If my wife (ex) who attended your seminar about 15-16 wears ago, followed your plan, she would be wealthy by now. However, she gave me the tapes to listen to. So, I listened, then she did everything except follow the program. Guess what happened. Call, then I will tell you.
You probably dont care but does someone know a tool to log back into an Instagram account?? I was stupid forgot the account password. I appreciate any tips you can offer me
@Immanuel Forest thanks for your reply. I got to the site through google and Im trying it out now. Looks like it's gonna take quite some time so I will reply here later when my account password hopefully is recovered.
With how much you’re saving on mortgage payments, you won’t be broke for long. Congratulations! I hope to have my house paid off by this time next year.
Pay off my house... quit my job because I realize I will never became rich if I keep doing the same thing (also there was a trash supervisor there) now I taking the risk to start my own business so far so good 👍. It's true no having a mortgage payment is not like having no fear to experiment new things!
Paid off my mortgage 22 years early (roommates and insane work hours), greatest financial feeling ever! And still driving a 2006 Kia Rio while my buddies w BMWs and Mercedes are renting for $2000 a month.
It’s not about LOOKING successful, it’s about being successful. My wife snd i smile as we live our non-flashy life in the house that’s paid for and drive our cars that are paid for. Everyone else is chasing this fantasy of big houses and fancy cars trying to make it look like they are something they are not. Wait until you watch your savings grow and grow and grow! Good luck!!
@@stephencollins1479 My wife and I smile everyday because we have a large house on the water with a boat dock and 2 new vehicles . Life is for living , someday you are going to realize you life as coming to an end and those smug smiles will be all you have .
I paid off my Mortgage 5 years ago. I am a 45 years old single mother to a 14 years old child that live with me full time. I am looking into what I kind of business I can venture into. Living in America rent and mortgage free is a very good feeling.
Most of that comes from people not knowing that we use a marginal tax system. If it actually worked the way they think it does, their logic would make sense.
But for the countries that do not use the marginal tax bracket system, sometimes one who earns more than another would infact receive less take home pay.
I paid my house off three years early. Didn’t notice an increase in taxes but noticed a big increase in my bank account. One thing I did see decrease was my stress over worrying how to cover monthly how to cover monthly house payments- since I didn’t have one😁
Last year I paid my last debt off at age 42. It's been 8 months of bliss. The happiness of having no mortgage doesn't go away. It always feels nice and you'll think about it frequently. 👍
These frequent tax code changes are disrupting my long-term investment strategies. Are there ways to structure my investments to be more resilient to potential tax code modifications?
Tax code changes taught me to you can build resilience into my portfolio. Diversification is key! My set manager helped me spread my investments across different asset classes like stocks, bonds, and real estate so that a positive tax code cha age here can help minimize the impact of aa negative tax code change there adjustments.
I agree. Based on personal experience working with a financial manager, I currently have ($2million) in a well-diversified portfolio that has experienced exponential growth from when i started. It's not only about having money to invest in stocks, but you also need to be knowledgeable, persistent, and have strong hands to back it up.
REBECCA NASSAR DUNNE is her name. She is regarded as a genius in her area and works for Equity Services inc. She’s quite known in her field, look-her up.
When I told my broke brother-in-law that my hubby and I had paid our mortgage, he said we should get a reverse mortgage. I asked him, "Why would I do that?" He couldn't answer. Because he didn't know. Did I mention he's broke?
a few months ago, there was a rampant amount of reverse mortgage ads on Facebook. I gave them my two cents on how dumb it is to give away your home and be left with nothing for your heirs. The amount of idiotic rebuttals I got was amazing. I couldn’t believe what I was reading... (reverse mortgage helps the seniors, rm is like free money you don’t have to pay back, rm is risk free) I kid you not. Dumb people are scary.
The reason he suggested taking out a reverse mortgage is because his financial knowledge puts him at the Moutian peak on the Dunning-Krueger curve of wisdom vs confidence. He heard the term reverse mortgage and wanted to use it in conversation to show his wisdom but he lacked the very wisdom he was trying to demonstrate.
“They said” and “I heard” are the worst financial planning firm out there! So true! Too many people get misguided advice. No matter how well-intentioned your friends or loved ones are, you have to be well-educated about your financial plan in order for it to work at all!
every bit of education is an "i heard" or "they said" situation. i heard a decent amount of information from Dave that ive implemented and its greatly helped with my finances. i get what you're saying though, tons of advice is bad advice and people should do research from multiple expert sources to see if the advice they're getting is good or bad advice.
Lazy people are unwilling to do the work period. Lazy people just take the loans and go into debt. Lazy people might not itemize when they should and would benefit from it.
Paying off your house quickly is one of the most freeing things you can possibly do. When I paid mine off almost 12 years ago, it was like someone removed a pair of heavy leg irons from me. Had a 15-year mortgage and paid it off in less than seven. DO IT.
A close family member who used to work part-time as a tax preparer gave me this exact advice. She also advised us to sell our house below market value to avoid paying taxes on the profit (that only applies to profit over 500k in the first place). The accountant she worked for must have been a real winner.
@@KristenBudgets86 did you ever live in that rental? If I sold my house there wouldn't be any tax, but I wonder if I rented it out then sold if there would be tax
When I was paying off my house, I looked at it this way: For my particular situation, I was paying $3 in interest to save $1 in taxes. You're still down $2 for every dollar you "save" in taxes. Keeping a mortgage around longer than necessary only helps the bank, not you!
In my mind the greatest benefit of accelerating your mortgage payments is that you keep your lifestyle reasonable. You get used to living on less, so when your mortgage is gone, it feels natural to invest the amount.
I love reading these comments about people paying off their houses and having not debt and having a huge amount of money in their savings accounts. It really motivates me to pay off my house soon. I want to know how financial freedom feels like.
My Dad and I had just paid off our house in full early March this year in 2023 and I'm only 40 years old and my Dad he's only 71 years old too, and it only took us 28 years out of a 30 year mortgage loan to pay off, to where we are 3 years ahead of schedule. Also I'm crying tears of joy. Thanks Dave Ramsey. So I Shine sweet freedom, shine your light on me 😂!!!
What he is saying is so true. Pay the house off then you can keep your future money and a paid off home. I noticed that when preparing my taxes a few years ago. I was so shocked. The lie about home right offs. The liesssssss. Now I’m motivated more than ever to pay off my house. I have prepared my personal payoff plan and should be done in 4 to 5 yrs.
If they are math challenged they need to move on to WooTube the channel done by the Aussie high school math teacher Eddie Woo who got the Local Hero Australian of the Year award. Even did a Teen Boss TV series to teach high school students basic finance and budgeting.
We have $550+ paid off home and $900 in 401K + still contributing with employer match. Never thought I was a millionaire but hearing Dave's analogy we are. Worked very hard to get here but it's a good thing!
Paid our mortgage off in 2016. We now have no debt and a huge emergency fund. The best part, we can help our grandkids to get started on the property ladder. It feels amazing.
And they're called brackets for a reason , the higher rates are only for the amounts in their respective brackets, not the whole thing. Everyone still gets 0% on their first 12k bracket 0 (standard deduction), 10% on their first 10k bracket 1, etc
Paid my house off back in April of 2023 at 51 years old. Going on 4 months with no mortgage feels so good. Of course I’m paying the taxes and still feels good with no mortgage 🔥🔥🔥🔥
@@Simon-oy7kf And Dave has shown that people In finance are often dumb too, what's your point? If your point is, some people in finance know what they are talking about, sure I agree.
Thank you for these question and answer videos. They seriously help more than you'd think. The best part is, once you record one perfectly articulated video about tax breaks and investing, real estate etc. It's on the internet forever. Dave your show is going to help millions of Americans just by them waiting to come on by your wonderfully smart and in depth knowledge sharing. Thanks again for all you do
Dave is so right. We are nearly out of debt. Our home, cars, credit cards, and first rental property have been paid for years. We are about to pay off our second rental property. With my two small pensions, my wifes and my social security, and two rental incomes, we will only need a a small amount from our substantial 401K accounts to live the way we are accustomed to. Our financial advisors tell us our net worth will continue to rise throughout retirement. I was a mid level employee at an engineering and construction firm, my wife is the same. But we got to our present net worth slowly, by honoring God, saving, investing, and HATING DEBT.
@_ David _ I respect your right to be an atheist, but I am curious. Why in the world would you listen to Dave Ramsey, who is a dedicated Christian, and who firmly believes in honoring God by giving generously? Dave teaches giving generously is essential for a Christian who wants to please God. Dave gives away more in a year than most people make. I hate to put myself down, but I will. I am quit certain I am as dumb as a brick. I have made every mistake in the book. But when I decided I wanted to stop all the stupid stuff I was doing and at least try to please God, he turned my life around. If God could make a fool like me prosperous, imagine what he could do with a genius like you? Tired of misery? Turn to God.
