@@Cheapshot7 Not OP, but can tell you what I did. Started rounding up the payment to the next $100 with the very first payment. That sounds like not much, but every bit counts and it established the pattern of paying more than I needed to. Got.a substantial increase at job, and put the entire increase toward the house payment. 30 year mortgage paid off in 8 years. At that point I'd never heard of Dave if he was even doing his "thing" then....but I learned from parents and grandparents that the only thing you go into debt for is a house, and you pay it off as fast as you can. In fact, I talked informally to 2 financial advisors when I got that increase, asking whether I should pay off the mortgage or start investing (I was already maxing the amount I could put into retirement account). They both said to pay off the house--that they couldn't guarantee me better returns than paying off that mortgage would bring. Then, after paying off the mortgage, I began placing that amount in an investment account. That has enabled me to retire early, provide debt free education for family, and live a great life. Not a "don't ever need to think about money or a budget" life, but a life that included nice vacations, etc.
well done that man. we paid our house off 6 years ago. no car loans. 200k saved now. owning your own house outright is one the greatest things u can ever do
Congratulations 🎊. I’m 57 and thinking of paying off my mortgage but my girlfriend tells snot to and save my money. For other stuff. I don’t know what to do lol 😂.
@@edmalts really appreciate it. Thanks. It’s been six months since I paid my house off and I built my bank account back up to over $50,000 in six months I also have other accounts that I have money in as well so it can be done long as you save your money and spend wisely.
@@edmaltsI would pay the house off. This way you can invest more as you approach retirement. 😅 This is the approach my wife and I are doing. We are are doing this very thing ourselves.
Even after all these years, you can clearly tell from Dave’s smile at 0:27 that he is still genuinely happy and proud of people for getting out of debt. Awesome!
Agreed. Nothing wrong with paying your home off early, but if your goal is to buy another house later, I feel like its better to start saving up for that. You're still building home equity, doing that either way. Depending on the interest rate, then you're better off putting in a MMA or if you next house is 5+ years down the road then put that in VOO/VUG something like that. Also not to mention maybe you decide to not move and want to fix up your house or remodel, with cash or etfs you have options. Sure, equity can be an option but the liquidity of having a bank sell me back my own equity at 5%, doesn't seem like its getting ahead.
We have no car loan, sold one car, share one 2014 Subaru Crosstrek, our house we paid cash for 5 years ago and the house was new, but small. What we have is financial freedom and 1million in assets and investments.
Very clear and helpful : thanks! I'm working extra to keep my ROI flowing into my mortgage payment. it's the last piece of debt i have and i'm a bit overeager to see it gone. Any index fund or stock tips to help that get done?
I think stocks will plummet further before actually experiencing steady growth and there are still quite a few stocks that makes for a good buy this season, you just have to do your research, but to be on the safer side and not second guess your market decisions, I’d suggest you reach out to a proper investment manager for guidance, they’re better equipped at understanding market patterns/movements and adjusting portfolio to match up with these market trends.
my portfolio is down over 23% j and It’s been that way fsince 2022 and I really could use professional help, I’m close to retirement. have you worked with an asset manager before and could recommend any?
SONYA LEE MITCHELL is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
Check to see how much interest you are paying daily on your mortgage. When we realized that we were paying $37 of interest per day, we started throwing all the money that we could, at the balance. We are nearly done...within the next month we should be free!
So true, as I put it, "Setting money on fire". My modest mortgage of $370k at 3.5% was initially setting fire to $1,000 a month. Thankfully paid it off in 7 years but cannot fathom what new home owners are going through.
Paid my mortgage off years ago. Used equity to buy land. That hung over my head for years. I had retired. Anyways, went back to work for a while to pay it off. Got it done. Then I realized I loved my new job. Amazing how things work.
After fighting cancer 3 times I just got the chance to get my first house. Great timing for the video ! Can’t wait to paid it off sooner than 30 years 😊
Dave might disagree, but I saved a lump sum to pay off a debt. During the student loan pause, I didn't make any payments- I saved the money instead with the hope of earning some extra interest. In order to make it easier, I bought T-bills that mature in mid-September, and when the due date for the loans come, my repayment plan is to write a check. It is tempting when you have a big pile of money sitting around to use it for something else, but I'm quite tight-fisted, so I trusted myself to stay the course.
That's why I write on my calendar what should be autopaid. So I still have the ease of autopay but, I'm able to know the amount that should come out and double check if I have a concern.
Very fair point! My father in law has been dead for months...they have all the docs required.. and now they are threatening to shut off his tv...he is DEAD...since June.. my wife spoke to them days ago for 3 hours. It should have been a 5 minute chat.
Going on a vacation with your children is not a bad investment. You'll be 60-70 soon and you'll have that smile on your face thanks to that vacation. Life's short.
I may no longer have the energy to backpack across Europe when I'm 70, but at least I can stop eating rice and beans, and finally purchase a new car that I'll barely drive 😂
Jade and Dave work so well together and Rachel & George are great together. I love these two pairings, they bring somewhat different approaches but it’s still cohesive. I like it!
@@jamesjazzy8040yes they do make a good pairing. She’s smart and he has the experience. She is a co-host, do you just want her to sit up there and stay quiet?
You can set up auto payment from your account instead of setting it up on the bill website. This way, you have control. If you need to change the date or stop it, it's easier
Love the David Bach shoutout. That started me on retirement savings and eventually led me to Dave Ramsey. I’m not perfect but at least I have money saved for retirement and my kids college
Being self employed I never put anything on auto draft because I dont want all these different hands in my checking account. I go into the back of my bank and use e pay and pay it myself and dictate how much I want to pay because im not on a salary so i dont know when my next client will come. So I have to be very conservative.
Bad advice. If your mortgage is under 4% interest and you have a ways to go, I would certainty not send extra payments at this time. Put that extra payment money into a money market and just make your regular payments to the mortgage. When you have the lump sum available in your money market, then you make the decision to pay off or not when/if that day comes. The higher and longer the risk free rate gets/sticks, the more regretted you will be having sent extra payments to the mortgage. Not only will you not make money on that money, but your asset value is also decreasing. Its a lose-lose. If the risk free rate turns the other way, cash out the money market and then maybe send it to the mortgage if that is what makes sense at that time. It will be iffy for a while as the economy completely implodes, but eventually we will be in recovery and then you consider resuming extra payments again or a lump sum pay off. The only time people absolutely should be sending extra payments to a mortgage is when mortgage interest rates are generally trending down, asset values are generally trending up, and the risk free rate is far below your mortgage interest rate. None of those three are true right now. If you are absolutely determined to pay off your mortgage, at least wait for two of those to be true.
Would a sensible person take money out of their current house to buy a new house? I don't think so. Pay off your security -- the bird in hand, your current house.
I think Jade changed the question and then answered that. The question - and the title of the video - is whether to pay off current house vs save (to pay cash) for a new house. I'm no expert, but paying off current house means that, unless they buy cheaper next time, they will still have house payments with new home. If they continue paying current mortgage while saving to pay cash for new house could mean some equity at sale of old + enough cash for new to stop having a house payment altogether, right?
I still chose my $328k in 25 months despite the low interest rate at 2.625% 15 years. My last payment was 2 days before Thanksgiving 2022. Love it and now totally no debt whatsoever.
Did you just save up until you could write a check and be done with your mortgage? Me and my wife are saving to pay it off also, 1/2 way there so far....
Awesome, thank you! We were doing that for a couple of years, I just started saving it to pay it off in total once the economy started cooling, just in case things get bad.
I still manage my money from a ledger. I refuse to let any company automatically draft out of my accounts. They can wait till the money order arrives at their office.
I do not autopay utilities anymore. You have a bill get messed up and say the meter or recording device way over measured you, or some other mistake and you autopay? No thank you. I review the bill as soon as I get the notification and then pay manually.
Forced savings is always a good thing to help limit expenses. Dave might not agree, but I did this with my last car. I already had a lot taken out from my pay for a 457 plan and Roth IRA, and wanted to see if I could manage a car payment at the same time even though I could have paid for the car in cash. It was tight some months, but it forced me to limit spending and I did it!
I've paid off my car a year early and am now paying down my credit cards. What is shocking is how much interest is charged each month! Right now I'm paying down my smallest one and am adding in the interest charged to the payment so I'm not paying interest on the interest. I'll have that card paid off in 6 months and then I'll take that money used to pay down that card to the payment I'm making to the other one (last card). If you want a motivator to pay down debt, check out how much interest those cards are costing you each month!
