the insurance company. Insurance is a scam and I am over it!!
Just keep the extra cash in a HYSA if your mortgage interest rate is low. We had a 20K event recently and were so thankful our BS6 dough is liquid to take care of that.
I would have liked to know what interest rate he has on his mortgage and what tiny little interest rate he is earning with his savings. I've always thought that if you can earn more than you are paying out, then you are winning the game. I've got such a low interest rate on my mortgage (2.875%) that I'm not going to pay that off. I'll put every extra dollar into something that will earn me more than that
If I had taken that approach when interest rates were low in my country, I would be struggling to pay my mortgage now, when interest payments are 5 times what they were a year ago. Get your mortgage balance down as far as you can, while interest rates are low so more of the extra you are paying is able to go towards the capital and you will have less to pay each month when interest rates do go up.( as it will at some point) Doing the opposite with mortgages/real estate is the mistake Dave tells us he made that he is trying to warn against.
I mean, these guys don’t even have problems that needs solving😂 They are sooo comfortable. Calling in for advice, when they KNOW they are out of debt by CHRISTMAS. Lol. Couple 30 years old, out of debt. Save the call time for the guys that need him help hahaha
Yes, spend every penny you have to pay off the house immediately. That way you’ll have to do a reverse mortgage to buy dog food in order to survive. That’s a great plan.
Why you need a reverse mortgage? After the house if paid off one paycheck pays all the bills for the month and three paychecks are left over as fun money. What planet do you live on?
How so, Dave told them not to stop paying in to their 401k. The caller said his wife pays in 11%, he pays in 7% and also pays 8% in to a roth ira, they also have a paid off house, between them they make $193,000 a year they'll probably end up being the millionaire next door.
I'd like to say there's a Step 8, "critical mass investments". Lets say you max out your 401k/IRA accounts, but there's still more to invest in taxable mutual funds... once the dividends from those are able to cover your living expenses, you're in crazy wealth territory
Why not pay off mortgage with savings and get a heloc as your emergency fund? You don’t have to use it. At least you’re not paying interest on it in the meantime though?
I convinced the wife to double our house payments. We struggled and struggled for 10 yrs and managed to pay off the house. Then, she left me, filed for divorce and took the house.
They make $200k a year and their "expenses" are only $3k a month...how can they not pay this house off by Christmas? Something doesn't work with the numbers given in my mind.
Or. Keep buying assets until you are ready to retire. Then cash in or continue to live on the income those assets generate. Mortgage interest is irrelevant if your assets are creating profit and long term wealth.
I would not pay off. If you are that close to paying off your mortgage almost all the interest was already paid off therefore there is no benefit for paying off. Use part of your savings for investments which will generate revenue yearly. It is beneficial to make payments in the earlier part of the mortgage where you can save on the interest payments.
SOMETHING DOESNT STACK HERE???. If they earn $200k and only have $3k month outgoings without the house (as he says) how do they only have $35k savings????
I think its because he said theyve been paying off debts and are recently debt free besides mortgage...otherwise yeah they should have over 100k saved up.
@@amattson6578 I bet you this caller and his wife were probably throwing a lot of extra money at the principal on the home too, probably -- because with that income it shouldn't have taken that long to pay off two cars and only have that little in the bank.
2:50... wut. If he’s paying off the house.. he doesn’t have a house payment. Therefore he should not factor in his house payment when deciding his savings minimum after paying off the house.. duh.
Generally I'm ok, but If you have a low rate mortgage, below 3% invest, there's no reason to pay off early. It's burning your future. Its way too easy to reliably, easily beat 3% in returns, that its giving away money.
Question for you Dave, I work construction and am starting your plan my income varies monthly so should I save more for my emergency fund to compensate for slow months?
In his book Total Money Makeover, Dave advises single income households or people with varying income to have a 6-month emergency fund instead of just 3. I hope it works out for you!
