Comments on: Pay Off Mortgage Early. Is Dave Ramsey Right?

By: Pinyo

Pinyo — Tue, 09 Mar 2010 02:31:35 +0000

@Michael — If you can pay it off fully and still have money left for emergencies, then yes, you’re almost always better off.

By: Michael

Michael — Sat, 06 Mar 2010 14:56:45 +0000

OK after reading all this I am still a bit confused, here is my situation I have enough to pay off my mortgage, and still have over a years worth of money in a CD/savings/money market not including my other investments. now if I pay it off. and no longer have a mortgage and then place the money i normally would have been paying to the bank on a monthly basis wouldn’t it better off for me? to own my home and only have to make the payment of gas/electric/HO insurance/ property taxes? I have a duplex and rent it so it is a income earning asset at the same time and I would also be earning the monthly interest. and I have 8 years left on a 15 year mortgage and a good job with great security right now.

By: Greg

Greg — Fri, 19 Feb 2010 04:05:36 +0000

Couple things… have a home and have saved enough to pay it off. Today’s economy and the way government seems to be acting, Bernacke, etc… and the amount of friends and family that watched their investments, 401k’s, etc… drop out of sight over night….

I will pay off the home! Bird in hand… is worth?

Like OneCheapChick said, if all else fails, we can just pay the taxes and still have shelter.

By: Josh

Josh — Tue, 05 Jan 2010 18:15:31 +0000

I really liked your article and the comments made me think. I think I have made the decision to pay off my house as soon as possible. I know there are some disadvantages like the comments said, use the extra money to invest, tax breaks etc…. I think for me it is the peace of mind knowing the house I live in is mine. I just setup a blog if anyone wants to follow my journey http://www.payingoffmyhouse.com I know I will need encouragement down the road. I can’t imagine what it will fell like when I I am sending in the last check.

By: Sean E

Sean E — Mon, 04 Jan 2010 05:46:01 +0000

The idea of a tax deduction benefit might not even be a consideration for some people given today low rates. I am unable to itemize for this reason. My family is a strong Dave Ramsey supporter but I disagree with him on some points and this is one.

The strategy we have decided on is a combination of paying the mortgage off early and saving the rest in bonds, stocks, and CDs at about 75% in safer investments and 25% in stocks. We put about 30% towards paying the house off early and 70% into savings.

If at some point we end up with 2+ years worth of living expenses in liquid savings we might then consider making our mortgage our #1 priority.

By: Erik W

Erik W — Fri, 11 Dec 2009 21:05:07 +0000

Here is a question for everyone. I currently live in MA and my wife and I are planning on moving to Florida as soon as we can find jobs down there. I am a CPA and she has an MBA. So while jobs are hard to come by in every state I think eventually we will be able to find something. I bought a condo years ago in MA which we will be selling and through some inheritance, savings and proceeds from the sale of the condo in MA we could buy a home outright in Florida for $300K, still have over $100K in liquid assets (cash and CDs) and aprox $230K in our retirement funds. We are 34 and 32 years old respectively. I am very seriously considering buying a home outright when we move. We will still have plent of liquid assets as well as money in the market from our retirement funds. We have no kids currently, but paln on having 1, maybe 2 someday. What do others think about this plan?

By: FrugalWill

FrugalWill — Mon, 07 Dec 2009 17:33:29 +0000

There are calculators out there that show you the return on your investment if you pay off your mortgage. For example, my loan $165,000 over 15 years at 5.375% interest shows a 48% annual return if I pay $1000 extra a month on my mortgage. The idea is that I saved myself roughly $42,000 in interest changes over 15 years by paying it off in 8 years. That 48% annual return on my $1000 a month investment is guaranteed and tax-free is it not? It would be crazy to think you could do better than that investing in the risky stock market right?

By: larry

larry — Tue, 03 Nov 2009 07:34:25 +0000

should i get a c card w/ 0% intrest intro. and pay it off . or i can get a loan for 15000 at 3% that i wood only use for e.fund. im debt free now but little savings. and a unstable job- econome

By: larry

larry — Tue, 03 Nov 2009 07:25:48 +0000

larry- look i saved 60000 by pre paying .I work 32 hrs week 14 hr im 42yrs old. and as you know the gov will be my retirment 2500 mo. and growing with this president . i will be payed off in 3 yrs. with 70000 eq. i dont want to work when i am 50 but i live very small.

By: Matt

Matt — Thu, 03 Sep 2009 15:00:26 +0000

Pinyo – I understand the argument and understand why people get confused on the isssue. AT the end of the day though, the argument that you are saving interest doesn’t hold any water if people are analyzing things correctly. You have to take money from some place else on your balance sheet or cash flow and invest it in an illiquid investment and there is no gain in the growth of that investment when you make that decision. The whole point in even having this discussion or any like it, is to grow your wealth in the most efficient manner. Except for some strange situations, pre paying the mortgage will not increase your wealth down the road more than the alternatives. Unfortunately, as a financial planner for 17 yrs, I spend way too much of my time explaining this concept to clients because of all of the misinformation that is out there. You have a nice forum here, keep up the good work! – Good luck