Paying down a mortgage now will cost you thousands. The only argument for doing this is for an individual with weak personal discipline who can't save money (but the caller isn't that type!). Here's why: the mortgage rate is probably low (4 percent or less), but even risk-free high-yield savings accounts regularly return 4 percent these days. (You know where I'm going.) If you have personal discipline and won't spend, then you need to keep every spare dollar in the high-return, risk-free accounts (including CDs). If interest rates drop, then just shift the money towards the mortgage! Once again, Dave Ramsey and co. gives advice meant for non-disciplined individuals to disciplined individuals, and costs them a lot over the long term.
once again i see this every time and you send out misinformation. you literally only compare interest rates. You never include taxes, or principle, fees, insurance reductions, cashflow etc
You sound very slow, in the last 2 years I have gathered over 100k in equity on my house and I owe less than 30percent of the actual mortgage. From your perspective I will need to sit at least 1million buck down before I can get 100k in those 4percent accounts, unlike me paying my mortgage down and sitting on over 100k in equities.
Depending on your income ...paying off your mortgage could cost you more in Fed taxes. His info is general not specific. He's a millionaire by giving undisciplined info.
You’re “advice” does not work for most normal people. The folks with the paid off mortgage are always better off. You complicate things and complicated advice attracts those with lower IQs. You sound like someone that sells whole life insurance
I do have a question. What if you are currently renting but are wanting to buy a home but you are currently on step 2 paying off all consumer debt. What would be the best plan of action? Pay off all debt while still renting then save to purchase a home in all cash? Or simply save for a down payment purchase the home and slowly pay off that mortgage over time?
The question was never asked, "What is the interest rate on your mortgage". If the mortgage is low, say 2%, and he can make 4%-5% in interest in a money mutual fund, then it makes sense to keep the money in a money market mutual fund. However, if the mortgage is much higher, their advice is good.
@@cathyvictorvaldivia4530Dave hates credit cards. I use my Apple Card daily, Apple Cash back goes to the Apple savings. Yes theirs better out there. But ease of use, customer service. The card is pif weekly
I disagree with Dave here. Please save up in a separate account for a new down-payment. WHYYYYYYYYYYYYYYYYY limit your buy option with a contingency on the sale of your house. Give yourself the flexibility.
My mortgage is 3%. HYSA is above 4%. Not a major difference but it’s silly not to get that 1+% every month until that HYSA rate drops. Then pay off the house when the HYSA grows enough above emergency fund. Lots of free money for debt payoff. Simple in that sort of situation.
What if you are not planning to sell your current home and instead rent it out? Wouldn't it make sense to not pay down the mortgage and put it into high interest savings or index fund for a down payment on the new home? This assumes you are responsible enough to not spend it on something else.
Why not pay down the mortgage to reduce interest expenses until you are ready to buy the new house and at that time remortgage the old house for your down payment on the new. You would save money overall as long as interest rates are not drastically different between the old mortgage and new.
@@jeffwhite3021 Yeah, think about all the landlords who had renters not making payments during COVID, but they had to keep making the mortgage payments.
So always payoff the mortgage before buying another property? Regardless of how well or poorly the market is doing? Aren't there too many variables to have such a hard and fast rule? Having investment properties that are rented out and don't cost you anything while you're paying for the mortgage of your primary seems fine?
My 12-year mortgage was down to roughly 5600. I had that amount in my savings and cleared the balance in May. It left me with $6K or so, but boy oh boy it improved my cash flow by 25%. I’ve almost recouped that amount and am saving at a much-increased rate, increasing my 401K and doing a Roth-all on part-time hours.All sorts of things got easier. Now I’m paying any credit card balance at the end of the month so I’m going into the new month with gas/electric, phone, internet bills and not much more. I’m still not convinced I actually pulled it off. Next? After reducing my internet by 25% monthly, I’m looking at going to Mint Mobile for cell service. Just cut an annual subscription ($80 annually) and reduced monthly internet is now reduced $10 each month for $200 yearly savings. The new phone plan savings will double that figure. Lots of synergies now that that mortgage is off my back.
I currently have $800k in a high yield savings account, yes I’m making gains but to what extent with inflation eating away at the dollar? Am I better off investing in the stock market or paying off my mortgage?
Gold is a great investment and a good bet against the devaluating dollar, been holding some for awhile now. I’m grateful for this tip from my adviser cos her moment by moment changes in the market are lightening quick....who know how much losses I would’ve had by now!!
@840trk I envy you, I’m still trying to recover from losses I incurred in 2021/2022, who is this adviser you work with, I’m intrigued and I could use some quality guidance
Certainly.....'Monica Selena Park' deserves credit as one of the finest financial planners who decides what assets i acquire whilst raking in 7 figure earnings. Her reputation precedes her, and I highly recommend her on a public post, you can look her up to locate her online if you are internet-savvy
thanks for putting this out, just copied and pasted her full name on my browser, spotted her site easily and skimmed through her credentials, she seems very professional
You don’t necessarily have to make the minimum or lump sum on a 401(k) loan. It usually depends on the record keeper of the plan. As long as they are aware of the extra amount the participant wants to make, they can usually make an adjustment on their end.
All signs suggest that 2023 will be a year of severe economic pain, I was really hopeful of my investments this year, but all my plans have been disoriented. I've been studying the market crashes and I realized some investors made millions from the last recession and I was wondering if such success rate could be achieved in this present market.
Understandably, the purpose of buying dividend stocks is to maintain a steady cash flow but dividends are slow if you're not yet retired. I have a couple dividend stocks. I've rather opted for a more aggressive approach and so far I've made over $350k in raw profits this year from mainly blue chip stocks, an allocation fund, S&P500 and coins, with the help of Trisha Jean Webb my F.A... Investing has no one way to it.
@3:10 "automate smart" yes! This is why people with a 401K option should do it automatically and treat it like a tax *regardless if they have debt to still pay off*
I am a 55 yr old woman in NZ and enjoying yr show. I would like advice too. I have achieved some good things since a crippling divorce. But am aware I only have 10 years until retirement and wish to achieve my freedom and security. Can you assist?
😊😊I pay extra on my house so when I have my mortgage paid in full I don’t need to worry about 2 mortgages waiting for my house to sell while trying to buy a new house.
Cutting my tax deferred savings in half by paying a monthly mortgage would raise my effective tax rate from 12% to 22%. How about that for some YIELD SPREAD MATH. Guaranteed 10% annually, not 12% but not minus 5% either. Keep on paying those mortgages, I'm OUT.
I have basically the same question, a little different. The home I am paying for now is not going to be out forever home. We know once we retire, we will not be here. So, I have been looking at it like this is a rental. I have a 30 yr 3% mortgage. I understand it will take forever "if we stayed here or were staying here". We will not have this home for 30 years. So, I am thinking stacking cash, let this mortgage be what it is, then when we sell, we will have whatever out of the sale, but have the cash on hand, so between the two payoff new home, which will be much smaller, etc. Thoughts?
The benefit of paying down the mortgage is that the 3% (though might not be much) is only applied to the current principal balance. As you pay it down, you are paying less in interest, so more money goes towards your pocket in the end. If you pay nothing extra to the principal over 15 years, then you will have paid excess interest that likely wouldn't have earned you profit in a savings account (unless you get lucky with a high yield savings that actually returns that value... which good luck in the market). Again to Dave's point - the idea is that if you are locked in on it, then you don't use that money for something else instead. It's a mental game more than a math game.
@@notwbandgeek, yea I get all of that. Understand amortization, etc. In 5 months we will be consumer debt free. I have been investing since my mid 20s am 60 now, just got stupid there for a bit, and careless as jobs were great, paychecks good as well. Now that we have aged a little, are in a home we know we will not be in long, or until 46 is out of office and our economy takes off again, and Feds stop messing with stuff, we will sell. So was thinking (hoping positively) that 2024 - 2025 will be the year we get right in this nation again, that we will make the move, and not have to payoff much if any on our final home. As Dave has mentioned before, nothing wrong with renting til you get all else in order. That is kind of my thinking. I do understand paying more and I do that, plus make an extra payment every year. And then the greedies show up and raise property and insurance taxes and fees. Appreciate the comment.
@@t3angling575We're in a similar situation, only no consumer debt. Husband is 63, 64 later this year, I'm 60. We are adding extra principal payments every month, refied to a 15 year last year and have paid our mortgage down to just over 50k from $137,500 @ refi. Next year is the year we intend to move from WA to NV, it's not if, but when. Husband just started a new job on May 1 after being laid off for 4.5 months, that did make it more difficult to add extra payments, and now going to try and play catch-up, if our current home isn't paid off by the time we want to move it will be very close. Good luck to you!!