What you save in mortgage payments, you build in your savings. It's like getting a monthly raise. Paid mine off early and never looked back. I said years ago, I'd rather pay the taxes than pay interest - it was cheaper for me.
You can go broke chasing tax deductions. The real story -- the person is jealous that you have no mortgage and is trying to belittle your accomplishment to make himself feel better.
I have a paid for home and never had a mortgage. Every month I don't have to write a rent check I count my blessings. Just set aside $200 or so a month for property tax and insurance.
Jill Pruett Property Taxes is such a scam, the gov should abolish it. It keeps poor people poor, and encourages homelessness to those that cannot afford an extra 200$ a month.
christina My town has volunteer firemen. And as sad as it is libraries will fade out eventually. But tell me, do you think its right that the gov can come in, and take away your property? Property Taxes are wrong, there are other ways of raising taxes elsewhere, without making people homeless. Increase the taxes on junk food by a penny or two, I’d bet that would easily make up the difference with how much people buy. Seriously, I cant understand how people think its okay to literally be slaves and surfs, unable to truly own their own land, property taxes didn’t even start until the 1800’s! But fine, I say that if the government expects us to be renters to our own home, then they should give me the land for free, and build the house, I’ll gladly pay the property taxes each year, because thats what a renter is, they dont own the home. What happened to the land of the free?! Unjust Taxes are literally what we went to war over! Plenty of countries do not have property taxes, the fact the US does is asinine, wake up! We are one of the least free countries!
@@McWrisk Actually, the argument you would get from many is that it is smarter to invest the money that you would use to pay down the mortgage. Considering that it would take a good 10-15 years to pay off a mortgage, this would give the DISCIPLINED individual a good head start on investing over the person who opts to pay off their mortgage first. I acknowledge that. My thing is that the market can dole out 30-50% losses at any time. It's a lot easier to withstand that sort of onslaught knowing your house is paid off. It all comes down to knowing your financial stamina, which most people in the market severely overestimate.
L D you’re actually better off investing in the stock market and not prioritizing your mortgage. Dave is correct with regards to the reasoning on the mortgage interest deduction, but unfortunately misses the point on the stock market.
@@EmpireTextbooks You actually don't know that you will be better off. Depends on when you buy, how long you hold, and your rate of return. There have been significant periods when one felt like an idiot being invested in stocks. In an environment like we are in now, after a long bull market, of course everyone thinks stocks are the way to go, but people don't realize that you can't buy past returns.
I paid off my house 8 1/2 years early and saved $52,000.00 in interest. I could have done it alot sooner if I understood the relationship between principal, escrow, and interest. Quite simple once the concept is fully understood.
Federal income taxes are not the only taxes. I haven't sat down and done the math, so don't take this as an endorsement of any particular financial plan, but my homeowners insurance gives a discount for having an active mortgage, plus there are property tax and state income tax benefits for people with mortgages. Then on top of this, with good credit you can manage a 3.75% interest rate on a mortgage right now. Average returns on a 401k or roth IRA is around 7%. Some more risky investments, real estate REITS can manage 8%+ returns. Obviously starting your own business could have anywhere from negative yields, you go bankrupt and wind up with 2 mortgages on your house and completely broke, up to 10's of thousands % increase over a few years. If you just stick with the boring idea and say stick your extra money in your 401k instead of paying off the mortgage faster, you in theory would be mathematically better off, because of saving on insurance, state and maybe local tax, property tax, the difference in interest between mortgage and the returns on the investment account, the savings on federal tax from having untaxed money going into the 401k. If you calculate that out, it could be substantial, i'm not sure. The other factor is that without a mortgage, you are more flexible, you can decrease or stop your contribution to retirement accounts at any point to deal with a financial hardship, but if you have a mortgage you have that payment to make each month, it is not flexible. So this factor is in dave's favor, but I believe it also matters how big your mortgage is. Mine is quite small, it's about 1/7.5th of my and my wife's income.
@@hzuiel right when u hit 30 years old , you better build a minimum 300-450k retirement/investment account nest egg account before age 46. U won't actually have to save anymore money if ur ok with only have 2 million dollar retirement if the market stays 7-8% . the problem is when ur taking home 50-60k and spending 25-30k on debts before utilities/food/children/gas/subscriptions/ etc . Ur actually only living on 30k a year The power to build generational wealth is always 1 generation away in America
Kim Jong-un Thats way easier said than done, not everyone can save that much or make that much money, many jobs only pay 15-20k a year, and most people live paycheck to paycheck.
Some get confused with money especially with taxes. Like Dave said, some single people and a very few married couples may benefit from itemizing because their deductions are more than $24K. However, Dave's argument about paying $10K interest on a home just to get around $2K savings in your taxes should help you realize that single or not; PAYING OFF YOUR HOME is the correct choice once you are on the right baby step. Now mortgage companies hate for you to pay off your home early because of the interest $$ they lose. Funny story. My mortgage company actually called me after I started making extra payments to my principal balance and said that I should take out a mortgage loan because of the equity I had built. Coincidence? No it wasn't. They know that if I keep this up the house will be paid off sooner and they WILL lose money. Just like Colleges, Mortgage companies are businesses trying to make money. Don't forget this as you listen to Dave about school loans and College tuitions.
It's crazy! Here in Canada the mortgage company limit how much you can pay. For example for us We can only make one lump sum payment a year extra on our mortgage for not more than 15% than the mortgage balance. And we can only increase our payments by 15% once a year. So basically no extra payments just gotta save and make one big lump payment 😩 but our interest rate is 2.99% so thats cool at least
for the average person paying off their mortgage asap is smart, but for a real estate investor its not the smartest move because your money can be used as a down payment on more property rather than just dumping all of your money into 1 property. this is what Graham Stephan and tons of other people do. real estate investing is way over the head of most people though.
Hey Dave, We paid off our mortgage early in 2019 and we were able to invest almost $100k not including our retirement contributions. With SimpleIRA and HSA contributions we were able to lower our taxable income by another $40k. Since we have no debt aside from monthly bills (electric, heat, water and property tax) we have MONEY. We will retire in our early 50's. We put in the hours and delayed gratification so we can live and give like nobody else.
@@KellyMichaelsTV I wasn't always doing as well as I am today. There is no way to pay back the people who helped me 30 years ago when I was young poor and stupid. Who knows who they are or if they are still alive, but I can try to make a difference for some other young, poor and stupid person/persons. Maybe give them the leg up I got. It's never about the money, it's about the freedom the money gives you. You can live and give like nobody else.
Jim Peppers Good on you guys for wanting to pay it forward. That’s part of being a good steward of money -realizing it’s not yours to hoard and that you should give back to others. When I am financially secure I will do the same.
He needed to explain this! I had mortgage brokers telling me what this caller was being told. A deduction is different from a credit and folks really have no clue !
I paid my house off at 32 paid 320k and now it’s worth 600k. Not having a payment has allowed me and my wife to establish wealth. Best decision we made
Kind of forgot about a little thing called opportunity cost. For each dollar used to pay down your mortgage, you lose not only the interest deduction but also the return of investing that dollar elsewhere (mutual funds on average earn a higher return than tax affected mortgage rate). If I can trade 3% money for 8% return, that's a good trade.
Yeah. But Dave will try and distract you by bringing up tax deductions and false arguments. His followers don't know the difference and just go along with it.
That 8% is assuming the economy is strong which it may not be. Also you'll have to pay capital gains tax on that interest whenever you take it out. Investing can be a better deal in some cases but Dave tends to counsel people towards the sure thing.
@@jambaby4999 Actually the 8% assumes an AVERAGE economy--in good years it might be 12%, in bad years it might be 4%. Dave tends to counsel undisciplined people (i.e., most people). He'd say it's better to pay off debt than spend frivolously. I'm saying it's even better to not pay off cheap debt and invest (but that requires rare discipline).
If you view it as an investment it can pay off. I went to a state university with the GI Bill and graduated debt free. My sister in law borrowed $200k to go to an elite private school and top-tier medical school. I'm doing great as an engineer, but even after paying off those loans she will make much more in her career than I will. Now, if she had borrowed to study theater arts or something it would be different.
I hear u man i dropped out too!!! I bought a house in cash in the hood and bought my self a gun!!!!mission accomplished!!! life is good and I got all my income coming to me and still saving every coin I get,, I look broke but very wealthy now.
@@muggzcervantes8283 I’m not wealthy. I spent 30yrs doing it wrong before I woke up and did it right. But I’m wealthy compared to the rest of my life. LoL I feel wealthy.