Something isnt adding up, they should be able to pay th8s off by the end of january without twking anything out. They make 10k a month net and he said they spend less than 3k a month.
Household income of 200K and expenses of 3K per month. Mortgage is 45K. What's not stated is value of home/interest rate/term of mortgage. Also no idea what income stability is on both incomes. Sloppy analysis but on face value, there is no reason to pay off the mortgage from current savings.
well said, way too many variables unanswered. At the end of a mortgage, the interest portion approaches $0. Many folks would rather invest versus pay off low interest loans, if they believe the return on the investment exceeds the borrowed interest rate.
The decision making process did not even discuss the mortgage interest rate. With inflation as high as it is, anyone with a mortgage at significantly lower rates should think very hard about paying it off any more quickly than necessary. Look at the alternatives. Can you invest your money to give you a risk free return rate better than the difference between the inflation rate and the mortgage rate?
How does anyone have $3000 month in expenses?? Cable internet 230 cell phone 120 auto insurance 120 home insurance 1400 gas and electric 300 groceries 1400 water bill 100 propert tax 1400 life insurance 200…..just for starters …..
Or keep the savings and just pay down the mortgage quickly. Having that money saved it good for emergencies. If he only needs $15K for emergencies when it's paid off, then he can wait until there's $25K left on the loan and just pay it off, hence leaving $15K.
and then what happens if he has a roof collapse, can't pay it, and loses the house??? You're not safe when you're close to paid off home and good emergency fund, you're safe once you have both of those things. It's way safer to keep the nice healthy emergency fund and pay the house off after 9 months.
These people that call in that make 200k a year and worry about paying off their house in a year, I don't really feel for them, I don't think they need his advice. They already have a financial advisor!
![ค้างคืนโรงเก็บกระสวยอวกาศร้างกลางทะเลทราย [Around The World Ep. 3]](http://i.ytimg.com/vi/E5bWZQhABJE/mqdefault.jpg)
Finally a situation I can relate to. So what I get from Dave is, don’t leave yourself completely vulnerable even if you have no debt.
The whole idea of being debt free is to avoid being backed into bad corners and letting situations dictate what decisions you make. Even if you are debt free but have zero resources and you suddenly need to fix a car or need to get medical help or or or whatever else can set you back in to debt or something worse
@@georgewelker853 yes
@@georgewelker853 Exactly! A little debt is good, alot of savings is better!
I implemented Dave’s advice for one month and made some radical changes and for the first time in years I actually have savings. For the past ten years I spent my money on a load of nothing. Hoping to be debt free in the next three years.
Get a real investment adviser and stop listening to youtube fool.
I started watching these videos about 7 years ago and have been debt free for 3 years. It’s wonderful. Good job dude. Keep it up!
I like having a paid off house. Eighteen months ago my brother bought a bigger newer house before mortgage rates went up. His thought process was he needed to access that cheaper money before rates go up.
I still like my smaller paid off house! 😎
I love my debt free module on my land!!!!!
It’s hard to not want more. I like new and big too, but when I see the estimated mortgage payment, it doesn’t make sense, I will be paying a lot more for little return. My mortgage is quite low, it’s hard to beat. My house is standard and I’m happy with it, just needs minor maintenance.
That's why I live in a small house and buy rentals. Best of both. Took advantage of low interest while keeping my monthly expenses low (obviously unless renters don't pay but haven't gotten there yet
Debt free is better.
Too bad property and school taxes are endless, regardless if the mortgage is paid off
Yeah, I'd also get nervous around $10k. What they didn't mention is that, when he does pay off his house, his monthly expenditure will drop significantly, so that $10k would stretch a bit further as an emergency fund.
It would, but the added risk isn't worth shaving a few months. They won't be paying much in interest by then.