If you are a controlled person and has a 2.8 percentage mortgage rate. Please don't follow it and pay your house. Even if you let the money site on a high yield interest account you will make more than the interest rate you are paying+ the interest rate you pay is tax deductible. If you spend any money you see or if you have a high interest mortgage then you may be better off following their advice.
Jade using a strawman argument. He said save up and put down a lump sum down payment on a new house. He did not say a lump sum to pay his current mortgage.
@@Beginningtopeak The thing about having a lot of money and you will use it for something completely different then what was ogival intended. That is a strawman argument.
My question is how long does take to get back the investment you make for buying an all cash house and then renting it out ??because if the house cost you around 230k and you rent out for $2,500 but you will also have pay taxes and house insurance and as well of fixing stuff for your the people renting and as well everytime they move painting and maintenance of the house to put back in market.maybe I'm just over thinking this but can someone please tell me how long this take
I am 69 years old. My house payments are $900 a month I owe 84,000 on the house net income is 60,000 a year. How’s the best way to pay it off? I have no debt other than my house.?
It was certainly easier for me to spend any extra cash. Took me some time to realize this idea of "forced savings" by paying into my mortgage debt. That extra cash never went to financial freedom. It was a mindset change for me.
Does the interest rate play into this? I have 2.25% on my mortgage (about $80,000 left), and I am getting over 4% on my high interest savings. Is my $25,000 in savings doing more for me than if I put it on the mortgage?
From a strictly numbers perspective, you are ahead by investing your extra money instead of paying off the mortgage. But Dave advocates for financial peace, and a big part of that is not being in debt.
I have the same question. How much interest will you earn in 1 year on that high interest savings account ? How much interest are you paying in that same year on the mortgage ?
Say I have 25k at 4.5% on a High yield savings account. Over one year i will earn about $1,125….. in that same year I will be paying about $4800 of Interest alone on the mortgage. So to me the savings account doesn’t even keep up with the interest on the mortgage (4%)
@@danielpa0415 Assuming a 30-year, $200,000 mortgage that is down to about $80,000, he would pay something like $1800 to interest, and the high yield savings would pay a little over $1000 in interest.
I owe 75K on my 250k house, but got 80k in a CD drawing 5.25 Apr , my house Apr is 2.8%. Anyway I plan on retiring and moving close to my daughters in grandkids in another state in 3 yrs. Should I empty my saving on this house and not have no money to move ? I make 75k a yr., but can live on 60k a yr. My retirement pension will be around 9K a month in 3 yrs, which also includes my military pension and state pension and a couple other pensions. I am single.
not true, I paid extra on 401K loan and paid it off, fast. In the fidelity website, there was an option to make extra payments, in which I did, in addition to the automatic payments coming from my paycheck. This happened to me in 2020, when I was still bad with money, please don't take out 401K loans, and if you did, pay them off quick, both interest and principal go to you, however the longer the loan sits there, the more your future self will hurt.
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@@BrandonIvan-c6e However, if you do not have access to a professional like Clementina Abate Russo, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments.
I used to want my mortgage paid off, but my financial advisor recommended me not to do that and save instead. I listened to him and so glad I did. Today, I still have a mortgage at 3% but a heck of a nest egg drawing much more than that. I gladly pay my mortgage while my savings work for me.
You can make more in the stock market and just make payments on your house. But for me, I paid off the house first. Investments are not a necessity, but a home is. So my belief is to pay off necessities before investing. But to each their own.
I have the cash now to pay off my house having invested heavily before I bought a house and during. But Ive put it in an account (savings) that pays 6.5% a year. The interest is being put into government debt funds for mexico that returns 11.35% annually. Since neither investments is directly tied to the stock market im as well continuing as I am knowing if I have a change in circumstances, ie laid off, the house can easily get paid and in the meantime the "house" gives me monthly investments
Same question. Current mortgage at 2.25%, pile of cash in savings account is giving 4.3% interest. Pay off or savings account and pay only required amount? Thoughts ?
@PS-zw4yc Doesn't matter. You invest 15% and throw everything you can at the house. Pay it off as fast as possible, and then you can invest your 15% plus your house payment. That's what we did, and it feels great to have a paid-off house AND investing in a great retirement.
@@jimroscovius It why would I push to pay off a 3% loan with tax benefits when my savings account pays me 5% This is not a situation that existed before. I would agree pay off the house before dumping all your money into stocks. But 5% savings 3% mortgage is a different ballgame
What if your savings account interest rate is higher than your mortgage interest rate? High interest accounts now are making 5% without assuming any risk (beyond bank crashes, which are insured)
@@thedopplereffect00 I'm not really seeing the connection here. Either way, it's leaving money on the table if you don't take advantage of low risk/high interest, but instead use it to pay off a low interest debt.
I dont understand how "paying down existing mortgage" and "saving for a new down payment" are mutually exclusive. Don't they go hand-in-hand? Aggressively paying down existing mortgage, aggressively builds equity. The more equity you have in your first house, the more money you get back at closing when you sell. The more money you get back all goes into your checking account. The more money you have in your checking account, the larger down payment you have for the new house. I want to challenge this caller's mindset that those 2 ideas are exclusive to each other, they are actually one-in-the-same.
I think I'd want to do a bit of both, paying down the house and saving for a new down payment. I would rather live in my house and shop for a new one and then sell. Is that a bad strategy?
@@DeBee-dc9ce Apologize for the late response. You can do it that way, but there are a couple of risk factors to consider. 1. You may not qualify for 2 mortgages. In which case you have to sell first home to get the mortgage off your record to be approved for the mortgage on the new house. This happened to a co-worker of mine. He was approved for new mortgage contingent upon the sale of his first house. He set up both closings on the same day. All the wire transfers were set up ahead of time. He closed on the sale of first house at like 10am. Brought the closing docs from the sale to the closing of new house. The closing docs proved the sale of first house went through, which formalized the approval of new mortgage. Closed on new house at like 1pm. ... He likes to joke he was "homeless" once (for 3 hours). Or 2. If you do qualify for 2 mortgages - do you want to have to pay 2 mortgages payments. If you buy new house first, you run the risk of the first house sitting on market not selling (3, 6, 9+ months ... Happens sometimes), in which case you will have to float both mortgages payments. This was my case when I went to move. I would have been approved for 2 mortgages. I didn't like the idea of potentially having to pay total of both mortgages if first house didn't sell. The one thing I did was negotiate 30 days post close occupancy with the buyers of my first house. This allowed me to move at my own pace without stress of (a) potential 2 mortgage payments and (b) having to move out same day. 3. If you do qualify for, and are willing to take the risk of 2 mortgages payments - you have a small initial down payment for 2nd house. Then when the 1st house sells you get the equity back. Now what? How do you get the $ to go into new house. You have 3 options (a) make a large principle payment. But this does not reduce your required monthly mortgage. Required monthly payment is based off original principal loan amount. If the point of large initial down payment is to get lowest monthly payment possible this doesn't achieve that. Other 2 options do lower / reset mortgage and therefore payment calculations. (b) refi right after 1st house sells. This will likely require a new appraisal and closing costs which is an added cost. (c) some types of mortgages allow for what is called "recast". "Recast" resets mortgage to new lower principle and recalculates monthly payment. Mortgages that allow recast usually only allow it 1 time during life of loan for free (no closing costs, appraisal still may be required). Not all types of mortgages allow for recast. For those types of mortgages (VA loans for example) that don't allow for recast, options (a) or (b) are the only options available. Long answer, but I still recommend putting all $ towards existing mortgage as a way to do both pay down existing mortgage and save up for down payment simultaneously.
@@marcsolloway3941 Apologies for the late response. Id you follow a Ramsey plan as written, you don't get a rental property until after your primary house is payed off and you can afford the rental with cash. If you want to rent out 1st house, you would first need to pay it off completely, then save up for and pay cash for new house. This way when you move into new house, it is payed off and 1st house, which becomes the rental is also payed off. This means aggressively paying off first mortgage and saving for down payment would not be done simultaneously, dividing $ between the 2 choices, but rather both done in order. With all $ first paying off existing mortgage, then, all $ saving up for 100% downpayment for new house.