This situation is like someone wouldn’t invest in capital markets cause gains are taxed by the govt, or refuse a pay raise cause the raise would push them to another bracket.
If nobody paid taxes where would we all be? I have no problem with paying fair taxes to keep my country running (assuming the government knows how to manage it - but that's a whole other story). It just means I must be making money!
Regardless of tax bracket: To pay off our mortgage, would have to withdraw from IRA and therefore pay income tax on that IRA (and miss out on tax-deferred stock market increases). My mortgage is at 4% interest, 17 years to go, down to $200K principal owed. I expect IRA tax protected / deferred returns above 4%. Therefore, pay taxes on $200k IRA withdrawal to make less wealth buildup over time? Doesn’t make sense for my situation to pay mortgage off.
Even when interest rates were much higher and the standard deduction was much lower it did not usually pay to forgo paying off the house to supposedly save on taxes. Owning the house free and clear is the best feeling ever!
I have always done my taxes with computer software so I realized what Dave is saying. People are good at repeating advice to sound smart. But they don’t analyze the advice they have been given. I tried to explain this to people every time that they told me this.
Thank you! Top excuses for not paying off the mortgage: 1. “TaX dEdUcTiOn!” 2. “I can have a 30 year mortgage and invest the money I would have put into the house!” 3. “Even if you pay off your house, you don’t own it! You still have to pay real estate taxes!” 🙄
What about needing to withdraw from IRA to pay mortgage off… and therefore paying taxes on the income? I’d have to withdraw more than the $200k remaining principal… and miss out on tax deferred increases in the value of the $200k that’s in the IRA.
This is the best, most useful video Dave has ever released. So many crazy folks just do not believe this information. It’s the most misunderstood tax concept out there.
To put it simply, if you are married, and you itemized, everything above $24k is truly tax deductible. Pay off your mortgage and pay it off quickly. Whether you are paying a mortgage or own your home outright, you still have that 24k deduction floor.
Bought a house and paid off my mortgage within 5 years, immediately right at the moment we saved enough to pay off, great feeling. Saved us lots of interest money that we would be able to use to cruise with the kids every year.
5 years...awesome. Me too. Bought my first house in 1984 and had it free and clear by 1989. After that I started 2 businesses that eventually did rally well. There were some really lean times at first and I was glad not to have a mortgage payment. I'm retired now. Even after 36 years I love this home and will never move. Its in the San Francisco Bay Area. Zillow says its worth over 10 times what I paid for it. Ain't Georgia but I'll survive!
kimmer6 home in San Francisco is very expensive isn’t it? 10x that was great. You should sell the home and move to GA, buy a nice home that only cost a small portion of that money and still become a multi millionaire retiree. With no extravagant Congress spending you should have a nice time for many year or the rest of your life. The hard part is to sell a home with lots of memories that you don’t want to leave behind.
@@AwesomeK285 Yes, property values are insane here. I could never leave or sell this place because of the memories. My home is at the end of a wooded steep canyon with deer, raccoons, foxes, and wild turkeys on the hillside 35 feet from my bedroom window. Going out on the roof deck is like being on vacation. I retired in 2018 and life is pretty good, much less stress!
OMG - I’ve been making this argument for years! You should hear my “investment” professional friends try to debunk it and talk about leveraging debt (as i put my fingers in my ears and go “lallalalaalaaalaaaa - can’t hear that foolishness”)!
@Zachary Beaupre that's what the rich dad, poor dad guy preaches. To not pay off your house, instead take more loans to leverage assets, like a rental property that brings in cash flow. This is good but not something the average American can do. Less risk to follow Dave's advice.
@@beet4416 Dave's advice is actually better from a mathematical point of view over the long term. Yes, leveraging to buy properties allows you to grow your portfolio faster in a rising market, but also ties you to it, eg. Market rises, with leverage you make 10 times, when it drops you lose 10 times, you need enough of a buffer to take on this. Buy with cash and it might take you 8 years to purchase your first property. Your leveraged friends might have 8 properties in the 8 years, then your 2nd one might take 6yrs, your 3rd might take 3.5yrs etc. Eventually when another GFC hits, you will be able to buy multiple properties in a very short time frame because of the discounted prices. Your leveraged friends will be the ones forced to sell them to you.
@Zachary Beaupre but hence why you need buffers, I know loans work differently in the U.S, I'm in Aus, here they don't do 15 and 30 yr fixed loans, so if a recession or something occurs, interest rates would generally rise, causing your repayments to increase, this is why you need strong buffers and income to allow for this otherwise you are forced to sell. So in a way even if you don't sell you are still losing money on the increased interest payments.
@@alexc5369 Fixed rate and your cost is amortized so you know every payment. If you're renting a property that's in the middle to low class, you should be fine as everyone needs a place to sleep, even in a recession. But if you are renting a high cost apt, then people may move to a lower cost apt, leaving your rental vacant.
Someone give me the same bad advice when I said I paid off my house 20+ years Ago. When I worked the numbers on the dry eraser board, the guy old enough to be my dad, was speechless! He In 2012, he lost his house to foreclosure because he over leverage to purchase a piece of land to built his future retirement home. Older does not mean wiser...
It’s like my mom telling me not to pay off my car because I need it for my credit score. I laughed at her. When I do get a home I plan on making extra payments.
Amen. I'm glad to finally hear someone say it. These people who have never itemized and likely never will, are the some of the same people who made a big deal about losing the state tax deduction.
The scenario I always hear is in rental properties. HOWEVER! The tax writes offs are NOT WORTH paying the interest on the mortgage. It's ALWAYS better to pay the house off, even in investment property. You can find other ways to reduce your taxes in investment property by say, purchasing a roof or something to off-set your taxes. If I know Uncle Sam is coming after me for a big chunk of taxes in a fiscal year, I go an improve my rental homes with things like insulation and energy efficient upgrades that helps me avoid taxes and the tenant keep their bills low. Invest in yourself before Uncle Sam. (You can't dodge property taxes, and they are a killer lol)
Squid Rider Sorry, a roof replacement on rental property is not immediately deductible. In fact the allowable depreciation allowed exceeds the life of the roof in most cases.
Use cash flow to pay down mortgage on behalf of the tenant. Use cash flow to make rental energy efficient to save the tenant money, replace high ticket roof to depreciate over time to write off taxes vs when it’s completed it’s useful life. Interesting prospective.
Haha, that’s a weird flex thats backfiring on them. See if you can get them to take you on a vacation for free due to a real estate conference and a “write off”. 🤣😂
Just bought a house this summer - plan on paying it off in five or seven years . I would rather be broke for five to seven years than broke for 30 years. Looking forward to my 40s!
@@AnnMitt I am retired. I paid off my first home in less than 5 years in the 1980's. After that, I started playing property Monopoly. It has set me in a higher worth bracket than Dave mentioned. In 2017 I bought my son and his new wife the home they were admiring. All Cash to seller, 10 day escrow close, paid off before the key went into the door. Its in the San Francisco East Bay. Everything you heard about high property prices here is true. My signature was all it took to wire that money to the seller. You will never be sorry you don't have a mortgage. Good job in paying yours off!
@@veganmikedizzle4303 No...off Reliez Valley Road in Lafayette. Hey....apartment houses in Oakland were selling for $275,000 per unit and up. 20 units, $5.5 million. That's about to change (for the worse) in 6 months. I don't care what the economy does, Dave was right. My home was paid off long ago and I'm so thankful I did it.
I paid off my mortgage very quickly, like I had so much momentum after doing the debt snowball I just kept going and paid off my mortgage about five years into it. That was almost ten years ago. Pretty much been chillin’ ever since.
my sister in law actually lost her government assistance over an 11 cent raise. now she can't afford health care and went all winter with no running water or heat. her oldest daughter who just got out of college and has a house of her own actually started helping her with bills because she was afraid she was going to freeze to death or die of starvation
@@amalHope3 Thanks for replying. I was referring to declining a raise because it would put the person into a higher tax bracket. That is different than declining because it might affect a person's health insurance. The tax bracket change would at most affect only the incremental amount of the raise. I say "at most" because the tax bracket change would not increase the tax being paid on the original earnings. Getting, say, an additional $4k in a raise might result in paying, say, $1k in tax. While that may be a higher rate than what's paid on the original earnings, it still leaves that raise as having an after-tax benefit of $3k. Only a fool would turn it down because receiving the raise would result in more taxes.
Ever notice that the family member who says " I heard "is usually the one past his eyeballs in consumer debt, working 18 hour days, has back problems from the job and never has enough money?
