Why It Doesn't Make Sense To Delay Paying Off Your Mortgage

brought to you by the every dollar app start budgeting for free today so my wife and I just a little contact with 33 years old and we're on baby step like four five and six good one between there we had we had a question thank you we have a hundred and fifty thousand dollars in stocks from her old job that she's not in anymore and we were wondering if it was worthwhile to put that on the principal of our home yes okay yeah I'm in a little debate with my family right now I don't know why your family gets a vote yeah yeah yeah yeah yeah here's a thing here's the way here's a couple things on this to help you know that that my suggestion is right here's why I'm telling you this there's two reasons one is if you reverse engineer some of these decisions in the Harvard investment newsletter causes sunk cost analysis okay so reverse engineer it and say if I had the opportunity to borrow given my state of mind today I'm working baby steps four five and six which means you're putting 15% of your income into retirement you're doing something on kids college and you're paying anything you can find reasonably on the houses baby step six to pay off the house early that's the stated goals of four five and six you know that don't you yeah okay so if that's where your head is and you had the opportunity to borrow 150,000 on your home to buy stock in your wife's old company you would never do that hey George here with a quick interruption if something were to happen to you tomorrow would your family know where to find your life insurance policy your will even your Netflix password well knockbox solves that it's a kit that organizes your financial accounts state plans and everything your family would need all in one place that way they don't have to hack into your laptop or locate some long lost thumb drive so leave them a legacy not a scavenger hunt with knockbox Ramsey fans get the best discount available at knockbox.com slash Ramsey that's knockbox.com slash Ramsey would never do that no no we wouldn't so keeping it is the exact same thing only in reverse it says if you if by not cashing it and paying it on the house it says if you borrowed on the house to buy it mathematically does that make sense right yeah so that's one thing go ahead I'm sorry oh sorry I was just gonna say the only thing is we right now we have a 18 month old and another child on the way so our budget is very tight right now we're kind of like losing about $500 a month so I didn't know if they people were saying it's just like a backup in case anything were to happen that we would have that money you have an emergency fund of three to six months of expenses correct so we have 30,000 emergency fund and we have a hundred thousand and like a high-yield money market account how much backup do you need the great well Linda I mean you don't talk how I was how I trap easy you got two hundred and eighty thousand dollars and backup this is insanity yeah yeah I agree I would like to pay the principal down and okay so how much do you owe your home so we owe three twenty nine and our interest rates two point eight seven five okay so here's what I would do if I woke up in your shoes okay now I currently own about 650 million in real estate that's my point of perspective and I started from being broke okay after having lost everything if I woke up in your shoes I would put two hundred and fifty thousand dollars down on that house and have a thirty thousand dollar emergency fund by the end of the day because I know that the data tells me not only my own life but the 10,167 million years that we studied that the millionaires that became millionaires starting from nothing which is eighty nine percent of them that's nine out of ten in America became millionaires starting from nothing here's what they did they paid off their house early and use the increased cash flow to bill wealth and they systematically and steadily invested year after year after year in their 401k's and the Roth IRAs and good mutual funds so when we run into a millionaire that's 47 and they've got one point seven million in net worth it's typically seven eight hundred thousand dollar paid for house seven eight hundred thousand bucks in their 401k and that's not your broke relatives with an opinion those are millionaires yeah so we're only doing five percent of our 401k because my wife's a stay-at-home mom and we make well again five a year okay I'm sorry I made a mistake I thought you said you were doing babysits four five and six and you're not so you're gonna have to do that before we have a discussion and if you want to beef up your emergency fund of forty thousand or fifty thousand even just to be crazy that's okay but two hundred and eighty thousand is moronic that's just ridiculous okay and you guys need to get your budget tightened up if you if you are if you have zero debt which I'm now questioning if you do or not except your home and you're putting 15% of your income away for retirement you don't have room in your budget regardless of the daycare issue so something else is wrong so dude you're not the dial-in to the stuff we're talking about in order for us to say you're doing the stuff you're talking about and you're not so we got to figure that part out but reason is you guys been piling up cash over on the left so that tells me you're making money and you're good savers you're just crummy at selecting where because you're taking advice from broke relatives so okay guys if broke people are making fun of your financial plan it's like fat people making fun of your diet okay come on you've got to think through this it's just silliness if you walk in and you hire a personal trainer and there four hundred and fifty pounds you made a mistake okay it's a problem and so you've got to go you know it's like these people that say I'm a life coach and they've never had a life so that's a problem okay so it's you should you should actually have some background some experience some track record some what we call social proof to move forward yeah something's off I'd love to see their budget because for them to be able to stack away that much cash and still say he's five hundred dollars in the red every month just a couple of things are off and I think it's got to be some fundamentals I don't think it's crazy living no obviously not crazy living in the gun say that kind of money yeah but sometimes go either probably chunking money in there instead of doing their pre- so I mean seriously this is you can you can this is a wealth building process that that bar none but you've got to actually do it it's not a theory create your free every dollar budget today the simplest way to budget for your life