@@tfosss8775 no problem, I think this is very sensible, although often when you save up in cash for property the prices run up so much you would have been better off with a mortgage, our rental is around 30% LTV so quite a small mortgage and the yield is really good, I think even with a 50% LTV rentals are a sound investment
The question in the title here was not actually answered. They said to put money in current mortgage rather than have a bunch in savings. But they didn’t mention about investing money into another house vs keep in savings🤔
The low interest rate sounds good, but watch out for how much of your payment is going to interest vs principal. It's the subtle things that can go unseen if it's not carefully observed.
Question for the group as im thinking i can get a quick answer. I have a 30 year. (4%) I have about 120k left. I keep hearing make principal payments only. However, how do you do that exactly? I use Bill Pay from my bank online and it send them a check and i see on my loan breakdown X goes to principal and XXXX goes to interest. Do banks allow you to just make principal payments? I have 100k cash available and will have more by December so i will have enough to pay the balance but im not sure on the finer details (penalties for paying off early or how any of that works).
Paying off your feels like you don’t have any money but you do, it’s in the equity. This only matters if your planning to sell you house. What if you have no intentions to seek your house.
Follow the baby steps , all of them! Child education fund also important. I would pay off existing mortgage first just to keep things simple. But then that's me. I also pay car and home insurance in full. It's not auto pay. I save the 5$ each service charge. 10 $ × 12 = 120 dollars saved. Utilities I do auto pay.. A saying I heard as a kid" if you watch your pennies your dollars will take care of themselves"
The saving for a childs education in America is so weird. As a Dutch person, nobody does that because the government pays most of the tuition fees. Also if they do end up paying something, it would feel like their own responsibility.
@@Bertuzz84The government pays for education? How do they finance that? Don’t you mean that each citizen pays it through the taxes that the government charges?
@@skylady64ish93 Yes, but the beauty is that it's spread out through everyone. So it's not on all on your shoulders in the form of debt when you start your adult life.
We’ve been completely debt free for 3 years now. We have a fully funded emergency fund, we have investments, we have assets. Now we are having to move back to the us and we HAVE to buy a home and 1 new car. I’m scared to DEATH. We don’t have enough to pay cash for a car. I’m so worried about it.
Paying off a low-interest mortgage is "making stupid easy". In fact, it is guaranteed stupid with current interest rates. Instead, start a T-Bill ladder, earning 5.5% interest, and contribute to it every week. Those will be "locked" for 6 months, so it's not as easy to blow that on a vacation or car instead. Make the minimum mortgage payment until the interest rate of the mortgage is greater than the rate of return for Treasury bills. You don't often get such an easy, guaranteed arbitrage in life. Take advantage of this opportunity
Uhh... that's not how it works. If you have a $400k house with a 3.5% fixed rate, you are still paying exponentially more on interest, in comparison to what you are "making" on a 5% APR savings account with only $25k saved in it (assuming a 6 month emergency fund).
@@DeanBKK I never said anything about not having enough money to pay off the mortgage. I have more than enough money to pay off the mortgage. I said there is no reason to lose money by paying it off when you’re making higher interest on a savings account. An FDIC insured savings account has close to zero risk. Therefore, there is no risk to calculate into the equation which is one of Dave’s main arguments about paying it off.
@@yankeefrugal if that's the case, then that's pretty foolish to have that much money stored in a savings account (PNC bank 4.5%, Capital One 4.15%), when you would literally be getting double that in mutual funds or a decent index fund. 🤷♂️ Also, even at 5% APR from a savings account you are BARELY beating the current inflation rate.
@@DeanBKK not foolish at all. I guess you missed the part of my reply where I talked about the risk calculation. I also have money in index funds and am well aware of how those funds have been UNDERperforming over the past few years. A guaranteed 5% is much better than an index fund break even or loss.
I deal with people all the time that have no idea how much they make gross wages.. all they know is how much they get on that check.. I wish more people would pay attention to the tax lines on their pay stubs.
Paying off your mortgage, assuming you refinanced in the last few years makes zero sense. Especially in a real estate market that is on a downturn and may likely continue. I could pay off about half of my mortgage, instead it’s in a high interest account. Earns 4.5% interest, my mortgage is 2.5%. So do the math.
Yes, and you can super charge an emergency fund. If a large downturn comes, and you were to get laid off, that additional savings will be a tremendous help for you stay afloat longer. If you put it all into your house, the money is illiquid, and you'll be facing financial ruin faster
I paid off my mortgage this morning! A 30 year mortgage paid off in 11 years. Onward and upward!
That's awesome! Any tips for doing that you can share with us?
Well done!
Can you share with us?
@@Cheapshot7I live far below my means and continue to try and earn more. I went into tech about 15 years ago and have been steadily raising my income.
@@MrRadical87sorry I missed this! I just left a similar reply on the next comment. Good luck! I wish you the best!
@@Cheapshot7 Not OP, but can tell you what I did. Started rounding up the payment to the next $100 with the very first payment. That sounds like not much, but every bit counts and it established the pattern of paying more than I needed to. Got.a substantial increase at job, and put the entire increase toward the house payment. 30 year mortgage paid off in 8 years. At that point I'd never heard of Dave if he was even doing his "thing" then....but I learned from parents and grandparents that the only thing you go into debt for is a house, and you pay it off as fast as you can. In fact, I talked informally to 2 financial advisors when I got that increase, asking whether I should pay off the mortgage or start investing (I was already maxing the amount I could put into retirement account). They both said to pay off the house--that they couldn't guarantee me better returns than paying off that mortgage would bring. Then, after paying off the mortgage, I began placing that amount in an investment account. That has enabled me to retire early, provide debt free education for family, and live a great life. Not a "don't ever need to think about money or a budget" life, but a life that included nice vacations, etc.
We paid our car and house off this week! Turned 41 years old today and we have ZERO debt.....a nice birthday present 😀
Awesome that’s the way to do it congratulations
well done that man. we paid our house off 6 years ago. no car loans. 200k saved now. owning your own house outright is one the greatest things u can ever do
Congrats! God bless you guys
That's amazing !! Congratulations on your financial freedom 👏 🙌
Paying off my mortgage was like getting the best massage ever
I’m 51 years old just paid my house off April of 2023. What a awesome feeling it is.
Congratulations 🎊. I’m 57 and thinking of paying off my mortgage but my girlfriend tells snot to and save my money. For other stuff. I don’t know what to do lol 😂.
@@edmalts really appreciate it. Thanks. It’s been six months since I paid my house off and I built my bank account back up to over $50,000 in six months I also have other accounts that I have money in as well so it can be done long as you save your money and spend wisely.
@@edmaltsI would pay the house off. This way you can invest more as you approach retirement. 😅 This is the approach my wife and I are doing. We are are doing this very thing ourselves.
@@edmaltsyou get a new girlfriend 😂
@@lee77778same here at 50 last year. Congratulations sir!
Even after all these years, you can clearly tell from Dave’s smile at 0:27 that he is still genuinely happy and proud of people for getting out of debt. Awesome!
That's fake.
@@jimmymcgill6778Are you dave? Coz what kind of f**lish response is this? Why shouldn't he be happy or smile to hear that someone is doing well ?
it's an act
@@jimmymcgill6778That's what every troll says.
@@rnt45t1OK, troll.
Ability to buy the next one with a down payment without the contingency of selling the current home is also a pretty solid position.
That’s the way it works.
Agreed. Nothing wrong with paying your home off early, but if your goal is to buy another house later, I feel like its better to start saving up for that. You're still building home equity, doing that either way. Depending on the interest rate, then you're better off putting in a MMA or if you next house is 5+ years down the road then put that in VOO/VUG something like that. Also not to mention maybe you decide to not move and want to fix up your house or remodel, with cash or etfs you have options. Sure, equity can be an option but the liquidity of having a bank sell me back my own equity at 5%, doesn't seem like its getting ahead.
This helped me here in England, I’m in a position to pay my home off cutting them ties. Mortgage free at 43 ❤
We have no car loan, sold one car, share one 2014 Subaru Crosstrek, our house we paid cash for 5 years ago and the house was new, but small. What we have is financial freedom and 1million in assets and investments.
Yo Karen good job ❤
Very clear and helpful : thanks! I'm working extra to keep my ROI flowing into my mortgage payment. it's the last piece of debt i have and i'm a bit overeager to see it gone. Any index fund or stock tips to help that get done?
It’s a good time to buy in on the market, so seize the opportunity to purchase stocks on sales.
I think stocks will plummet further before actually experiencing steady growth and there are still quite a few stocks that makes for a good buy this season, you just have to do your research, but to be on the safer side and not second guess your market decisions, I’d suggest you reach out to a proper investment manager for guidance, they’re better equipped at understanding market patterns/movements and adjusting portfolio to match up with these market trends.
my portfolio is down over 23% j and It’s been that way fsince 2022 and I really could use professional help, I’m close to retirement. have you worked with an asset manager before and could recommend any?