Time and money are the most important thing when investing. Using Dave’s example. 5% interest on a 200k house does come out to 10k. And if you’re in the 24% tax bracket you would only save 2.4k on taxes, but what that does is you’re effective interest rate on the house is now only 3.8%. I would argue that putting extra money into equity vehicles that bring you a larger return (7%) is better than putting more money on your house. Some people just like having no debt- which I can understand. But if you stick to investing (and don’t spend extra money) you’ll come out much better in the long run. In reality, if I had a client that insisted on paying off their house. I’d just say to make bimonthly payments and add half and invest the other half of their extra income
I like this advice, I am in the home buying process and I plan on keeping the house after it’s paid for to have added security when I’m close to my retirement years
There are so many people that are so focused on avoiding sending a dollar to the IRS they would rather send even more to mortgage companies. It is crazy. Mostly I think they then justify having large mortgages for expensive homes that they can't afford, never paying it off.
Still paying on my primary residence but recently paid off the rental house we own and man it suddenly felt like there was money all over the place. We do have to maintain the funds to pay the property taxes and of course repairs and maintenance but I definitely wish I could pay off my regular house now!
Taxes generally are irrelevant to this decision. It all comes down to how aggressive you want to be with your money. Do you want to pay off your house (safe low return/insurance) or do you want to invest the excess (unsafe higher return)? However, if you’re not going too invest that money you’re worse off than either choice.
I can’t seem to comment on these videos anymore. I can only reply to others comments. Is this a youtube problem or did the channel restrict me for some unknown reason?
Excellent point, agreed. I'm obviously no expert but I would also think that, even if the interest payments did surpass the standard deduction, I don't think the tax savings will equal the savings on interest paid over the life of the loan due to the early pay-off.
@@Mulatto4Yeshua exactly! The total amount that you pay back over the life of the loan is more than twice the original loan amount. For some reason people hardly mention this in discussions about early mortgage payoff.
One way to view making extra payments on your house mortgage is that it is like a long term certificate of deposit giving you an interest rate which is the interest rate of the loan itself. This is a very safe investment giving a much higher return than any CD available at a bank. Once we paid off our mortgage, we took out a homeowner’s line of credit. This took the place of the emergency fund you are supposed to keep in a bank. I can’t remember if we ever used the line of credit. If we did it was paid off quickly, not the minimum payment. We then accumulated enough money for a down payment for purchase of rental property.
What they didn’t tell us about this increased standard deduction was that personal exemptions would be eliminated. That was the main reason my taxes actually went up in 2018 vs 2017. 2018 standard deduction was < 2017 itemized+personal exemptions, so my taxable income was higher. Luckily they’re going back down in 2019 because we had a 2nd kid. $2000/child credit with this tax bill actually is nice.
People who itemize and their deductions and the deductions were between 12,000 and 24,000 got hurt the most. They no longer itemize and lose the personal exemptions. The draft bill was available in October or November 2017. It was clear in the draft bill that the personal exemption was eliminated, but politicians (republicans) never mentioned it (from my recollection).
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Very true words, we are one of the few that itemize, my wife owns her own business. So close to being debt free, 1-2 years left we will be set for life and we are 37 years old.
Get life-changing financial advice anytime, anywhere. Subscribe today: ruclips.net/user/TheDaveRamseyShow
If my wife (ex) who attended your seminar about 15-16 wears ago, followed your plan, she would be wealthy by now. However, she gave me the tapes to listen to. So, I listened, then she did everything except follow the program. Guess what happened. Call, then I will tell you.
You probably dont care but does someone know a tool to log back into an Instagram account??
I was stupid forgot the account password. I appreciate any tips you can offer me
@Kristopher Sean Instablaster =)
@Immanuel Forest thanks for your reply. I got to the site through google and Im trying it out now.
Looks like it's gonna take quite some time so I will reply here later when my account password hopefully is recovered.
@Immanuel Forest it did the trick and I now got access to my account again. I am so happy:D
Thanks so much, you really help me out !
Sooo I just paid my house off literally 2 hours ago and now I am broke but it feels good. Thanks Dave Ramsey.
Neville Guerrero congratulations
I’m in the process of buying a house cash right now. !!!!!
This is the only kind of broke you want to be, Congrats!!!
Congratulations! You're not broke, you're blessed!
With how much you’re saving on mortgage payments, you won’t be broke for long. Congratulations! I hope to have my house paid off by this time next year.
Paid my house off, loss my job...I can do side work to pay the taxes....no place like home
Having a paid-off home buys you a lot of security and options.
This. The most valuable thing in the world are options. Paying off a home gives you the power of “no.”
Pay off my house... quit my job because I realize I will never became rich if I keep doing the same thing (also there was a trash supervisor there) now I taking the risk to start my own business so far so good 👍.
It's true no having a mortgage payment is not like having no fear to experiment new things!
😍😍😍😍😍😍😍😍😍😍😍😍😍😍😍😍😍😍😍😍😍😍😍😍😍😍😍😍
And the home insurance (and also if you have HOA)
I'm 59 and my wife is 52 we just paid our house off in October of 21. Nine years early. The peace of mind it gives is priceless.
well not priceless..
Paid off my mortgage 22 years early (roommates and insane work hours), greatest financial feeling ever! And still driving a 2006 Kia Rio while my buddies w BMWs and Mercedes are renting for $2000 a month.
Now if you could only find a girlfriend
@@sarahann530 lol well done!
TheFlairGuy be careful with the girlfriend she could leave you homeless lol
It’s not about LOOKING successful, it’s about being successful. My wife snd i smile as we live our non-flashy life in the house that’s paid for and drive our cars that are paid for. Everyone else is chasing this fantasy of big houses and fancy cars trying to make it look like they are something they are not. Wait until you watch your savings grow and grow and grow! Good luck!!
@@stephencollins1479 My wife and I smile everyday because we have a large house on the water with a boat dock and 2 new vehicles . Life is for living , someday you are going to realize you life as coming to an end and those smug smiles will be all you have .
CPA here, Dave is correct.
Okay
That's a copy
@@roncur what's a copy?
@@alexc5369 means i heard you. Or in this case read you
Alex Campili A copy is a duplicate of the original or of another copy. 😂
I had the opportunity to pay off my house ten years ago and it still remains one of the best decisions I ever made. The peace of mind is priceless.
Yes, it is indeed.
Just remember you don't own your house even though you paid it off.
@@michaelperez3887 You still have to pay taxes but it sure beats the peace of mind of paying off a mortgage, even worse renting.
@@michaelperez3887Yes, you do. Stop with your property tax excuse. I own my house. My name is on the deed, not the government.
I paid off my Mortgage 5 years ago. I am a 45 years old single mother to a 14 years old child that live with me full time. I am looking into what I kind of business I can venture into. Living in America rent and mortgage free is a very good feeling.
"Living in America rent and mortgage free is a very good feeling." Amen!
Awesome job !!!!
Great job!!!! I just paid off my mortgage two weeks ago.
Naomi May - Sustainable Prepper nice !!
Good for you (no sarcasm) thats awesome
Paid mine off yesterday!!! Still doesn't seem real.
Congrats!
That's great!
Congrats!🎊
Congratulations!!🔥🔥
congratsssss
This question is just a rephrasing of the "I can't take a raise because I'll be in a higher tax bracket" idiocy.
Most of that comes from people not knowing that we use a marginal tax system. If it actually worked the way they think it does, their logic would make sense.
Devin Forbes so true - heard my aunt say this the other day about why “should she take overtime pay if it all goes to taxes?” 🤦♂️.
But for the countries that do not use the marginal tax bracket system, sometimes one who earns more than another would infact receive less take home pay.
@@alexc5369 I mean... yeah. But in Canada and the USA, that's not an issue.
Or don't work overtime you will make less money....
I paid my house off three years early. Didn’t notice an increase in taxes but noticed a big increase in my bank account. One thing I did see decrease was my stress over worrying how to cover monthly how to cover monthly house payments- since I didn’t have one😁
B
Thats great, now we have to do something about lowering taxes overall.
starting my morning with coffee and a dave ramsey rant...
It’s going to be a good day =)
Think Money Indeed LoL, love, love, looooove me some Dave R
kg1 Lol whats he ranting about now
Think Money best way to start the day!
You are a good man. Have a great day!
Yesss!! I listen to Dave in my car 🚗 & home 🏡 while cleaning, doing laundry 🧺 etc. 😂
This is the first month I don't have to pay my mortgage. Thank you for your teachings, it has changed my life. 🙏🙏🙏
awesome feeling isnt it. no more M&T bank for me as of 3/10/2021.
Congratulations. I can't wait until I can say the same. 3 years and counting.
Paying my house off in 2 weeks, 22 years early at age 42. I’m stoked!
