I’m Being Told NOT To Pay Off My House, Should I Listen?

[@Mountainhippiedude]

I have yet to meet a person who paid off their house that regretted it.

[@db2631]

Dave loves dropping the hammer and cutting the callers off mid sentence by hitting the button!

[@The.AI.Finance]

My belief is everyone should pay the house off early, the peace is 100% worth it at any age. That being said, this guy is RETIRED. He should definitely pay that thing off, retirement is about relaxing and there is nothing more relaxing than a paid off home mortgage.

[@kara2162]

Agree. We paid ours off way before we were close to 1M net worth. Best thing we ever did.

[@dancalmpeaceful3903]

I paid mine off many years ago. And then about 3.5 years ago I got laid off. The only thing I had to worry about was health care insurance....and property taxes.....I wasn't worried and took some serious time off and it really didn't affect us. Get free of the slavery and enjoy the peace.

[@The.AI.Finance]

@@kara2162 Congratulations!

[@The.AI.Finance]

@@dancalmpeaceful3903 That's awesome! I love to hear it!

[@jml9550]

Totally agree. 3 paid off properties here in the Bay Area and I’m 49 YO. Rental and salary income just keep flowing in every month.

[@stevencole7331]

It's my money and I want it now . Completely agree with Dave . Another factor is your a senior citizen and as he suggested on the back end of life . A paid off house makes things so much easier now and after you depart for your loved ones .

[@sMaShEdToMaToS]

After I paid off my house early, my outlook changed from “I have to work” to “I want to work” Psychologically that is the best decision I have made. If I don’t like my job, I can change jobs without concern of paying bills for a couple months.

[@dancalmpeaceful3903]

same here....I"m looking at getting out of the rat race at age 60 or so.....

[@imdoc7872]

Why do people call in with this stupid question? You know what Dave recommends. If you don’t think paying off your house is for you then don’t pay it off. Having said that, he should pay it off being retired.

[@pauljansen6650]

Affirmation

[@robedmund9948]

Take a look at your mortgage payment. Take a look at what that $80k would pay you monthly. Factor in your life expectancy. The numbers should tell you what to do.

[@JimmyMook700]

Ultimately it’s your decision. For me it’s whether or not I can sleep at night. If you’re awake worrying, make changes so you don’t worry anymore or at least feel good about your choices.

[@steelcastle5616]

Pay off the house, sell the car, deliver pizza, and eat rice and beans (Good stuff!). Come on dude...if you're a listener you know this!

[@nathanaellewis3312]

Hi Greg, I'm from Frederick also, nice to hear your story.. Pay off the house! Best thing we ever did was to pay off our house. At 38yrs old I paid off our approx. $350k house in 11years. Now worth over $500k! The interest saved paying off the house early was a no-brainer and the freedom to now contribute more to retirement savings, children's school and savings and freedom to just splurge a little on a nicer car/truck or that toy you always wanted and or to contribute to the less fortunate is such a blessing.. I hope you decided to pay off the house! You won't regret it. Congrats!

[@linuxsurfer2002]

I hope everyone who is advising him not to pay it off early reads this. It's not solely about the math in the situation, it's about freedom, about getting out of debt. Congrats to you guys!

[@metaltera86]

Nice to hear coming from Fredrick. I live in Oregon now but I lived in Jefferson which is close

[@timb787]

The answer is it depends. There is a small percentage of people who i would say no, dont pay your house. However, there is zero reason this guy should not pay off his house.

[@aaront936]

Yes you should listen to your advisor

[@billybuttons4298]

@john Smith Or he uses simple math and not emotion to advise the guy how to make the best returns out of his investments and money. Dave's plan is based on emotion. Real money guys that can do math have a different approach.

[@donaldlyons17]

@john Smith Not sure people who make way more than they spend feel any issue by the end.

[@megalodon1726]

Once he sells $80K of investments to pay off the house, that reduces the size of the portfolio available for his advisor to manage. Smaller portfolio = less money for the financial advisor. Always think about that when dealing with a financial advisor. What's in their best interest isn't always aligned with your best interest.

[@superblump87]

It makes the most financial sense to not pay off the house.