SONYA LEE MITCHELL is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
Check to see how much interest you are paying daily on your mortgage. When we realized that we were paying $37 of interest per day, we started throwing all the money that we could, at the balance. We are nearly done...within the next month we should be free!
You just helped me get even more motivated. I'm at almost $40 a day on interest alone. This needs to change.
So true, as I put it, "Setting money on fire". My modest mortgage of $370k at 3.5% was initially setting fire to $1,000 a month. Thankfully paid it off in 7 years but cannot fathom what new home owners are going through.
Hey, hope you guys continued to get that all paid off. How'd you guys go?
@@larios86im at $73… its crazy
Paid my mortgage off years ago. Used equity to buy land. That hung over my head for years. I had retired. Anyways, went back to work for a while to pay it off. Got it done. Then I realized I loved my new job. Amazing how things work.
After fighting cancer 3 times I just got the chance to get my first house. Great timing for the video ! Can’t wait to paid it off sooner than 30 years 😊
Dave might disagree, but I saved a lump sum to pay off a debt. During the student loan pause, I didn't make any payments- I saved the money instead with the hope of earning some extra interest. In order to make it easier, I bought T-bills that mature in mid-September, and when the due date for the loans come, my repayment plan is to write a check. It is tempting when you have a big pile of money sitting around to use it for something else, but I'm quite tight-fisted, so I trusted myself to stay the course.
I consider the interest I pay on my mortgage my "rent" payment, and all the extra principal payments just go to lowering my "rent" every month
I'm debt free but on my regular everyday bills I would never do auto pay on anything. It's too easy for companies to make mistakes.
That's why I write on my calendar what should be autopaid. So I still have the ease of autopay but, I'm able to know the amount that should come out and double check if I have a concern.
Trust but verify
I want to be in control of my finances and prefer to pay it myself online.
And very easy for them also to intentionally scam you, not to mention any names (Wells Fargo》 😊
Very fair point!
My father in law has been dead for months...they have all the docs required.. and now they are threatening to shut off his tv...he is DEAD...since June.. my wife spoke to them days ago for 3 hours. It should have been a 5 minute chat.
Going on a vacation with your children is not a bad investment. You'll be 60-70 soon and you'll have that smile on your face thanks to that vacation. Life's short.
I may no longer have the energy to backpack across Europe when I'm 70, but at least I can stop eating rice and beans, and finally purchase a new car that I'll barely drive 😂
100% agree. My kids remember every trip we have taken vividly. They do not remember anything we bought them
Doesn’t mean you go into debt for it though. Kids will appreciate not having to take care of their “retired” parents.
Hit $200k today. Thank you for all the knowledge and nuggets you had thrown my way over the last months. Started with $20k in September 2023
The future belongs to those who believe in the beauty of their dreams. Success is a state of mind.
I think I'm blessed because if not I wouldn't have met someone who is as spectacular as Expert Mrs Lucy Mary Liam.
You don't have to be surprised because I'm also a huge beneficiary of her good works.
I still wonder how she got her analysis. I remember friends calling me crazy when I started but now I shut up them with my four figure weekly return.
I can sincerely says she's one of the best Traders I have ever seen in the state in the past few years, now cutting losses and ensuring profits.
I want to be mortgage free as soon as possible! 🏡💰💸💵
🎉congratulations! I'm working on my last 3 months, 2 jobs, 56 divorced ...we can do this ❤
I love jade, Dave, and their relationship. When jade is dropping knowledge, you can tell how proud Dave is by how he looks at her.
Jade and Dave work so well together and Rachel & George are great together. I love these two pairings, they bring somewhat different approaches but it’s still cohesive. I like it!
You gotta be kidding me she's taken over the show... She's ruined the show...she won't shut up...
@@jamesjazzy8040yes they do make a good pairing. She’s smart and he has the experience. She is a co-host, do you just want her to sit up there and stay quiet?
You can set up auto payment from your account instead of setting it up on the bill website. This way, you have control. If you need to change the date or stop it, it's easier
that was not the question though. He wanted to know if he should make extra on his 3% mortgage or save up extra for his next 6% loan
She made a good point about when you’re broke not liking auto pay/ draft. Living check to check is not fun
That Matthew example is gold. No way in hell would we have income tax if it wasn’t taken out before you got paid.
As a Matthew, I approve of this video. Love the "automate smart, and make stupid hard" concept. Love Jade, too.
The money goes from the bank account into the house. No change in net worth. So pay off the house and don't be thinking you'll lose the money.
That's exactly what I did.
Love the David Bach shoutout. That started me on retirement savings and eventually led me to Dave Ramsey. I’m not perfect but at least I have money saved for retirement and my kids college
Being self employed I never put anything on auto draft because I dont want all these different hands in my checking account. I go into the back of my bank and use e pay and pay it myself and dictate how much I want to pay because im not on a salary so i dont know when my next client will come. So I have to be very conservative.
Bad advice. If your mortgage is under 4% interest and you have a ways to go, I would certainty not send extra payments at this time. Put that extra payment money into a money market and just make your regular payments to the mortgage. When you have the lump sum available in your money market, then you make the decision to pay off or not when/if that day comes. The higher and longer the risk free rate gets/sticks, the more regretted you will be having sent extra payments to the mortgage. Not only will you not make money on that money, but your asset value is also decreasing. Its a lose-lose. If the risk free rate turns the other way, cash out the money market and then maybe send it to the mortgage if that is what makes sense at that time. It will be iffy for a while as the economy completely implodes, but eventually we will be in recovery and then you consider resuming extra payments again or a lump sum pay off. The only time people absolutely should be sending extra payments to a mortgage is when mortgage interest rates are generally trending down, asset values are generally trending up, and the risk free rate is far below your mortgage interest rate. None of those three are true right now. If you are absolutely determined to pay off your mortgage, at least wait for two of those to be true.
Would a sensible person take money out of their current house to buy a new house? I don't think so. Pay off your security -- the bird in hand, your current house.
I think Jade changed the question and then answered that. The question - and the title of the video - is whether to pay off current house vs save (to pay cash) for a new house. I'm no expert, but paying off current house means that, unless they buy cheaper next time, they will still have house payments with new home. If they continue paying current mortgage while saving to pay cash for new house could mean some equity at sale of old + enough cash for new to stop having a house payment altogether, right?
I'm not going to lie! I've been waiting for Dave to speak on automatic wealth creation. I need to work with Dave.
I still chose my $328k in 25 months despite the low interest rate at 2.625% 15 years. My last payment was 2 days before Thanksgiving 2022. Love it and now totally no debt whatsoever.
Did you just save up until you could write a check and be done with your mortgage? Me and my wife are saving to pay it off also, 1/2 way there so far....
@@FTW1984 nope, pay $12k on top as I go. The more principles you pay, the less interest incurres.
Awesome, thank you! We were doing that for a couple of years, I just started saving it to pay it off in total once the economy started cooling, just in case things get bad.
We paid off our house too and now we're investing even more!!
You have no more debt? SELL THE CAR
Look at the amortization schedule of your loan. The money you saved in interest by agressively paying down trumps any investment vehicle.
I still manage my money from a ledger. I refuse to let any company automatically draft out of my accounts. They can wait till the money order arrives at their office.
I do not autopay utilities anymore. You have a bill get messed up and say the meter or recording device way over measured you, or some other mistake and you autopay? No thank you. I review the bill as soon as I get the notification and then pay manually.
We debate this a lot. Our mortage is 2.5% which makes the debate harder for us.
Forced savings is always a good thing to help limit expenses. Dave might not agree, but I did this with my last car. I already had a lot taken out from my pay for a 457 plan and Roth IRA, and wanted to see if I could manage a car payment at the same time even though I could have paid for the car in cash. It was tight some months, but it forced me to limit spending and I did it!
In the UK the interest is usually calculated daily. So paying the mortgage off as extra payments whenever you have means instant savings
I've paid off my car a year early and am now paying down my credit cards. What is shocking is how much interest is charged each month! Right now I'm paying down my smallest one and am adding in the interest charged to the payment so I'm not paying interest on the interest. I'll have that card paid off in 6 months and then I'll take that money used to pay down that card to the payment I'm making to the other one (last card). If you want a motivator to pay down debt, check out how much interest those cards are costing you each month!