Last year I paid my last debt off at age 42. It's been 8 months of bliss. The happiness of having no mortgage doesn't go away. It always feels nice and you'll think about it frequently. 👍
Moved to the U.S in 1998 with $200. Purchased our home in 2007 & paid off our mortgage 5hrs ago (2021).
Thank you God! It can only be you.
You know what sucks the most about not having a mortgage payment?
Nothing.
Still not owning ur property?
Trying not paying the tax man
These frequent tax code changes are disrupting my long-term investment strategies. Are there ways to structure my investments to be more resilient to potential tax code modifications?
Tax code changes taught me to you can build resilience into my portfolio. Diversification is key! My set manager helped me spread my investments across different asset classes like stocks, bonds, and real estate so that a positive tax code cha age here can help minimize the impact of aa negative tax code change there adjustments.
I agree. Based on personal experience working with a financial manager, I currently have ($2million) in a well-diversified portfolio that has experienced exponential growth from when i started. It's not only about having money to invest in stocks, but you also need to be knowledgeable, persistent, and have strong hands to back it up.
Your manager must be really good. How I can get in touch? My retirement portfolio's decline is a concern, and I could use some guidance.
REBECCA NASSAR DUNNE is her name. She is regarded as a genius in her area and works for Equity Services inc. She’s quite known in her field, look-her up.
Found her webpage, I wrote her an email and scheduled a call. Hopefully she responds. Thank you.
When I told my broke brother-in-law that my hubby and I had paid our mortgage, he said we should get a reverse mortgage. I asked him, "Why would I do that?" He couldn't answer. Because he didn't know. Did I mention he's broke?
And dumb.
Mary Fields 😂😂😂😂
Mary Fields LOL
a few months ago, there was a rampant amount of reverse mortgage ads on Facebook. I gave them my two cents on how dumb it is to give away your home and be left with nothing for your heirs. The amount of idiotic rebuttals I got was amazing. I couldn’t believe what I was reading... (reverse mortgage helps the seniors, rm is like free money you don’t have to pay back, rm is risk free) I kid you not. Dumb people are scary.
The reason he suggested taking out a reverse mortgage is because his financial knowledge puts him at the Moutian peak on the Dunning-Krueger curve of wisdom vs confidence. He heard the term reverse mortgage and wanted to use it in conversation to show his wisdom but he lacked the very wisdom he was trying to demonstrate.
“They said” and “I heard” are the worst financial planning firm out there! So true! Too many people get misguided advice. No matter how well-intentioned your friends or loved ones are, you have to be well-educated about your financial plan in order for it to work at all!
every bit of education is an "i heard" or "they said" situation.
i heard a decent amount of information from Dave that ive implemented and its greatly helped with my finances.
i get what you're saying though, tons of advice is bad advice and people should do research from multiple expert sources to see if the advice they're getting is good or bad advice.
Lazy people are unwilling to do the work period.
Lazy people just take the loans and go into debt.
Lazy people might not itemize when they should and would benefit from it.
Paying off your house quickly is one of the most freeing things you can possibly do. When I paid mine off almost 12 years ago, it was like someone removed a pair of heavy leg irons from me. Had a 15-year mortgage and paid it off in less than seven. DO IT.
A close family member who used to work part-time as a tax preparer gave me this exact advice. She also advised us to sell our house below market value to avoid paying taxes on the profit (that only applies to profit over 500k in the first place). The accountant she worked for must have been a real winner.
"I want to give a bank $10,000 to keep from giving the government $2,200." That is a stupid tax of $7,800!
My father in law told me not to sell my rental property because of the tax I would owe. I made over 100k after tax and he still broke 😜
@@KristenBudgets86 lol
@@KristenBudgets86 did you ever live in that rental? If I sold my house there wouldn't be any tax, but I wonder if I rented it out then sold if there would be tax
Also the bank is gonna turn around and pay the government income taxes on that interest income, so the government still gets your $.
When I was paying off my house, I looked at it this way: For my particular situation, I was paying $3 in interest to save $1 in taxes. You're still down $2 for every dollar you "save" in taxes. Keeping a mortgage around longer than necessary only helps the bank, not you!
In my mind the greatest benefit of accelerating your mortgage payments is that you keep your lifestyle reasonable. You get used to living on less, so when your mortgage is gone, it feels natural to invest the amount.
I love reading these comments about people paying off their houses and having not debt and having a huge amount of money in their savings accounts. It really motivates me to pay off my house soon. I want to know how financial freedom feels like.
My Dad and I had just paid off our house in full early March this year in 2023 and I'm only 40 years old and my Dad he's only 71 years old too, and it only took us 28 years out of a 30 year mortgage loan to pay off, to where we are 3 years ahead of schedule. Also I'm crying tears of joy.
Thanks Dave Ramsey.
So I Shine sweet freedom, shine your light on me 😂!!!
What he is saying is so true. Pay the house off then you can keep your future money and a paid off home. I noticed that when preparing my taxes a few years ago. I was so shocked. The lie about home right offs. The liesssssss. Now I’m motivated more than ever to pay off my house. I have prepared my personal payoff plan and should be done in 4 to 5 yrs.
It's kind of fun setting it up on a pay-off spreadsheet and watching the balance drop off with each extra payment. I love the feeling!
“They’re math-challenged” 😂 love you Dave
If they are math challenged they need to move on to WooTube the channel done by the Aussie high school math teacher Eddie Woo who got the Local Hero Australian of the Year award. Even did a Teen Boss TV series to teach high school students basic finance and budgeting.
We have $550+ paid off home and $900 in 401K + still contributing with employer match. Never thought I was a millionaire but hearing Dave's analogy we are. Worked very hard to get here but it's a good thing!
Gotta believe you knew. Your 401k, cars, cash in the bank put you there already before your house friend. Nice work. How old are you?
Paid our mortgage off in 2016. We now have no debt and a huge emergency fund. The best part, we can help our grandkids to get started on the property ladder. It feels amazing.
Financial advisors at the bank will always give you advice that makes the bank the most money off of you.
Years ago I bought evergreen mutual funds from first union. They never made one dime. Fees fees fees.
U arent kidding
Yes!!! As an accountant I feel like I have to explain this to everyone! It’s good to be in a higher tax bracket!
And they're called brackets for a reason , the higher rates are only for the amounts in their respective brackets, not the whole thing. Everyone still gets 0% on their first 12k bracket 0 (standard deduction), 10% on their first 10k bracket 1, etc
Dave continues to bring such informative content! Always look forward to new videos.
"They said and I heard are the worst financial planning firm out there" One of Dave's best lines 🤣
BunkMasterFlex77 If you have a debt, or loan that needs to be pay, or just want to make some extra cash text 1 (518) 547-4763 for more info.
@@parkerread154 do you do payday loans or sell whole life? I'd so, I'll definitely give you a call.
@@BunkMasterFlex77 What is Ramsey's qualification to give financial advice other than his bankruptcy ?
@@sarahann530 post your website/credentials so we can see how successful you have become.
Paid my house off back in April of 2023 at 51 years old. Going on 4 months with no mortgage feels so good. Of course I’m paying the taxes and still feels good with no mortgage 🔥🔥🔥🔥
Congratulations!! Guess what, renters pay taxes too, the bill is wrapped up in their rent every month.
And repairs, and maintenance, and rehab, and your fire insurance
U good tenant of the State, u
Life Rule: done take financial advice from family
Unless your dad is Dave Ramsey
Why, there are plenty of people who have intelligent family, both of my parents work in a financial buisness
@@Simon-oy7kf And Dave has shown that people In finance are often dumb too, what's your point? If your point is, some people in finance know what they are talking about, sure I agree.
What if Dave is your family?
Mr Wrestling we should all aspire to be as perfect as you and your family.
Thank you for these question and answer videos. They seriously help more than you'd think.
The best part is, once you record one perfectly articulated video about tax breaks and investing, real estate etc.
It's on the internet forever. Dave your show is going to help millions of Americans just by them waiting to come on by your wonderfully smart and in depth knowledge sharing.
Thanks again for all you do
Brandon Ralph If you have a debt, or loan that needs to be pay, or just want to make some extra cash text 1 (518) 547-4763 for more info.
Dave is so right. We are nearly out of debt. Our home, cars, credit cards, and first rental property have been paid for years. We are about to pay off our second rental property. With my two small pensions, my wifes and my social security, and two rental incomes, we will only need a a small amount from our substantial 401K accounts to live the way we are accustomed to. Our financial advisors tell us our net worth will continue to rise throughout retirement. I was a mid level employee at an engineering and construction firm, my wife is the same. But we got to our present net worth slowly, by honoring God, saving, investing, and HATING DEBT.
Did you mean “wife’s” or “wives”?
lol, it’s silly, i know. But congrats!