Dave disregarded that because the caller didn’t have enough to completely pay it off so he still needed the higher emergency fund
Yes the paid off home mortgage has taken the place of the BMW as the status symbol of choice. Somebody told me that once…
Oh? Is there a big sign that gets installed on your house when you pay your mortgage off? Unless you tell them, nobody knows, or really cares, if you have a mortgage or not. Beyond self satisfaction, I don't really get your point.
@@ranger2316 You obviously haven’t been listening to Dave that long if you don’t recognize the tagline. It was a staple of his for years.
@@genxretiree I know that, I've been watching this show for years... I am suggesting that in my particular financial situation, I don't see the virtues of paying off MY house.
@@ranger2316 I found a lot of virtues in it. Actually the sign idea isn’t a bad one. I might put one up.
@@genxretiree Good on you! 😁
Thank you Dave. People need to hear what you just said to this caller. Your income will be your most valuable tool when you are not giving a portion of your earnings to someone else. Great, ❤ it.
Theyre probably taking home $8-9k a month after taxes and only have monthly bills of less than $3k. So they have an extra $5k a month. They can easily pay off the remaining $45k mortgage in a year. No need to call Dave for advice on this one. Id throw an extra 4000 a month towards mortgage and 1000 in savings. In 10 months the house be paid off and theyd have an extra 10k in savings.
yeah people seem to really love paying off their home and hate investing which is much more liquid something goes wrong.
I make $8-$9k/month for 2 years. Have a total debt of $60k. Couldn't pay it back. Partying for 8 months with new friends. Wasted $25k in play money. Smh. I fucked up. 😢😢
He makes $145k a year and his wife makes $48k. After $3k in monthly expenses, they still make $14k month before taxes. They're sitting pretty.
Which begs the question, how come they can't pay off $45k in 3-5 months?
Exactly. They should pay it off asap!
theyre spending more than 3k a month, hes not budgeting.
@@666dynomax Yeah I don't blame them but income was only one side while expense are on the other!
My expenses are 16K a month so I’m stuck
I paid off my house in 2019 no regrets 😁 I was 29 years old
With debt being at an all time low in cost... regrets incoming.
@@TavernMasterAndy lolRegrets not being in debt - said no one ever (well, no one with any brains). "But wait...wat about all my GAINS I can make while in debt" You do you bro, meanwhile I will sit over here with millions in the bank and not owing a cent to anyone, and feel bad about it.
@@stephen-ng And then he’s left with zero and no investments…
@@TavernMasterAndy pay off your mortgage, if you regret it get another one. 😅
@@tao-abdn luck has nothing to do with it
This caller is overthinking his situation. It honestly doesn’t matter how he tackles the mortgage, because his house will be easily paid off within less than a year.
Agreed. At this point in his mortgage the interest on the loan is so low why take away that much in liquidity from savings? Unless this guy is bad with money why be overly aggressive here. Do the math & figure out how much extra this will cost if you delay this by a year.
Yeah, his issue is more emotional than financial. Either way, it’s a win-win. He’s either too anxious and ecstatic or has an identity issue with money.
Agreed. He’s annoying. The dude would drive me crazy if I had to work with him. Overthinking people ugh
Yessss! I agree with all replies in this thread. It’s not like he has THAT much in savings to warrant paying off anything substantial. I would freak out if that’s all I had in savings and sure as sh*t wouldn’t be paying my mortgage off…if ONLY mine was that small haha.
Dude is just calling to brag. They built all that savings presumably over the course of a long period of time and didn't use it to pay down the mortgage and now all the sudden he's getting antsy to pay it off a few months earlier than he otherwise could?
Dude is stressing out over a few bucks in interest and doesn't think about how stressed out he will be if he loses his job and has a 3 month countdown to find a new one.
Good point. The job could lay him off next month.
If he doesn't have a mortgage he won't have it too hard
@@dpeagles might have to pick up the cost of healthcare without a job tho
Starbucks
How stress free to have no mortgage!!