Paying down a mortgage now will cost you thousands. The only argument for doing this is for an individual with weak personal discipline who can't save money (but the caller isn't that type!). Here's why: the mortgage rate is probably low (4 percent or less), but even risk-free high-yield savings accounts regularly return 4 percent these days. (You know where I'm going.) If you have personal discipline and won't spend, then you need to keep every spare dollar in the high-return, risk-free accounts (including CDs). If interest rates drop, then just shift the money towards the mortgage!
Once again, Dave Ramsey and co. gives advice meant for non-disciplined individuals to disciplined individuals, and costs them a lot over the long term.
once again i see this every time and you send out misinformation. you literally only compare interest rates. You never include taxes, or principle, fees, insurance reductions, cashflow etc
I wonder how many millions have you made by doing this?
You sound very slow, in the last 2 years I have gathered over 100k in equity on my house and I owe less than 30percent of the actual mortgage.
From your perspective I will need to sit at least 1million buck down before I can get 100k in those 4percent accounts, unlike me paying my mortgage down and sitting on over 100k in equities.
Depending on your income ...paying off your mortgage could cost you more in Fed taxes. His info is general not specific. He's a millionaire by giving undisciplined info.
You’re “advice” does not work for most normal people. The folks with the paid off mortgage are always better off. You complicate things and complicated advice attracts those with lower IQs. You sound like someone that sells whole life insurance
I love the thought. Forced savings plan
Dave's words are invaluable to helping to remove people from the slavery of debt.
Jade is wonderful. She made a great team with Dave.
And she is some beautiful, wonderful addition to the show
Jade is an awesome addition to the show! ❤
I do have a question. What if you are currently renting but are wanting to buy a home but you are currently on step 2 paying off all consumer debt. What would be the best plan of action?
Pay off all debt while still renting then save to purchase a home in all cash? Or simply save for a down payment purchase the home and slowly pay off that mortgage over time?
always pay off mortgage first and than if you have the money get another home
The question was never asked, "What is the interest rate on your mortgage". If the mortgage is low, say 2%, and he can make 4%-5% in interest in a money mutual fund, then it makes sense to keep the money in a money market mutual fund. However, if the mortgage is much higher, their advice is good.
Yes. I do that, and part of my mortgage is paid by my home business. And I get 5k a year cash back from my credit cards.
@@cathyvictorvaldivia4530Dave hates credit cards. I use my Apple Card daily, Apple Cash back goes to the Apple savings. Yes theirs better out there. But ease of use, customer service. The card is pif weekly
nope. funds aren't guaranteed, mortgage interest is.
@@lolwtnick4362 you could get a lot more than 2 or 3% on a simple money market or CD. Don't have to go into stocks or index funds.
I disagree with Dave here. Please save up in a separate account for a new down-payment. WHYYYYYYYYYYYYYYYYY limit your buy option with a contingency on the sale of your house. Give yourself the flexibility.
My mortgage is 3%. HYSA is above 4%. Not a major difference but it’s silly not to get that 1+% every month until that HYSA rate drops.
Then pay off the house when the HYSA grows enough above emergency fund. Lots of free money for debt payoff.
Simple in that sort of situation.
I have almost payed off my van. I will be living in it a long time.
😂
What if you are not planning to sell your current home and instead rent it out? Wouldn't it make sense to not pay down the mortgage and put it into high interest savings or index fund for a down payment on the new home? This assumes you are responsible enough to not spend it on something else.
Depends on your interest rate.
Remember, you're not a hedge fund.
Why not pay down the mortgage to reduce interest expenses until you are ready to buy the new house and at that time remortgage the old house for your down payment on the new. You would save money overall as long as interest rates are not drastically different between the old mortgage and new.
You're trying to be Robert kyosaki.
What if your renter doesn't pay?
@@jeffwhite3021No idea who that is but if you cannot afford your renters not paying than you should not be a landlord.
@@jeffwhite3021 Yeah, think about all the landlords who had renters not making payments during COVID, but they had to keep making the mortgage payments.
Mortgage free at last ❤❤ just turned 44 life feels alot like freedom 😊
So always payoff the mortgage before buying another property? Regardless of how well or poorly the market is doing? Aren't there too many variables to have such a hard and fast rule? Having investment properties that are rented out and don't cost you anything while you're paying for the mortgage of your primary seems fine?
My 12-year mortgage was down to roughly 5600. I had that amount in my savings and cleared the balance in May. It left me with $6K or so, but boy oh boy it improved my cash flow by 25%. I’ve almost recouped that amount and am saving at a much-increased rate, increasing my 401K and doing a Roth-all on part-time hours.All sorts of things got easier. Now I’m paying any credit card balance at the end of the month so I’m going into the new month with gas/electric, phone, internet bills and not much more. I’m still not convinced I actually pulled it off. Next? After reducing my internet by 25% monthly, I’m looking at going to Mint Mobile for cell service. Just cut an annual subscription ($80 annually) and reduced monthly internet is now reduced $10 each month for $200 yearly savings. The new phone plan savings will double that figure. Lots of synergies now that that mortgage is off my back.
Will you marry me? LOL
congratulations!
@@haydengrant8253 TY!
Congratulations! Having no mortgage is an awesome feeling!
CONGRATULATIONS! So excited for you. I can hardly wait until mine is paid off! :)
I currently have $800k in a high yield savings account, yes I’m making gains but to what extent with inflation eating away at the dollar? Am I better off investing in the stock market or paying off my mortgage?
Gold or bonds. Gold has been a top performing asset over the last 30 years.
Gold is a great investment and a good bet against the devaluating dollar, been holding some for awhile now. I’m grateful for this tip from my adviser cos her moment by moment changes in the market are lightening quick....who know how much losses I would’ve had by now!!
@840trk I envy you, I’m still trying to recover from losses I incurred in 2021/2022, who is this adviser you work with, I’m intrigued and I could use some quality guidance
Certainly.....'Monica Selena Park' deserves credit as one of the finest financial planners who decides what assets i acquire whilst raking in 7 figure earnings. Her reputation precedes her, and I highly recommend her on a public post, you can look her up to locate her online if you are internet-savvy
thanks for putting this out, just copied and pasted her full name on my browser, spotted her site easily and skimmed through her credentials, she seems very professional
Yep, I've always wondered why my friends were opposed to auto drafting. Been doing it before I had a smart phone.
You don’t necessarily have to make the minimum or lump sum on a 401(k) loan. It usually depends on the record keeper of the plan. As long as they are aware of the extra amount the participant wants to make, they can usually make an adjustment on their end.
Fidelity - the only change to loan payment is the bank account they take money... Pay minimum or pay it all at once.
All signs suggest that 2023 will be a year of severe economic pain, I was really hopeful of my investments this year, but all my plans have been disoriented. I've been studying the market crashes and I realized some investors made millions from the last recession and I was wondering if such success rate could be achieved in this present market.
The market always bounces back, keep investing and you will be fine.
Understandably, the purpose of buying dividend stocks is to maintain a steady cash flow but dividends are slow if you're not yet retired. I have a couple dividend stocks. I've rather opted for a more aggressive approach and so far I've made over $350k in raw profits this year from mainly blue chip stocks, an allocation fund, S&P500 and coins, with the help of Trisha Jean Webb my F.A... Investing has no one way to it.
@@peejaydandoy2889 I did look up your FA and I'm impressed with the reviews, very remarkable and transparent. I hope she is open to assist
@3:10 "automate smart" yes!
This is why people with a 401K option should do it automatically and treat it like a tax *regardless if they have debt to still pay off*
How do they give financial advice without asking what his current rate is on the mortgage?
Because debt is always dumb.
I am a 55 yr old woman in NZ and enjoying yr show. I would like advice too. I have achieved some good things since a crippling divorce. But am aware I only have 10 years until retirement and wish to achieve my freedom and security. Can you assist?
😊😊I pay extra on my house so when I have my mortgage paid in full I don’t need to worry about 2 mortgages waiting for my house to sell while trying to buy a new house.
I agree with you, to me it makes more sense to pay off the existing mortgage first, then, start thinking about buying a new house.
Cutting my tax deferred savings in half by paying a monthly mortgage would raise my effective tax rate from 12% to 22%.
How about that for some YIELD SPREAD MATH. Guaranteed 10% annually, not 12% but not minus 5% either. Keep on paying those mortgages, I'm OUT.