@@rv3089 Thanks, man. Wife. She is great, but one is enough. Take care and keep listening to Dave. I wish I had him to listen to when I was 20.
_ David _
Nahh, the problem with your comment is that you wish there was no God. Sorry! Time to get off your high horse! 🤷🏽♂️
@_ David _ I respect your right to be an atheist, but I am curious. Why in the world would you listen to Dave Ramsey, who is a dedicated Christian, and who firmly believes in honoring God by giving generously? Dave teaches giving generously is essential for a Christian who wants to please God. Dave gives away more in a year than most people make.
I hate to put myself down, but I will. I am quit certain I am as dumb as a brick. I have made every mistake in the book. But when I decided I wanted to stop all the stupid stuff I was doing and at least try to please God, he turned my life around. If God could make a fool like me prosperous, imagine what he could do with a genius like you? Tired of misery? Turn to God.
@_ David _ Are you happy with your life?
2 years after paying off the house, Hubby got cancer (complete recovery) and we didn't have to worry about homelessness while going thru this.
What you save in mortgage payments, you build in your savings. It's like getting a monthly raise. Paid mine off early and never looked back. I said years ago, I'd rather pay the taxes than pay interest - it was cheaper for me.
at least you get something for the taxes
I was telling my financial adviser friend the same thing 35 years ago, he gave me the blank stare!
You can go broke chasing tax deductions.
The real story -- the person is jealous that you have no mortgage and is trying to belittle your accomplishment to make himself feel better.
I would rather have a paid for home if I lost my Job than a tax deduction and I can save that tax deduction with a paid for home
I have a paid for home and never had a mortgage. Every month I don't have to write a rent check I count my blessings. Just set aside $200 or so a month for property tax and insurance.
Jill Pruett
Property Taxes is such a scam, the gov should abolish it.
It keeps poor people poor, and encourages homelessness to those that cannot afford an extra 200$ a month.
I agree they are a scam you never truly own your home.
christina
My town has volunteer firemen.
And as sad as it is libraries will fade out eventually.
But tell me, do you think its right that the gov can come in, and take away your property? Property Taxes are wrong, there are other ways of raising taxes elsewhere, without making people homeless.
Increase the taxes on junk food by a penny or two, I’d bet that would easily make up the difference with how much people buy.
Seriously, I cant understand how people think its okay to literally be slaves and surfs, unable to truly own their own land, property taxes didn’t even start until the 1800’s!
But fine, I say that if the government expects us to be renters to our own home, then they should give me the land for free, and build the house, I’ll gladly pay the property taxes each year, because thats what a renter is, they dont own the home.
What happened to the land of the free?! Unjust Taxes are literally what we went to war over!
Plenty of countries do not have property taxes, the fact the US does is asinine, wake up! We are one of the least free countries!
@@XFizzlepop-Berrytwist taxes we didn't vote on is what we literally went to war over, but every property tax is voted on.
As a CPA, I always say "People love paying $1.00 (mortgage payment) to save $.30 (taxes)."
Makes no sense to have a mortgage if you don't need one.
You mean paying $1 (with interest over 25 years more like $2.50) to save $0.30
Not to mention the money you save to invest not having a mortgage... “Stupid is as stupid does”
@@McWrisk
Actually, the argument you would get from many is that it is smarter to invest the money that you would use to pay down the mortgage. Considering that it would take a good 10-15 years to pay off a mortgage, this would give the DISCIPLINED individual a good head start on investing over the person who opts to pay off their mortgage first. I acknowledge that.
My thing is that the market can dole out 30-50% losses at any time. It's a lot easier to withstand that sort of onslaught knowing your house is paid off. It all comes down to knowing your financial stamina, which most people in the market severely overestimate.
L D you’re actually better off investing in the stock market and not prioritizing your mortgage. Dave is correct with regards to the reasoning on the mortgage interest deduction, but unfortunately misses the point on the stock market.
@@EmpireTextbooks You actually don't know that you will be better off. Depends on when you buy, how long you hold, and your rate of return. There have been significant periods when one felt like an idiot being invested in stocks. In an environment like we are in now, after a long bull market, of course everyone thinks stocks are the way to go, but people don't realize that you can't buy past returns.
I paid off my house 8 1/2 years early and saved $52,000.00 in interest. I could have done it alot sooner if I understood the relationship between principal, escrow, and interest. Quite simple once the concept is fully understood.
We paid off our house and someone talked about my taxes going up. I said no because we took the standard reduction.
Federal income taxes are not the only taxes. I haven't sat down and done the math, so don't take this as an endorsement of any particular financial plan, but my homeowners insurance gives a discount for having an active mortgage, plus there are property tax and state income tax benefits for people with mortgages. Then on top of this, with good credit you can manage a 3.75% interest rate on a mortgage right now. Average returns on a 401k or roth IRA is around 7%. Some more risky investments, real estate REITS can manage 8%+ returns. Obviously starting your own business could have anywhere from negative yields, you go bankrupt and wind up with 2 mortgages on your house and completely broke, up to 10's of thousands % increase over a few years. If you just stick with the boring idea and say stick your extra money in your 401k instead of paying off the mortgage faster, you in theory would be mathematically better off, because of saving on insurance, state and maybe local tax, property tax, the difference in interest between mortgage and the returns on the investment account, the savings on federal tax from having untaxed money going into the 401k. If you calculate that out, it could be substantial, i'm not sure.
The other factor is that without a mortgage, you are more flexible, you can decrease or stop your contribution to retirement accounts at any point to deal with a financial hardship, but if you have a mortgage you have that payment to make each month, it is not flexible. So this factor is in dave's favor, but I believe it also matters how big your mortgage is. Mine is quite small, it's about 1/7.5th of my and my wife's income.
@@hzuiel right when u hit 30 years old , you better build a minimum 300-450k retirement/investment account nest egg account before age 46. U won't actually have to save anymore money if ur ok with only have 2 million dollar retirement if the market stays 7-8% .
the problem is when ur taking home 50-60k and spending 25-30k on debts before utilities/food/children/gas/subscriptions/ etc . Ur actually only living on 30k a year
The power to build generational wealth is always 1 generation away in America
@@kimjong-un5562 Well I've only got 12 years to build that nest egg already.
@@hzuiel 1/7.5th? Is that 2/15 you meant there?
Kim Jong-un
Thats way easier said than done, not everyone can save that much or make that much money, many jobs only pay 15-20k a year, and most people live paycheck to paycheck.
This man educates me on so much. I just love it.
Some get confused with money especially with taxes. Like Dave said, some single people and a very few married couples may benefit from itemizing because their deductions are more than $24K. However, Dave's argument about paying $10K interest on a home just to get around $2K savings in your taxes should help you realize that single or not; PAYING OFF YOUR HOME is the correct choice once you are on the right baby step.
Now mortgage companies hate for you to pay off your home early because of the interest $$ they lose. Funny story. My mortgage company actually called me after I started making extra payments to my principal balance and said that I should take out a mortgage loan because of the equity I had built. Coincidence? No it wasn't. They know that if I keep this up the house will be paid off sooner and they WILL lose money. Just like Colleges, Mortgage companies are businesses trying to make money. Don't forget this as you listen to Dave about school loans and College tuitions.
It's crazy! Here in Canada the mortgage company limit how much you can pay. For example for us We can only make one lump sum payment a year extra on our mortgage for not more than 15% than the mortgage balance. And we can only increase our payments by 15% once a year. So basically no extra payments just gotta save and make one big lump payment 😩 but our interest rate is 2.99% so thats cool at least
@@rachlearningmotherhood7336 get an M1 in Canada or Australia and make as big of payments as you want, no penalty. We paid our house off in 5 years.
@@CC-yv3tx Wow ! Thanks for the info I'm gonna look into M1 👍🏾😁
for the average person paying off their mortgage asap is smart, but for a real estate investor its not the smartest move because your money can be used as a down payment on more property rather than just dumping all of your money into 1 property.
this is what Graham Stephan and tons of other people do.
real estate investing is way over the head of most people though.
Stephanie Moore Thank you for this information!
Grabbed my coffee and listening to uncle Dave speak some common sense
Mamalo
Hey Dave, We paid off our mortgage early in 2019 and we were able to invest almost $100k not including our retirement contributions. With SimpleIRA and HSA contributions we were able to lower our taxable income by another $40k. Since we have no debt aside from monthly bills (electric, heat, water and property tax) we have MONEY. We will retire in our early 50's. We put in the hours and delayed gratification so we can live and give like nobody else.