I bought a house in 2020 which is now about a little less than double in value. I have started looking for a new home that i can buy cash after selling this current home with equity and extra cash that i have saved up. Just waiting for few more months. Builders have started to offer 100k off on new inventory homes here in dfw area. The prospect of being 100% debt free is so amazing. Looking forward to make this happen in sometime next year.
I wish I had this guy's "problem" 😄. Totally relate to what he said in the beginning, I wish I had discovered Dave Ramsey twenty years ago!
i was kinda with him until he said he made 150k a year lol. he said his household monthly cost is less than $3k a month so lets call it $2,800 meaning his yearly cost is almost 34k. Even if you take away 30% of his income for taxes he's STILL saving almost 55k a year all by himself lol. This is the biggest nothing burger "problem" i've ever heard.
@@adidab14 true, his problem isn’t that big of a deal when looking at the numbers, but the emotions and dilemmas behind it is bigger than what could be expressed here.
Me too
This is my family's situation right now so I really appreciate the advice. Very similar numbers and time frame with us. Good feeling seeing the finish line getting close.
Can't wait till I owe 45k on my house
The only person who talks truth and care about common people in US s DR & his team 🙌
The problem we have is that we paid off our house, but in Texas, our insurance and property tax is about 1,000/month. It only cut our payment by about $700. It does feel great though, really great.
You don't need insurance if you have no mortgage , just self insure.
Really? @@freedomworks3976
Exactly my concern is that it only saves 40% of my monthly "mortgage" payment. Yes i want it gone but more than half is there for life
Dave Ramsey changed my life! Thanks Dave
Just pay off your house , then build your savings !
Such sound advice. Never compromise your security blanket.
Just follow your finical advisor advice. That's why you have one. He really didn't need to call in.
If they make $200K, they should keep the $45K in savings, and enjoy a leisurely stroll towards debt free status.
When you’re being gazelle intense, there are no leisurely strolls.
What you and I agree is common sense. That savings could be wiped away in the blink of an eye.
lol i was thinking the same thing. this guy is way overthinking this.
They have a healthy emergency fund. I'd throw the rest of the money, after investments at the mortgage. It's tempting to just pay it down quickly at the end, but they need to keep in mind that most of the mortgage payment at that point is principal. So no need to add so much risk just to save a few months of payments.
They are just giving the bank their money then
I don’t think that guy needed to call Dave🙄 sir u don’t have any problem u make a lot of money
The reason he called Dave is the same reason he’s gonna maximize what he does make, rather than being one of the numerous high-income broke people in the US.
Dave will kill me 😀
I paid off my home That time I have $100 only in my saving.
Hi World, I paid off my mortgage back in May 2023, and wonderful feeling for sure. Since then I’ve been spending like I’m in Congress and generally pissing it up the wall. I don’t think this last part is in Dave’s plan. I’m going to get a grip and start saving into my S&P index fund but still make plans to travel and have a good time: life is short, get out and enjoy xxx
This man with 200k a year have no problem at all, pay house off or not.
I thought the same thing
This guy and his wife make enough to pay off their house and put aside some and then more for retirement and investments. They can do it!!!
The decisions are harder when you’ve put yourself in a position with so many options.
If your mortgage has an interest offset account just park your savings in there, it will reduce the interest paid on your mortgage to close to zero, it's sort of like paying off your mortgage but the money can be transferred back to regular savings with the click of a button at any time with no penalty or need to refinance.
I dont think they have offset option in America. I have it buy im in Australia.
Correct, nothing like that here in the US
@@briankelly1240I really like the idea, however!
The bank doesn't like it.
That’s what I did in 2019 and I did not ask nobody I went for broke and payed off my mortgage
WOW, since 2019 -- that is awesome -- what was your mortgage payment? I have a home I purchased in 2019 too. I have not put a dent in the debt.
I don’t want to see you inside a restaurant unless you’re working there!
Is that a Dave catch phrase? aha
They make 200k a year and have only 35k in savings. Something isn't right.