[@cooleobrad]

@@superblump87 I would agree with you if he was younger, and you might still be right, but at age 72 it's probably a good idea to have a paid off home. Unless he has a pension that's giving him great cash flow, I can't imagine he has a lot of money coming in each month from social security.

[@charlesg7926]

You’re not wrong, but it’s still stupid of him to sell an investment property to pay off his debt. Because information is a crime so rapidly, the more properties he has, the more his net worth is going to shoot up higher, quickly.

[@charlesg7926]

What he should do is keep the rental property, and fire the financial advisor 😂

[@westbccoast]

What taxes is he referring to ? I know you have property taxes, but if you pay off a mortgage is there an additional tax or tax one paid off house ?

[@Gibb591]

He pays long term capital gains taxes on the sale of his stocks. He is selling his stocks to pay off the house. In theory, he will have to pay taxes on them sometime anyway unless they turn into inheritance which gets into estate taxes instead of capital gains

[@westbccoast]

@@Gibb591 Thank you

[@rdmineer1]

If he has the cash it's a no brainer. Whatever the tax incentives for keeping the mortgage, give them up for peace of mind. And property taxes are really just an annual rent payment to the county. Do you ever really own with that program attached?

[@linuxsurfer2002]

Yes, they should have explained this during the call.

[@tnddiving6166]

You pay capital gains for your house. It doesn’t matter if you pay it off or not. If you pay 200k and sell for 250k you still pay capital gains on 50k. Even if it’s not paid off.

[@saulgoodman2018]

Usually I'd say pay the minimum and invest the rest. But at his age, and how much retirement he has. I would pay it off.

[@CrappyProducts]

Basically this

[@ericzz93]

Why wouldn't you want to pay it off quickly, this might be a stupid question but I'm new to homebuying

[@CrappyProducts]

@@ericzz93 Because often the interest that you pay on mortgage is way below what you can make by investing the money

[@Excalibur2]

@@ericzz93 Dave recommends a 15 year mortgage, so that's pretty fast as far as mortgages go. If you're disciplined enough to pay less and invest the money, you'll likely come out ahead

[@aaront936]

@Eric Zavaleta because 3% simple interest < 10% compounding interest

[@9liveslisa]

My financial guys told me debt isn't bad. I let it go in one ear and out the other. Otherwise they are doing a good job. They just have a different take on debt. But I like sleeping well at night. :-)

[@kuryanthomas1438]

all these investment advisors are about not paying off house, student loans, and just investing those minimum payments instead. I would like to see if theres a study which shows what percentage of individuals following that advice end up being debt free millionaires in the end.

[@Answers721]

Plenty of old people take the advice of financial advisers of making minimum payments and invest the rest. The result is retired people are still drowning in debt. Pay off debts.

[@JustinCase780]

Yes, that part was sad and he is still convinced that the shark help them make money.

[@abrahamflores2566]

Not "all", the good financial advisors will tell you to pay off the cars, student loans, credit cards but leave the house pay itself off with inflation. The real issue is that people overleveged and their house payments are too high for them. If you buy a house within your means on a 30 year mortgage and your interest rate is under 3%, I wouldn't pay it off. In the last 6 years my investments can payoff my house now.

[@harrisonwintergreen1147]

Richard Thaler, Economist who won the Nobel Prize, recommends this sting off the mortgage ASAP. He was interviewed on Meb Faber's podcast in 2021 and said debt elimination is a good way to build wealth.

[@dcamnc1]

Paid mine off when I was 40 (and all my other debt too), best thing I ever did financially, besides finding Dave.

[@Jim_Curtis]

If the guy is worried about losing tax deductions from not having mortgage interest, he can just increase his charitable donations with the extra money he has without a mortgage payment. Simple. It's also nice to hear what Ken had to say this time instead of Dave cutting him off. Ken has good points in these clips.

[@Teamshmo]

He's talking about selling stock I would assume. Selling 80k of stock is gonna mean selling over 100k. Selling small amounts to pay the mortgage each month will result in less tax overall and the money can still grow in your account. However, there is risk the market goes down.

[@Jim_Curtis]

@@Teamshmo I agree with that, but it's not the Ramsey way. Their way is to sell it off all at once to pay the debt off.

[@JustinCase780]

Ken did some LL Bean shopping.