@@KellyMichaelsTV I wasn't always doing as well as I am today. There is no way to pay back the people who helped me 30 years ago when I was young poor and stupid. Who knows who they are or if they are still alive, but I can try to make a difference for some other young, poor and stupid person/persons. Maybe give them the leg up I got. It's never about the money, it's about the freedom the money gives you. You can live and give like nobody else.
@@jimpeppers7230 Good on you Jim! That's a part of what life should be about. Once you are secure your should be able (and want) to help others.
Jim Peppers Good on you guys for wanting to pay it forward. That’s part of being a good steward of money -realizing it’s not yours to hoard and that you should give back to others. When I am financially secure I will do the same.
@@jimpeppers7230
Be blessed well done
Can you loan me 50k?
It's so stupid simple it literally hurts. Although I did learn something new regarding tax brackets. Best tax news I've ever heard.
He needed to explain this! I had mortgage brokers telling me what this caller was being told. A deduction is different from a credit and folks really have no clue !
I paid my house off at 32 paid 320k and now it’s worth 600k. Not having a payment has allowed me and my wife to establish wealth. Best decision we made
It's videos like this that show that Dave really knows what he's talking about.
Kind of forgot about a little thing called opportunity cost. For each dollar used to pay down your mortgage, you lose not only the interest deduction but also the return of investing that dollar elsewhere (mutual funds on average earn a higher return than tax affected mortgage rate). If I can trade 3% money for 8% return, that's a good trade.
Yeah. But Dave will try and distract you by bringing up tax deductions and false arguments. His followers don't know the difference and just go along with it.
@@Supertzar999 Dave will say that this is a much more risky position to be in than one where your debts are paid down or off.
That 8% is assuming the economy is strong which it may not be. Also you'll have to pay capital gains tax on that interest whenever you take it out. Investing can be a better deal in some cases but Dave tends to counsel people towards the sure thing.
@@jambaby4999 Actually the 8% assumes an AVERAGE economy--in good years it might be 12%, in bad years it might be 4%. Dave tends to counsel undisciplined people (i.e., most people). He'd say it's better to pay off debt than spend frivolously. I'm saying it's even better to not pay off cheap debt and invest (but that requires rare discipline).
That's ONLY true if your talking about the same balances.
I’m a high school drop out and buying my house cash right now.
Life is good not having student loans or
$300,000 in student loans
If you view it as an investment it can pay off. I went to a state university with the GI Bill and graduated debt free. My sister in law borrowed $200k to go to an elite private school and top-tier medical school. I'm doing great as an engineer, but even after paying off those loans she will make much more in her career than I will. Now, if she had borrowed to study theater arts or something it would be different.
I hear u man i dropped out too!!! I bought a house in cash in the hood and bought my self a gun!!!!mission accomplished!!! life is good and I got all my income coming to me and still saving every coin I get,, I look broke but very wealthy now.
@@muggzcervantes8283 I’m not wealthy. I spent 30yrs doing it wrong before I woke up and did it right. But I’m wealthy compared to the rest of my life. LoL I feel wealthy.
I take that back Semi Wealthy
@@PInk77W1 Wealth is relative. Good on you and best of luck to you!
I’m an accounting student and Dave hit the nail on the head.
This situation is like someone wouldn’t invest in capital markets cause gains are taxed by the govt, or refuse a pay raise cause the raise would push them to another bracket.
If nobody paid taxes where would we all be? I have no problem with paying fair taxes to keep my country running (assuming the government knows how to manage it - but that's a whole other story). It just means I must be making money!
@@lisamorice4701 Free!
Regardless of tax bracket:
To pay off our mortgage, would have to withdraw from IRA and therefore pay income tax on that IRA (and miss out on tax-deferred stock market increases).
My mortgage is at 4% interest, 17 years to go, down to $200K principal owed.
I expect IRA tax protected / deferred returns above 4%.
Therefore, pay taxes on $200k IRA withdrawal to make less wealth buildup over time?
Doesn’t make sense for my situation to pay mortgage off.
Even when interest rates were much higher and the standard deduction was much lower it did not usually pay to forgo paying off the house to supposedly save on taxes. Owning the house free and clear is the best feeling ever!
One of the funniest Dave Ramsey videos. I refer this to so many people that tell me I was stupid to pay my house off.
I had a mortgage broker tell me today to buy now with 5% down payment because the tax benefits, I just had to laugh.
Love these Dave Rants! You know this one helped a lot of people out there that are being told this exact same thing from their investors.
I have always done my taxes with computer software so I realized what Dave is saying. People are good at repeating advice to sound smart. But they don’t analyze the advice they have been given. I tried to explain this to people every time that they told me this.
Thank you! Top excuses for not paying off the mortgage:
1. “TaX dEdUcTiOn!”
2. “I can have a 30 year mortgage and invest the money I would have put into the house!”
3. “Even if you pay off your house, you don’t own it! You still have to pay real estate taxes!”
🙄
Number two made me 20 percent of the house value, which is a down payment
@@aevans1305the borrower is a slave to the lender
Slavery seems a passé to me
3. U do not own it
Try not paying the tax man lol
@@YeshuaKingMessiah 3. Is not true for all countries.
What about needing to withdraw from IRA to pay mortgage off… and therefore paying taxes on the income? I’d have to withdraw more than the $200k remaining principal… and miss out on tax deferred increases in the value of the $200k that’s in the IRA.
She was referring to local property tax “mortgage” exemption. Which can be a significant cut in that tax.
Pay the house off then invest the mortgage payment to IRA, and other common sense investment. Some you can deduct toward taxes.
This is the best, most useful video Dave has ever released. So many crazy folks just do not believe this information. It’s the most misunderstood tax concept out there.
To put it simply, if you are married, and you itemized, everything above $24k is truly tax deductible. Pay off your mortgage and pay it off quickly. Whether you are paying a mortgage or own your home outright, you still have that 24k deduction floor.
Bought a house and paid off my mortgage within 5 years, immediately right at the moment we saved enough to pay off, great feeling. Saved us lots of interest money that we would be able to use to cruise with the kids every year.
5 years...awesome. Me too. Bought my first house in 1984 and had it free and clear by 1989. After that I started 2 businesses that eventually did rally well. There were some really lean times at first and I was glad not to have a mortgage payment. I'm retired now. Even after 36 years I love this home and will never move. Its in the San Francisco Bay Area. Zillow says its worth over 10 times what I paid for it. Ain't Georgia but I'll survive!
kimmer6 home in San Francisco is very expensive isn’t it? 10x that was great. You should sell the home and move to GA, buy a nice home that only cost a small portion of that money and still become a multi millionaire retiree. With no extravagant Congress spending you should have a nice time for many year or the rest of your life. The hard part is to sell a home with lots of memories that you don’t want to leave behind.
@@AwesomeK285 Yes, property values are insane here. I could never leave or sell this place because of the memories. My home is at the end of a wooded steep canyon with deer, raccoons, foxes, and wild turkeys on the hillside 35 feet from my bedroom window. Going out on the roof deck is like being on vacation.
I retired in 2018 and life is pretty good, much less stress!
OMG - I’ve been making this argument for years! You should hear my “investment” professional friends try to debunk it and talk about leveraging debt (as i put my fingers in my ears and go “lallalalaalaaalaaaa - can’t hear that foolishness”)!
Seriously, "oh, you can get back a 22% of what you paid! Isn't that a great deal!"
@Zachary Beaupre that's what the rich dad, poor dad guy preaches. To not pay off your house, instead take more loans to leverage assets, like a rental property that brings in cash flow. This is good but not something the average American can do. Less risk to follow Dave's advice.
@@beet4416 Dave's advice is actually better from a mathematical point of view over the long term. Yes, leveraging to buy properties allows you to grow your portfolio faster in a rising market, but also ties you to it, eg. Market rises, with leverage you make 10 times, when it drops you lose 10 times, you need enough of a buffer to take on this. Buy with cash and it might take you 8 years to purchase your first property. Your leveraged friends might have 8 properties in the 8 years, then your 2nd one might take 6yrs, your 3rd might take 3.5yrs etc. Eventually when another GFC hits, you will be able to buy multiple properties in a very short time frame because of the discounted prices. Your leveraged friends will be the ones forced to sell them to you.
@Zachary Beaupre but hence why you need buffers, I know loans work differently in the U.S, I'm in Aus, here they don't do 15 and 30 yr fixed loans, so if a recession or something occurs, interest rates would generally rise, causing your repayments to increase, this is why you need strong buffers and income to allow for this otherwise you are forced to sell. So in a way even if you don't sell you are still losing money on the increased interest payments.
@@alexc5369 Fixed rate and your cost is amortized so you know every payment. If you're renting a property that's in the middle to low class, you should be fine as everyone needs a place to sleep, even in a recession. But if you are renting a high cost apt, then people may move to a lower cost apt, leaving your rental vacant.