I just love how exciting this is for this couple.
should i cut my grass now? or wait a week and save gas on my lawnmower... do people think for themselves???
Savings rates are starting to rise to offset inflation, house debt will become more expensive, unless you happen to be fixed into a lower rate at the moment - pick a payoff date, say 12 months, where you figure interest rates will be +2-3% and then you can reassess saving debt free
Almost everyone doing Dave's Plan will encounter this situation on their way to being fully debt free. So hearing Dave's advise on this call should be heard by everyone doing Dave's plan.
Baby step 3 - Emergency fund 3 to 6 months of house hold expense.
It's the matter of 4 to 5 months and he pays the mortgage off if they really work the plan. But even then your building your Emergency fund back up again.
I love that this guy gets it and wants so bad to pay off the house. What a great way to start 2024, to slap the home loan out and start building wealth.
sitting on a 2.25% 15 year mortgage, if I were to pay off my full mortgage of $228K I would save 32K of interest, Instead I put the money into low-risk mutual funds and CD's, which earn me an average of $1350 a month at an avg. rate of 5.35%. I will not be trading $430 for $1350 - Sorry mortgage stays.
I applied a non-retirement mutual fund cash out/savings but it wasn't the last of our money. Also I kept paying down the mortgage enough that the savings withdrawal would pay it off. So if there was some emergency, our next month would be only basic bills: food, utilities, taxes & insurance.
It worked out especially good because 2 months later, our mutual fund value took a nosedive, as well as all of our investments. We invested $17k. In 3 years it grew to $33 k. Then pulled out before it dropped. We got lucky. It wasn’t skill at all but I’m so glad we did that!!
I hate how he never puts the taxes into the equation. Taxes are bigger than most house or car payments.
Can you elaborate? Income taxes, property taxes, Etc
This. Between income tax in our expensive province, property and sales taxes, it's easily more than half our income.
@@96ej All of them. For example this family makes 190k a year gross income and Dave is making the calculations based on that income, when the reality is that they probably make less than 150 after taxes.
Because he asks about take home pay, that’s after taxes. Sometimes people provide the gross number, sometimes the after tax number.
@@kirapoodle He always always asks take home. After tax
The best thing I ever did regarding money was pay off my house. We kept our reserves, and put every other penny into the house.
Cash is king... I could probably pay off my house pretty easily, but I worked pretty hard to accumulate savings and my 401k... I just can't let that go.
Lol Dave would NOT tell you to cash in your 401k to pay off your house….
@@Kaktus965 I'm sorry, I should have shared a tiny bit more information. I'm 69 twice retired, two full pensions and two ss coming in. No bills, cars paid for. I don't really need my 401K at the moment, I take (used to) some of the earnings periodically for projects around the house. I know this flies in the face of what Dave advocates, but it works for me. Have a good evening!
I certainly read the different comments, ie cash is king, yes l could pay off my mortgage just like that!!!!, l have quite a bit in savings and things are spread out so l wouldn’t have to deplete 1 or the other completely, l would still have plenty leftover etc, it sort of hard to pay off the mortgage with what l have in 1 fund but again it took years to get to where I’m at ( I’m retired with 2 retirement checks from 2 careers I’ve had plus as) l don’t have to work anymore unless l chose too, the funds are guaranteed, l don’t see any situation where the companies I’ve worked for say we cannot send your retirement $ to you anymore-l have no other debt except the mortgage, its around 39,000 owed, but l hear Dave saying pay it off, be done with it invest etc
Without a mortgage you can save a lot more
We have 68k left on our mortgage and have 94k in savings which is part of our emergency fund. To payoff mortgage or not payoff mortgage...
PAYOFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFF
Pay it off next time you get paid!