I have basically the same question, a little different. The home I am paying for now is not going to be out forever home. We know once we retire, we will not be here. So, I have been looking at it like this is a rental. I have a 30 yr 3% mortgage. I understand it will take forever "if we stayed here or were staying here". We will not have this home for 30 years. So, I am thinking stacking cash, let this mortgage be what it is, then when we sell, we will have whatever out of the sale, but have the cash on hand, so between the two payoff new home, which will be much smaller, etc. Thoughts?
The benefit of paying down the mortgage is that the 3% (though might not be much) is only applied to the current principal balance. As you pay it down, you are paying less in interest, so more money goes towards your pocket in the end. If you pay nothing extra to the principal over 15 years, then you will have paid excess interest that likely wouldn't have earned you profit in a savings account (unless you get lucky with a high yield savings that actually returns that value... which good luck in the market).
Again to Dave's point - the idea is that if you are locked in on it, then you don't use that money for something else instead. It's a mental game more than a math game.
@@notwbandgeek, yea I get all of that. Understand amortization, etc. In 5 months we will be consumer debt free. I have been investing since my mid 20s am 60 now, just got stupid there for a bit, and careless as jobs were great, paychecks good as well. Now that we have aged a little, are in a home we know we will not be in long, or until 46 is out of office and our economy takes off again, and Feds stop messing with stuff, we will sell. So was thinking (hoping positively) that 2024 - 2025 will be the year we get right in this nation again, that we will make the move, and not have to payoff much if any on our final home. As Dave has mentioned before, nothing wrong with renting til you get all else in order. That is kind of my thinking. I do understand paying more and I do that, plus make an extra payment every year. And then the greedies show up and raise property and insurance taxes and fees. Appreciate the comment.
@@t3angling575We're in a similar situation, only no consumer debt. Husband is 63, 64 later this year, I'm 60.
We are adding extra principal payments every month, refied to a 15 year last year and have paid our mortgage down to just over 50k from $137,500 @ refi.
Next year is the year we intend to move from WA to NV, it's not if, but when. Husband just started a new job on May 1 after being laid off for 4.5 months, that did make it more difficult to add extra payments, and now going to try and play catch-up, if our current home isn't paid off by the time we want to move it will be very close.
Good luck to you!!
Money markets are yielding 5%, so stacking cash seems like the smart option to me.
@@thedopplereffect00only if you plan to keep Money there for the length of your mortgage
Revolution with pitch forks and torches 😂😂😂 this was a hilarious segment but also packed with tons of valid points. Thanks y’all
If you are a controlled person and has a 2.8 percentage mortgage rate. Please don't follow it and pay your house. Even if you let the money site on a high yield interest account you will make more than the interest rate you are paying+ the interest rate you pay is tax deductible. If you spend any money you see or if you have a high interest mortgage then you may be better off following their advice.
I absolutely love Jade. She’s a friend in my head 😊.
Jade using a strawman argument.
He said save up and put down a lump sum down payment on a new house.
He did not say a lump sum to pay his current mortgage.
A misunderstanding is not a strawman.
@@Beginningtopeak The thing about having a lot of money and you will use it for something completely different then what was ogival intended.
That is a strawman argument.
Always a quality video with quality poeple
Poeple
My question is how long does take to get back the investment you make for buying an all cash house and then renting it out ??because if the house cost you around 230k and you rent out for $2,500 but you will also have pay taxes and house insurance and as well of fixing stuff for your the people renting and as well everytime they move painting and maintenance of the house to put back in market.maybe I'm just over thinking this but can someone please tell me how long this take
12.5 Years On Average!
you break even every year
I am 69 years old. My house payments are $900 a month I owe 84,000 on the house net income is 60,000 a year. How’s the best way to pay it off? I have no debt other than my house.?
I love auto billing ever since I was young and dumb and let my auto insurance laps then my car got totaled by a hit and run 🤦🏼♀️ never again.
Pay the house off simple , pile it on and pay it off.
It was certainly easier for me to spend any extra cash. Took me some time to realize this idea of "forced savings" by paying into my mortgage debt. That extra cash never went to financial freedom. It was a mindset change for me.
Does the interest rate play into this? I have 2.25% on my mortgage (about $80,000 left), and I am getting over 4% on my high interest savings. Is my $25,000 in savings doing more for me than if I put it on the mortgage?
I agree with your plan. I'm doing the same.
From a strictly numbers perspective, you are ahead by investing your extra money instead of paying off the mortgage. But Dave advocates for financial peace, and a big part of that is not being in debt.
I have the same question. How much interest will you earn in 1 year on that high interest savings account ?
How much interest are you paying in that same year on the mortgage ?
Say I have 25k at 4.5% on a High yield savings account. Over one year i will earn about $1,125….. in that same year I will be paying about $4800 of Interest alone on the mortgage. So to me the savings account doesn’t even keep up with the interest on the mortgage (4%)
@@danielpa0415 Assuming a 30-year, $200,000 mortgage that is down to about $80,000, he would pay something like $1800 to interest, and the high yield savings would pay a little over $1000 in interest.
I owe 75K on my 250k house, but got 80k in a CD drawing 5.25 Apr , my house Apr is 2.8%. Anyway I plan on retiring and moving close to my daughters in grandkids in another state in 3 yrs. Should I empty my saving on this house and not have no money to move ? I make 75k a yr., but can live on 60k a yr. My retirement pension will be around 9K a month in 3 yrs, which also includes my military pension and state pension and a couple other pensions.
I am single.
not true, I paid extra on 401K loan and paid it off, fast. In the fidelity website, there was an option to make extra payments, in which I did, in addition to the automatic payments coming from my paycheck. This happened to me in 2020, when I was still bad with money, please don't take out 401K loans, and if you did, pay them off quick, both interest and principal go to you, however the longer the loan sits there, the more your future self will hurt.
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@@BrandonIvan-c6e However, if you do not have access to a professional like Clementina Abate Russo, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments.
@@Donnafrank-k6e Oh please I’d love that. Thanks!
@@BrandonIvan-c6e Clementina Abate Russo is her name
Lookup with her name on the webpage.
Can you imagine if someone made Dave the Secretary of the Treasury?
Everybody body said to me leverage interest only morgage I listened to dave and now I'm in a great position So I have to thank dave from a englander
If you listened to this advice, you're now poorer
I used to want my mortgage paid off, but my financial advisor recommended me not to do that and save instead. I listened to him and so glad I did. Today, I still have a mortgage at 3% but a heck of a nest egg drawing much more than that. I gladly pay my mortgage while my savings work for me.
You can make more in the stock market and just make payments on your house. But for me, I paid off the house first. Investments are not a necessity, but a home is. So my belief is to pay off necessities before investing. But to each their own.
I have the cash now to pay off my house having invested heavily before I bought a house and during. But Ive put it in an account (savings) that pays 6.5% a year. The interest is being put into government debt funds for mexico that returns 11.35% annually.
Since neither investments is directly tied to the stock market im as well continuing as I am knowing if I have a change in circumstances, ie laid off, the house can easily get paid and in the meantime the "house" gives me monthly investments
Same question. Current mortgage at 2.25%, pile of cash in savings account is giving 4.3% interest. Pay off or savings account and pay only required amount? Thoughts ?
What savings acct is paying you 4.3%? I’d love to switch over
@@benjaminfisher750Discover Online Savings is at 4.3% as of today.
Pay it off , save the payment you would have payed the bank , Peace of Mind is valuable
Pay off the mortgage, then invest and save up for a new house.
Agree 💯
@YanilleCastillo Is the smart thing to do. Why keep giving the bank money?
What about when it’s a 3%mortgage and savings accounts pay 5%
@PS-zw4yc Doesn't matter. You invest 15% and throw everything you can at the house. Pay it off as fast as possible, and then you can invest your 15% plus your house payment. That's what we did, and it feels great to have a paid-off house AND investing in a great retirement.
@@jimroscovius It why would I push to pay off a 3% loan with tax benefits when my savings account pays me 5% This is not a situation that existed before. I would agree pay off the house before dumping all your money into stocks. But 5% savings 3% mortgage is a different ballgame
WE LOVE YOU, UNCLE DAVE!!!
😅
I think this totally depends on interest rate ….
You got a 2.5-5.5% interest rate …….. hold onto that forever ,…,,
What if your savings account interest rate is higher than your mortgage interest rate? High interest accounts now are making 5% without assuming any risk (beyond bank crashes, which are insured)
Dave would rather you lose $5,000/yr in interest income so he doesn't have to print new books
@@thedopplereffect00
Dave has a lot of power over some of you and don't even know it.
@@thedopplereffect00 I'm not really seeing the connection here. Either way, it's leaving money on the table if you don't take advantage of low risk/high interest, but instead use it to pay off a low interest debt.