[@samuelsantiago3229]

I believe instead of paying extra money towards your principal mortgage, invest in index funds and after 10 or 15 yrs when your investment equals your mortgage pay off amount, then pay it off your mortgage.

[@dancalmpeaceful3903]

I did both at the same time and came out okay.......been free of that house for years and years.....best decision I ever made. Having paid it off allowed me to save for my son's college education and gorge my 401K....

[@ClaxtonBay123]

You're not considering Risk at all.

[@linuxsurfer2002]

Just remember this guy is 70+.

[@jumpiam8477]

He is 72 years old and retired. He'll be 82 or 87 yo by the time his investment equals his mortgage. 🤔

[@toddspangler6669]

I paid my house off early, moved and turned the house into a rental it's the investment now. After 8 years, the NET rent income paid back the entire cost of the house, Depreciation saves on taxes, and if I lose my job, I have another income to help out!

[@rdmineer1]

Invest the mortgage payments!

[@lkj0822g]

This guy needs to go back to his financial advisor and ask him to show him WHY he should or should not pay off the house. Also should realize the financial advisor may have a vested interest in keeping the money in the accounts rather than sitting in equity (he is probably getting fees based off the total investment amount). At 71 years of age, it probably doesn't make that much difference either way, but he needs to see it on paper.

[@lkj0822g]

I will add that perhaps the reason the financial advisor is recommending against paying off the house is that the market is down at the moment. Pulling money out of investments on March 23, 2020 "costs" more than pulling money out on February 10, 2020.

[@scoutandscooter]

Dave did not ask from where the caller was drawing the $80k. Didn't not ask about the mortgage rate. Two HUGE variables. Pull $80k out of tax deferred there are tax consequences. 3% mortgage, not so bad. Property taxes and insurance increases concern me more.

[@ATLFUNKCARTEL]

When you don’t pay off your house, you tend to live above your means.

[@billybuttons4298]

Dave: "that advisor is so arrogant."....says Dave, the most arrogant guy out there making investment advice based on emotion instead of simple numbers.

[@vincent8900]

That's literally what Dave says he does...

[@kurtco7]

Ahh yes, you're right Billy. What's your net worth?

[@brettstafford9665]

You mean for psychological reasons not emotion

[@LP-tu8li]

His show would be boring if he wasn’t. It helps get listeners.

[@gerilamb2714]

If you pay off your mortgage, you lose your Homestead/Mortgage Exemption for property taxes. I've heard if you keep a small Heloc loan open, you can keep those Exemptions. Any thoughts on this? I don't know if that's true or a good philosophy.

[@Theman2075]

Property taxes is separate from your paying off the loan of your house. As long as you own the house, the homestead exemption stays.

[@jorgesalazar818]

Owning a rental home gives you some real tax benefits. Being a homeowner does not.

[@genxx2724]

@@Theman2075 As long as you LIVE IN the house, you receive the homestead exemption. If you have more than one property, you receive the exemption on only one.

[@BrianW211]

If keeping your money invested in the market and not using it to pay off your house is a better strategy (according to the advisor), then why isn't doing a cash-out refi to get every dollar of equity out of your house and invest it into the market an even better strategy?

[@anomaliesanonymous]

4:55 "the taxes, you gotta pay 'em". False on two counts. 1. He could use existing streams of income to pay his mortgage off following the regular monthly schedule. He could never need to sell any assets to make the payments (assuming his income is sufficient). When he dies, his estate gets a step up in basis. No taxes paid + received tax deductions on the interest paid. 2. The timing of the asset sale would impact the tax liability. If he followed Dave's idiotic advice, the gain event could be enough to kick him one or possibly even two tax brackets up. If he staggered the sale between/among tax years, he could easily reduce the amount of taxes he'd owe purely because of the timing. It's remarkable how someone who prides himself on giving financial advice is so woefully BAD at it. It's almost criminal.

[@PerryD504]

Listen to Dave for financial advice. He knows best!

[@JustinCase780]

Thank you Captain Obvious.

[@mph5896]

In that guys situation, either way is irrelevant. Make a little money on the money invested or have a paid off home.

[@gregdevine9630]

Due to the Secure Act of 2019 if you reach age 70 1/2 in 2020 you must take your first RMD by April 1st of the year after you reach age 72.