Definitely pay it off this year
When you pay off your house, your savings don’t need to be as high, since you won’t have to cover a mortgage expense, right? Then you can save the “mortgage payment” into savings the month after you pay off your house…
That's like renting a car to drive to work everyday when you have one in your driveway that you already own. Why are you paying interest every month on $68k when you have more than that in savings. You are paying money to borrow something that you already have. And $26k is plenty for an emergency fund if you just pay the house off.
My emergency savings liquid fund comfort zone is 40K which is 10K more than the annual mortgage payment including escrow. Why not have enough for one year?
200k a year and I have a bigger savings at 35k year. Complete lunacy!!!
Well, his savings isn’t including his retirement savings, so he probably has a lot more. Plus a nearly paid off house. And no other debt.
@@clarifyingquestions why did you tag me? I agree with you!!
@@w7855 My bad - sorry.
Hold cash, pay extra each month and pay it off over the next 12 months. Awesome. Congratulations!! Dont forget your property taxes and insurance are part of your mortgage amount which will remain.
Comes down to what you can afford, I sold my company stock all of it. Paid my house from 160k down to 50k. I’m throwing everything but the kitchen sink at it. Never regret my decision
I pay off my Dec 2020 refi’d 2.625% 15 years $328K loan before thanksgiving 2022. Not regretting for a second now with no debt and still have a decent tech job.😊
Yes! Dave is back
He never went away.
I paid down my mortgage whenever I could. Now interest rates are rising ( approx 4 times the rate it was a couple of years ago ) I am so glad that I did so, as the capital left is only 14k. It means the extra interest each time the interest rate rises is only a few pounds per month. However if I had been able to pay the mortgage off conpletely I would be several hundred pounds better off each month as no mortgage to pay, plus no more interest payments steadily rising. At the moment I am still paying extra and scheduled to have mortgage paid off in 3 years ( the Lord willing), but if I had enough savings I would definately pay it off ( keeping back £1000 emergency fund!))
I am In uk so National Insurance that I paid during working life means healthcare is free at point of need and provides pension, so huge savings ( in my eyes) of 10k not needed if house is fully paid for !
This is not a black/white situation. I have 80k left on mortgage at 3.25% and I am getting 5.4% on my cash in Betterment. Also, mutual funds made over ~20% last year and individual stocks over 40%. It does not make financial sense to pay off mortgage. If you are responsible and know what you are doing, debt is fine. If it helps your well-being then that is a separate issue..0ne size does not fit all.
Towards the end of the loan, there's very minimal interest that you are paying, I would put that extra cash on to a CD or high interest savings.
A couple making almost $200k a year needs this level of advice? Proof you don't need to be smart to make money!
I’ve wondered this same thing for years. I’m also surprised how little money high earners have saved. But they are likely driving expensive cars and prolly have other expensive toys in the yard or garage.
Stay with the plan, keeping the savings, add to tax free accounts, and paying the house, 45k is nothing, forget about it
It doesn’t sound like you’ve ever been close to being debt-free. Once you’re that close, it becomes intense.
All of Dave's suggestions are simply common sense. I guess that's lacking in America.
I say, just make double payments.
Gradually pay off the house until the final payment as a Christmas gift for your family!
I will be paying my house off in less than 4 months. I WILL probably be at zero in my bank account, but I HAVE to have it paid off before the September insurance extortionist bill arrives. Then the mortgage company will be sending ME the check for 10k instead of the insurance company. Insurance is a scam and I am over it!!
Just keep the extra cash in a HYSA if your mortgage interest rate is low. We had a 20K event recently and were so thankful our BS6 dough is liquid to take care of that.
I would have liked to know what interest rate he has on his mortgage and what tiny little interest rate he is earning with his savings. I've always thought that if you can earn more than you are paying out, then you are winning the game. I've got such a low interest rate on my mortgage (2.875%) that I'm not going to pay that off. I'll put every extra dollar into something that will earn me more than that
that's the logical math way not the dave way for the weak minded/willed
If I had taken that approach when interest rates were low in my country, I would be struggling to pay my mortgage now, when interest payments are 5 times what they were a year ago. Get your mortgage balance down as far as you can, while interest rates are low so more of the extra you are paying is able to go towards the capital and you will have less to pay each month when interest rates do go up.( as it will at some point) Doing the opposite with mortgages/real estate is the mistake Dave tells us he made that he is trying to warn against.