I dont understand how "paying down existing mortgage" and "saving for a new down payment" are mutually exclusive.
Don't they go hand-in-hand?
Aggressively paying down existing mortgage, aggressively builds equity.
The more equity you have in your first house, the more money you get back at closing when you sell.
The more money you get back all goes into your checking account.
The more money you have in your checking account, the larger down payment you have for the new house.
I want to challenge this caller's mindset that those 2 ideas are exclusive to each other, they are actually one-in-the-same.
Depends whether you want to sell or rent out the 1st house, there’s quite a few scenarios here
I think I'd want to do a bit of both, paying down the house and saving for a new down payment. I would rather live in my house and shop for a new one and then sell. Is that a bad strategy?
@@DeBee-dc9ce
Apologize for the late response.
You can do it that way, but there are a couple of risk factors to consider.
1. You may not qualify for 2 mortgages. In which case you have to sell first home to get the mortgage off your record to be approved for the mortgage on the new house.
This happened to a co-worker of mine. He was approved for new mortgage contingent upon the sale of his first house. He set up both closings on the same day. All the wire transfers were set up ahead of time. He closed on the sale of first house at like 10am. Brought the closing docs from the sale to the closing of new house. The closing docs proved the sale of first house went through, which formalized the approval of new mortgage. Closed on new house at like 1pm. ... He likes to joke he was "homeless" once (for 3 hours).
Or
2. If you do qualify for 2 mortgages - do you want to have to pay 2 mortgages payments. If you buy new house first, you run the risk of the first house sitting on market not selling (3, 6, 9+ months ... Happens sometimes), in which case you will have to float both mortgages payments.
This was my case when I went to move. I would have been approved for 2 mortgages. I didn't like the idea of potentially having to pay total of both mortgages if first house didn't sell. The one thing I did was negotiate 30 days post close occupancy with the buyers of my first house. This allowed me to move at my own pace without stress of (a) potential 2 mortgage payments and (b) having to move out same day.
3. If you do qualify for, and are willing to take the risk of 2 mortgages payments - you have a small initial down payment for 2nd house. Then when the 1st house sells you get the equity back. Now what? How do you get the $ to go into new house. You have 3 options (a) make a large principle payment. But this does not reduce your required monthly mortgage. Required monthly payment is based off original principal loan amount. If the point of large initial down payment is to get lowest monthly payment possible this doesn't achieve that. Other 2 options do lower / reset mortgage and therefore payment calculations. (b) refi right after 1st house sells. This will likely require a new appraisal and closing costs which is an added cost. (c) some types of mortgages allow for what is called "recast". "Recast" resets mortgage to new lower principle and recalculates monthly payment. Mortgages that allow recast usually only allow it 1 time during life of loan for free (no closing costs, appraisal still may be required). Not all types of mortgages allow for recast. For those types of mortgages (VA loans for example) that don't allow for recast, options (a) or (b) are the only options available.
Long answer, but I still recommend putting all $ towards existing mortgage as a way to do both pay down existing mortgage and save up for down payment simultaneously.
@@marcsolloway3941
Apologies for the late response.
Id you follow a Ramsey plan as written, you don't get a rental property until after your primary house is payed off and you can afford the rental with cash.
If you want to rent out 1st house, you would first need to pay it off completely, then save up for and pay cash for new house.
This way when you move into new house, it is payed off and 1st house, which becomes the rental is also payed off.
This means aggressively paying off first mortgage and saving for down payment would not be done simultaneously, dividing $ between the 2 choices, but rather both done in order. With all $ first paying off existing mortgage, then, all $ saving up for 100% downpayment for new house.
@@tfosss8775 no problem, I think this is very sensible, although often when you save up in cash for property the prices run up so much you would have been better off with a mortgage, our rental is around 30% LTV so quite a small mortgage and the yield is really good, I think even with a 50% LTV rentals are a sound investment
More mortgage you pay off.....the less interest the bank is able to earn off of you
The question in the title here was not actually answered. They said to put money in current mortgage rather than have a bunch in savings. But they didn’t mention about investing money into another house vs keep in savings🤔
Well, my house loan is 3.25%, so I don’t plan on paying that off anytime soon.
thats fine. you can pay 1 1/2 times on your home then.
The low interest rate sounds good, but watch out for how much of your payment is going to interest vs principal.
It's the subtle things that can go unseen if it's not carefully observed.
Question for the group as im thinking i can get a quick answer.
I have a 30 year. (4%)
I have about 120k left.
I keep hearing make principal payments only. However, how do you do that exactly? I use Bill Pay from my bank online and it send them a check and i see on my loan breakdown X goes to principal and XXXX goes to interest. Do banks allow you to just make principal payments? I have 100k cash available and will have more by December so i will have enough to pay the balance but im not sure on the finer details (penalties for paying off early or how any of that works).
This is why I chose to just overpay my 2.14% mortgage instead of saving it in the bank at 5%
Paying off your feels like you don’t have any money but you do, it’s in the equity. This only matters if your planning to sell you house. What if you have no intentions to seek your house.
Follow the baby steps , all of them! Child education fund also important. I would pay off existing mortgage first just to keep things simple. But then that's me. I also pay car and home insurance in full. It's not auto pay. I save the 5$ each service charge. 10 $ × 12 = 120 dollars saved. Utilities I do auto pay.. A saying I heard as a kid" if you watch your pennies your dollars will take care of themselves"
The saving for a childs education in America is so weird. As a Dutch person, nobody does that because the government pays most of the tuition fees. Also if they do end up paying something, it would feel like their own responsibility.
@@Bertuzz84The government pays for education? How do they finance that? Don’t you mean that each citizen pays it through the taxes that the government charges?
@@skylady64ish93 Yes, but the beauty is that it's spread out through everyone. So it's not on all on your shoulders in the form of debt when you start your adult life.
We’ve been completely debt free for 3 years now. We have a fully funded emergency fund, we have investments, we have assets. Now we are having to move back to the us and we HAVE to buy a home and 1 new car. I’m scared to DEATH. We don’t have enough to pay cash for a car. I’m so worried about it.
Paying off a low-interest mortgage is "making stupid easy". In fact, it is guaranteed stupid with current interest rates.
Instead, start a T-Bill ladder, earning 5.5% interest, and contribute to it every week. Those will be "locked" for 6 months, so it's not as easy to blow that on a vacation or car instead. Make the minimum mortgage payment until the interest rate of the mortgage is greater than the rate of return for Treasury bills.
You don't often get such an easy, guaranteed arbitrage in life. Take advantage of this opportunity
The interest I make on my savings account is much higher than the interest I pay on my mortgage. No reason to lose money by paying it off.
Uhh... that's not how it works. If you have a $400k house with a 3.5% fixed rate, you are still paying exponentially more on interest, in comparison to what you are "making" on a 5% APR savings account with only $25k saved in it (assuming a 6 month emergency fund).
@@DeanBKK I never said anything about not having enough money to pay off the mortgage. I have more than enough money to pay off the mortgage. I said there is no reason to lose money by paying it off when you’re making higher interest on a savings account. An FDIC insured savings account has close to zero risk. Therefore, there is no risk to calculate into the equation which is one of Dave’s main arguments about paying it off.
@@yankeefrugal if that's the case, then that's pretty foolish to have that much money stored in a savings account (PNC bank 4.5%, Capital One 4.15%), when you would literally be getting double that in mutual funds or a decent index fund. 🤷♂️ Also, even at 5% APR from a savings account you are BARELY beating the current inflation rate.
@@DeanBKK not foolish at all. I guess you missed the part of my reply where I talked about the risk calculation. I also have money in index funds and am well aware of how those funds have been UNDERperforming over the past few years. A guaranteed 5% is much better than an index fund break even or loss.
I just paid mine off, age 37
Very nice, congrats!
What state? How much was your mortgage?
I deal with people all the time that have no idea how much they make gross wages.. all they know is how much they get on that check.. I wish more people would pay attention to the tax lines on their pay stubs.
Paying off your mortgage, assuming you refinanced in the last few years makes zero sense. Especially in a real estate market that is on a downturn and may likely continue. I could pay off about half of my mortgage, instead it’s in a high interest account. Earns 4.5% interest, my mortgage is 2.5%. So do the math.
Yes, and you can super charge an emergency fund. If a large downturn comes, and you were to get laid off, that additional savings will be a tremendous help for you stay afloat longer. If you put it all into your house, the money is illiquid, and you'll be facing financial ruin faster