Posted on 05/02/2025 9:30:32 PM PDT by where's_the_Outrage?
Had a 33 year loan that was paid off in about 25 because then it freed up money for other needs. It took about all the savings; in fact I think I cashed in a few life insurance policies to do it, but it sure helped out later on when a working insurance policy would not have helped. I suppose I took a chance, but now a larger life policy is not what’s been needed.
11th_VA wrote: “Would also like to know what funds he invests in, he never tells us. Probably Berkshire Hart - they seem to survive every market downturn.”
IIRC, Dave recommends SP500 index funds. I seem to recall him mentioning like Vanguard. He does not recommend stock picking.
When my folks bought their retirement home they took out a small mortgage equal to about 20% of the value of the property. With taxes and insurance the monthly was about $400.
They did this mostly for the convenience of making one payment, monthly. In our county property taxes are paid in a lump sum twice a year. It was easier to have a small mortgage, at at low (4%) interest rate, that included insurance and taxes, than to come up with the larger lump sum twice a year.
Mom and dad have passed and it was put into a trust with the stipulation that my sister could live in it as long as she made the payments. She recently passed, but had decided a couple of months before she met her maker to stop paying all of her bills. It went into foreclosure before we could get her death certificate. It was a mess. I kept offering to take over the payment and make the back payments, but Bank of America kept putting up road blocks. Six months after her death they “allowed” me to assume the mortgage if I paid the penalties and legal fees, totaling about $7.000. We did.
We came to discover that the property needed a lot of work, totaling about $40K. There was also the expenses of her cremation, the lawyer, the utilities, etc.
We have mixed legal opinions on whether we need to use the assets of the sale of the property to pay off my sister’s debts. Her car was repo’ed and auctioned off and they want $7K to make up the difference. She owed her mobile company $1000.
One expert tells me that since the property was in a trust and neither of us could access the value unless the other passed, I am not required to use the proceeds to pay her debts. Another says that because she was one of the trustees, half the value was hers and we do need to pay off her debts.
What a mess.
11th_VA wrote: “Dave Ramsey’s advice is mostly for those without financial discipline.”
Very much so. His advice is geared towards installing financial discipline.
I would have pretty much have to pay at least 22% on the entire amount since it is still $115k. My pension is 48k/year so with the standard deduction of 15k, I can draw 15k out of my IRA and just pay 12% Federal Taxes, anything over 15k goes up to 22% Federal Tax. I plan to have the house paid off in 5 years, while still staying out of the 22% tax bracket & to keep increasing my IRA over the same time, but things happen in life so plans can change.
Not that many people have extra money to pay off their houses.
Get out of DEBT and stop borrowing. I changed everything when the people decided to elect a marxist muslim that never had a job as President. I had 2 mortgages at the time, paid off one, sold one house then bought another house, paid it off in 10 months and built another ALL CASH and ended up with 3 paid for houses and don’t owe anybody a dime. Debt free for a long time now and never going back.
but what if your investment tanks?
Exactly.
A mortgage is DEBT.
I don’t like DEBT.
That was smart. Everyone lets you pay extra every month. You are allowed to pay any extra amount toward the principal balance you like.
At that interest rate, you’re also paying more in principle than interest day 1 (or *very* close).
I’m in a similar camp. Mine is 2.8% almost half my payment is principle, and I have investments where I could pay off the entire mortgage if I chose to...so I don’t worry about it. Sure, the market could tank, it just did, and it will recover. If the world goes to complete sh*t, I’ll have bigger worries.
That said, in some ways it’s a psychological thing. Some people are far happier knowing the mortgage is paid. It can change decision making about job prospects, having a ‘happier job’ vs one that pays the most. For me, I’ll keep making payments, draining the debt over time, and allow investments to grow. When I chose to retire I’ll just pay off whatever is left, I do want to be debt free at that point.
Maybe I’m lucky. I don’t stress over the mortgage and have a great & interesting job that pays well. Nothing in life is certain.
“my sister could live in it as long as she made the payments”
That approach only works if you have a way to monitor that the mortgage company (and other creditors) received payments on time—and act quickly if there is a problem.
Callers on Dave Ramsey have a lot of horror stories about trying to help relatives and getting burned.
No good deed goes unpunished. :-(
As long as there are property taxes due, you still don't own it. And government can also take your "paid off" house away any time they think they have a higher and better use for the property.
Better to use the bank's money for as long (and at as low an interest rate) as possible. Everybody in this country who is "rich" uses debt to buy income-producing assets. The "poor" use debt to buy worthless consumer goods - that's who Dave Ramsey is targeting with his advice.
I have a ridiculously wealthy (unfortunately) distant relative who made a fortune in modern art—bought it cheap and then it exploded in value.
They never borrowed a dime.
They never invested in income producing assets.
They put all their extra money (we are talking many millions here) in Fidelity money market funds.
There are many different ways to get wealthy and stay wealthy.
I have a 1.86% refi mortgage.
I have an investment account earning a ten year rate of return of 10%.
My mortgage is “good debt” as it allows me to pocket the +8% return on invested money. If I’d used the invested money to pay off the mortgage I’d have less principal earning that 10% so I’d be making less money.
I’m not smart enough in economics to explain specifically all of the parameters of my thinking other than to say that, to me, using depreciated (by inflation) dollars to pay a fixed mortgage sum (including a fixed loan rate of 2 1/8%) makes sense to me. In other words, we purchased my home in 2002 dollars and are repaying the mortgage in successively less value dollars each year.
I'm fine in short-term treasuries for now. The investment is laddered, so 25% matures every week.
Municipal bonds are great - until they aren't.
Yes the American way...Pay off your house just so you never own it ever...govt will always own it.
I’ve often said that myself.
48K to go on a 350Kish home. I can’t wait. I give much more than the monthly. I’m hoping to pay off in two years.
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