I mean, these guys don’t even have problems that needs solving😂 They are sooo comfortable. Calling in for advice, when they KNOW they are out of debt by CHRISTMAS. Lol. Couple 30 years old, out of debt. Save the call time for the guys that need him help hahaha
That's why they are out of debt by XMAS, from getting advice and planning.
@@HighCountryRambler clearly. But in the longrun, what’s another couple of months😂 so unnecessary😂
exactly my thoughts 🤦save the calls for peeps who really really need the help not a couple who brings in almost 1/4 of a million a year🤦🤦🤦so selfish
It's not selfish to take up 5 minutes of time. Plus others can listen and they can take the whole course for 80 bucks
Ridiculous
Yes, spend every penny you have to pay off the house immediately. That way you’ll have to do a reverse mortgage to buy dog food in order to survive. That’s a great plan.
Why you need a reverse mortgage? After the house if paid off one paycheck pays all the bills for the month and three paychecks are left over as fun money. What planet do you live on?
How so, Dave told them not to stop paying in to their 401k. The caller said his wife pays in 11%, he pays in 7% and also pays 8% in to a roth ira, they also have a paid off house, between them they make $193,000 a year they'll probably end up being the millionaire next door.
With a $200k income and no payments? They should be saving about $6k a month
I'd like to say there's a Step 8, "critical mass investments". Lets say you max out your 401k/IRA accounts, but there's still more to invest in taxable mutual funds... once the dividends from those are able to cover your living expenses, you're in crazy wealth territory
Why not pay off mortgage with savings and get a heloc as your emergency fund? You don’t have to use it. At least you’re not paying interest on it in the meantime though?
Not when your mortgage rate is less than your interest rate on your savings account.
I convinced the wife to double our house payments. We struggled and struggled for 10 yrs and managed to pay off the house. Then, she left me, filed for divorce and took the house.
This is a refreshing reminder. I've been thinking about this very thing all week!
They make $200k a year and their "expenses" are only $3k a month...how can they not pay this house off by Christmas? Something doesn't work with the numbers given in my mind.
You don't think they have something they are buying so they can't pay the house off as a result?
Or. Keep buying assets until you are ready to retire. Then cash in or continue to live on the income those assets generate. Mortgage interest is irrelevant if your assets are creating profit and long term wealth.
Must be an engineer....overanalyzing things. Just make a move. This is small potatoes
As an engineer my wife complains constantly that I do this.
As an engineer, not all engineers do that.
@@haasan9360 As an engineer, I agree.
Have a question for Dave I am not really a fan of beans and rice can I have crackers and cheese instead
I would not pay off. If you are that close to paying off your mortgage almost all the interest was already paid off therefore there is no benefit for paying off. Use part of your savings for investments which will generate revenue yearly. It is beneficial to make payments in the earlier part of the mortgage where you can save on the interest payments.
SOMETHING DOESNT STACK HERE???. If they earn $200k and only have $3k month outgoings without the house (as he says) how do they only have $35k savings????
I think its because he said theyve been paying off debts and are recently debt free besides mortgage...otherwise yeah they should have over 100k saved up.
@@amattson6578 still isn’t adding up. Unless they overdid it. We don’t know details.
Buying things
@@amattson6578 I bet you this caller and his wife were probably throwing a lot of extra money at the principal on the home too, probably -- because with that income it shouldn't have taken that long to pay off two cars and only have that little in the bank.
2:50... wut. If he’s paying off the house.. he doesn’t have a house payment. Therefore he should not factor in his house payment when deciding his savings minimum after paying off the house.. duh.