[@TheDjcarter1966]

Great point instead of just paying it off just use your RMDs and pay it off in 3-5 years

[@jerrysherman2743]

Why do you allow the spam in these comments?

[@vikkip4256]

No it's now 72 1/2! Keep up Dave!😂

[@dustinmaherfitness]

At his age maybe paying of the house is a good move for peace of mind, but I would never personally do it. I have all three of my homes leveraged (also Airbnb them) 80/20 and then bought more commercial real estate with that and at 38 I am financially independent from the passive income from all my real estate.

[@xterra4hire]

And what happens if they call in the loans. I had a buddy who had 32 2-4 flats that he leveraged and when 2008 hit. He was crushed and thankfully had just enough to sell them and break even barely he lost everything

[@harrisonwintergreen1147]

Hypothetical 8% returns don't show how the S&P 500 underperformed 1 year Treasuries for ~40 of the past 90 years: about 1929-1943, 1966-1982, 2000-2012.

[@nathanjones2229]

RMD age is 72! Might want to be a disclaimer on here!

[@rajbeekie7124]

There is absolutely no financial reason to pay off the house. NONE

[@cooleobrad]

I would agree with you if he was younger, but he is age 72. I think there is something to be said for not having a house payment in retirement. Unless he has a pension, he probably doesn't have much cash flow at his age with SS and an $800k portfolio.

[@jml9550]

I have 3 paid off properties here in the Bay Area. Rental and salary money just keep flowing in month after month and I can maximize 401K and investing. I would buy a another property with mortgage again.

[@Lon1001]

Not having to make mortgage payments is a pretty obvious reason to pay off the mortgage.

[@jml9550]

I should just sell my 3 properties and put $3M in crypto and make myself a nice 400% return. Then wait until I get that $12M and buy again in cash. I think that would be a smart move.

[@jeffmorse5599]

selling ainvestment and paying taxes on stuff that shoudl be yielding 7+% in favor orf paying down a sub 4% mortgae is batshit crazy. nothing makes up for time value of money.

[@Lon1001]

Nothing makes up for the time value of time. The caller is in his golden years, he's done investing.

[@miketheyunggod2534]

Because I pay my mortgage on time, my credit score soared to 813. Your mortgage is the single most important expense. You're lost without a mortgage.

[@georgeseymour7116]

Lost? Not having a mortgage is an awesome feeling for most folks. The borrower is a servant t the lender. True for the last 4000 years, at least.

[@xterra4hire]

Idk what this is supposed to mean, completely insane comment

[@stevehanak7695]

Taxes are evil!........Yet they always thank service members for their service.....whose salary is paid for by.....taxes?

[@steelcastle5616]

America was and is paid for with blood and gold over generations. Taxes is part of the gold side.

[@xterra4hire]

😂. This is a comical comment thank you. 🤡 🌎

[@elricnavatel7353]

So wrong. Put your money on a 6 to 7% return and keep paying your 3% mortgage as long as you can... Definitely bad advice on this one

[@RMSx3-hx3po]

You never own your house my friend, regardless.

[@jorgesalazar818]

Government owns it

[@dancalmpeaceful3903]

Yup...it 's called property taxes.....

[@nathalielady2592]

Federal taxes, state taxes, school taxes, city taxes, public hospital taxes, medicaid taxes, property taxes, sales taxes, and what else? It does add up.

[@peartfaldo]

Still better to not have the principle and interest though. Its a lot easier to pay taxes when P and I are gone......BTW the govt blows.....

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[@djpuplex]

After taxes on $800k and the $80k on the house he's gonna have $560k after taxes.

[@megalodon1726]

He doesn't need to liquidate the whole $800K. All he needs is $80K to pay off the mortgage, and around another $12-$25K to pay the taxes if it's in a non-Roth retirement account or taxable brokerage account.

[@robertwilson7073]

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[@juliangert]

Hi Ramsey, I'm reaching out from Broadband TV because my team is very interested in exploring a strategic partnership with you - I thought I'd try leaving a comment since there is no email listed. Would be great to connect for a quick call or over email this week - please let me know if you get this! Thank you! Julian at BBTV

[@cooleobrad]

Literally on his website there is a 'Contact Us' section.