Someone give me the same bad advice when I said I paid off my house 20+ years Ago. When I worked the numbers on the dry eraser board, the guy old enough to be my dad, was speechless! He In 2012, he lost his house to foreclosure because he over leverage to purchase a piece of land to built his future retirement home. Older does not mean wiser...
Yep. I have several people tell me not to do that. We paid off our house and it was a breath of fresh air not to have that additional payment.
It’s like my mom telling me not to pay off my car because I need it for my credit score. I laughed at her. When I do get a home I plan on making extra payments.
Amen. I'm glad to finally hear someone say it. These people who have never itemized and likely never will, are the some of the same people who made a big deal about losing the state tax deduction.
The scenario I always hear is in rental properties. HOWEVER! The tax writes offs are NOT WORTH paying the interest on the mortgage. It's ALWAYS better to pay the house off, even in investment property. You can find other ways to reduce your taxes in investment property by say, purchasing a roof or something to off-set your taxes. If I know Uncle Sam is coming after me for a big chunk of taxes in a fiscal year, I go an improve my rental homes with things like insulation and energy efficient upgrades that helps me avoid taxes and the tenant keep their bills low. Invest in yourself before Uncle Sam. (You can't dodge property taxes, and they are a killer lol)
Squid Rider Sorry, a roof replacement on rental property is not immediately deductible. In fact the allowable depreciation allowed exceeds the life of the roof in most cases.
Use cash flow to pay down mortgage on behalf of the tenant. Use cash flow to make rental energy efficient to save the tenant money, replace high ticket roof to depreciate over time to write off taxes vs when it’s completed it’s useful life. Interesting prospective.
I’ve tried making the same argument with friends of mine who are realtors that insist on paying for lunch because they’re going to “write it off”.
Haha, that’s a weird flex thats backfiring on them. See if you can get them to take you on a vacation for free due to a real estate conference and a “write off”. 🤣😂
Just bought a house this summer - plan on paying it off in five or seven years . I would rather be broke for five to seven years than broke for 30 years. Looking forward to my 40s!
I LOVE HOW HONEST AND STRAIGHT FORWARD YOU ARE! :)
Paying off my mortgage was the best thing I've ever did.
Because you probably never did anything good.
@@Supertzar999
Werid comment.
@@AnnMitt I am retired. I paid off my first home in less than 5 years in the 1980's. After that, I started playing property Monopoly. It has set me in a higher worth bracket than Dave mentioned. In 2017 I bought my son and his new wife the home they were admiring. All Cash to seller, 10 day escrow close, paid off before the key went into the door. Its in the San Francisco East Bay. Everything you heard about high property prices here is true. My signature was all it took to wire that money to the seller. You will never be sorry you don't have a mortgage. Good job in paying yours off!
@@kimmer6 Oakland?
@@veganmikedizzle4303 No...off Reliez Valley Road in Lafayette.
Hey....apartment houses in Oakland were selling for $275,000 per unit and up. 20 units, $5.5 million. That's about to change (for the worse) in 6 months. I don't care what the economy does, Dave was right. My home was paid off long ago and I'm so thankful I did it.
I paid off my mortgage very quickly, like I had so much momentum after doing the debt snowball I just kept going and paid off my mortgage about five years into it. That was almost ten years ago. Pretty much been chillin’ ever since.
I've heard of fools who turn down a raise at work because accepting it would have put themselves in a higher tax bracket!
Ross Macintosh 😂😂😂
my sister in law actually lost her government assistance over an 11 cent raise. now she can't afford health care and went all winter with no running water or heat. her oldest daughter who just got out of college and has a house of her own actually started helping her with bills because she was afraid she was going to freeze to death or die of starvation
Probably they are not fools. because if they get a bonus (say $100) they might lose their free the health insurance and be crewed
@@amalHope3 Thanks for replying. I was referring to declining a raise because it would put the person into a higher tax bracket. That is different than declining because it might affect a person's health insurance. The tax bracket change would at most affect only the incremental amount of the raise. I say "at most" because the tax bracket change would not increase the tax being paid on the original earnings. Getting, say, an additional $4k in a raise might result in paying, say, $1k in tax. While that may be a higher rate than what's paid on the original earnings, it still leaves that raise as having an after-tax benefit of $3k. Only a fool would turn it down because receiving the raise would result in more taxes.
@@drunclecookie216BOOM
Never take a raise when the SS is involved
U blow off ur foot to make them look good
I'm so glad I decided to watch Dave's videos.
Ever notice that the family member who says " I heard "is usually the one past his eyeballs in consumer debt, working 18 hour days, has back problems from the job and never has enough money?
Been doing my own tax returns since I was 14 and am astonished at how few people understand taxation. I'm no genius by any stretch of the word.
You helped me tremendously with this video. God bless you Dave.
Time and money are the most important thing when investing. Using Dave’s example. 5% interest on a 200k house does come out to 10k. And if you’re in the 24% tax bracket you would only save 2.4k on taxes, but what that does is you’re effective interest rate on the house is now only 3.8%. I would argue that putting extra money into equity vehicles that bring you a larger return (7%) is better than putting more money on your house. Some people just like having no debt- which I can understand. But if you stick to investing (and don’t spend extra money) you’ll come out much better in the long run. In reality, if I had a client that insisted on paying off their house. I’d just say to make bimonthly payments and add half and invest the other half of their extra income
The phrase..
*Penny wise and pound foolish*
Comes to mind.
I like this advice, I am in the home buying process and I plan on keeping the house after it’s paid for to have added security when I’m close to my retirement years
There are so many people that are so focused on avoiding sending a dollar to the IRS they would rather send even more to mortgage companies. It is crazy. Mostly I think they then justify having large mortgages for expensive homes that they can't afford, never paying it off.
Still paying on my primary residence but recently paid off the rental house we own and man it suddenly felt like there was money all over the place. We do have to maintain the funds to pay the property taxes and of course repairs and maintenance but I definitely wish I could pay off my regular house now!
It’s too early for all this math Dave
Never too early for math
Lenders love people who don't "feel" like doing math.
😂🤘🤣
Yayy Areaa 🤣
Just say yes
One of my favorite Ramsey videos.
Taxes generally are irrelevant to this decision.
It all comes down to how aggressive you want to be with your money. Do you want to pay off your house (safe low return/insurance) or do you want to invest the excess (unsafe higher return)?
However, if you’re not going too invest that money you’re worse off than either choice.
I can’t seem to comment on these videos anymore. I can only reply to others comments. Is this a youtube problem or did the channel restrict me for some unknown reason?
Excellent point, agreed. I'm obviously no expert but I would also think that, even if the interest payments did surpass the standard deduction, I don't think the tax savings will equal the savings on interest paid over the life of the loan due to the early pay-off.
@@Mulatto4Yeshua exactly! The total amount that you pay back over the life of the loan is more than twice the original loan amount. For some reason people hardly mention this in discussions about early mortgage payoff.
One way to view making extra payments on your house mortgage is that it is like a long term certificate of deposit giving you an interest rate which is the interest rate of the loan itself. This is a very safe investment giving a much higher return than any CD available at a bank. Once we paid off our mortgage, we took out a homeowner’s line of credit. This took the place of the emergency fund you are supposed to keep in a bank. I can’t remember if we ever used the line of credit. If we did it was paid off quickly, not the minimum payment. We then accumulated enough money for a down payment for purchase of rental property.
What they didn’t tell us about this increased standard deduction was that personal exemptions would be eliminated. That was the main reason my taxes actually went up in 2018 vs 2017. 2018 standard deduction was < 2017 itemized+personal exemptions, so my taxable income was higher. Luckily they’re going back down in 2019 because we had a 2nd kid. $2000/child credit with this tax bill actually is nice.
Can't have everything Jack
People who itemize and their deductions and the deductions were between 12,000 and 24,000 got hurt the most. They no longer itemize and lose the personal exemptions. The draft bill was available in October or November 2017. It was clear in the draft bill that the personal exemption was eliminated, but politicians (republicans) never mentioned it (from my recollection).
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Thank you Dave, for breaking this down in layman's terms so I can finally understand how this works! Glad I clicked!
Very true words, we are one of the few that itemize, my wife owns her own business. So close to being debt free, 1-2 years left we will be set for life and we are 37 years old.
Hope this economy holds together for 2 yrs
I doubt it’s not bust this time next yr. Srs.
I may be late but I'm so grateful I saw this video. It relieved so much stress off of my shoulders about taxes.
It's a percentage deducted from income. You buy a home because you need to live somewhere, not because you're trying to hide from taxes.
Dave is spot on on this one! You just can't cure some people's stupidity.