“So… a couple hundred thousand a year…” ZZZzzz…. Invest it!
i would paid off the mortgage by tomorrow night if i make 200k ,,,, no hesitation pal
Would you pay extra towards the mortgage after you fully fund your IRA/Roth?
Something doesn’t jive. But I’d say, don’t use savings. Use the monthly income to pay off the mortgage. 45k is not a whole lot saving.
Generally I'm ok, but If you have a low rate mortgage, below 3% invest, there's no reason to pay off early. It's burning your future. Its way too easy to reliably, easily beat 3% in returns, that its giving away money.
1:29 why do you pay a financial advisor to tell you what to do if you don’t trust them?
Anyone who hates debt will automatically receive likes from Dave. He's got a good financial advisor though, he's good to go.
Question for you Dave, I work construction and am starting your plan my income varies monthly so should I save more for my emergency fund to compensate for slow months?
In his book Total Money Makeover, Dave advises single income households or people with varying income to have a 6-month emergency fund instead of just 3. I hope it works out for you!
Without any payments, having a tiny emergency fund isn't a big risk.
Not sure I agree with a three to six month emergency fund. Too low.
Something isnt adding up, they should be able to pay th8s off by the end of january without twking anything out. They make 10k a month net and he said they spend less than 3k a month.
Household income of 200K and expenses of 3K per month. Mortgage is 45K. What's not stated is value of home/interest rate/term of mortgage. Also no idea what income stability is on both incomes. Sloppy analysis but on face value, there is no reason to pay off the mortgage from current savings.
well said, way too many variables unanswered. At the end of a mortgage, the interest portion approaches $0. Many folks would rather invest versus pay off low interest loans, if they believe the return on the investment exceeds the borrowed interest rate.
The decision making process did not even discuss the mortgage interest rate. With inflation as high as it is, anyone with a mortgage at significantly lower rates should think very hard about paying it off any more quickly than necessary. Look at the alternatives. Can you invest your money to give you a risk free return rate better than the difference between the inflation rate and the mortgage rate?
High yield savings have gone up enough that you don't even have to try in order to out earn a lot of people's mortgage rates.
How does anyone have $3000 month in expenses?? Cable internet 230 cell phone 120 auto insurance 120 home insurance 1400 gas and electric 300 groceries 1400 water bill 100 propert tax 1400 life insurance 200…..just for starters …..
Kudos to the Financial Advisor.
In his situation of household income vs mortgage debt he can easily pay it off and wipe out his savings and replenish his savings very quickly
Or keep the savings and just pay down the mortgage quickly. Having that money saved it good for emergencies. If he only needs $15K for emergencies when it's paid off, then he can wait until there's $25K left on the loan and just pay it off, hence leaving $15K.
and then what happens if he has a roof collapse, can't pay it, and loses the house??? You're not safe when you're close to paid off home and good emergency fund, you're safe once you have both of those things. It's way safer to keep the nice healthy emergency fund and pay the house off after 9 months.
clicked this to say yes, lower monthly expenses = more money going directly to savings
Explain why I would want to pay off my house when my mortgage rate is 2 3/8%?
These people that call in that make 200k a year and worry about paying off their house in a year, I don't really feel for them, I don't think they need his advice. They already have a financial advisor!
How can you even answer this question without knowing the mortgage interest rate? That would be the main factor for me.
This was one of the better shows thanks to you guys
$200k/year, probably $12k/net/month, $3k/expenses = what's the problem?
The caller HAD to be off on that expense #…I’m sure he was only thinking mortgage not bills,entertainment,etc
does it make sense to do a heloc if your mortgage interest rate is really low?
Just make double mortgage payments until it's paid off.
That Purple Saas ad was obnoxious.
Way too loud.
I have 500k only debt I have is 78k left in my house . Do I pay it off or is it better to do somthing else like put it in a cd
Not rocket science! Have enough money and your not using your last time do it!! Fixed like mine make more payments!!!