Dave Ramsey says it best. "The paid-off home mortgage has taken the place of the BMW as the status symbol of choice."
Dave Ramsey is for stupid people who can’t do math! While he does teach some good principles on doing a budget and paying off consumer debt; his “steps” are a good way to screw yourself out of at least seven figures by the time you reach retirement.
Regarding retirement, you should be putting away 10% or more of your money the second you have a retirement plan. To not take advantage of an employer match on your 401k and to lose out on the time value of compounding interest is absolutely ridiculous. To actually advise people not to prioritize this is borderline criminal! Dave’s advise could literally reduce your retirement nest egg by half.
To answer the question, I’ll have this place paid for in about four years. Well, what about security you ask? My investments and retirement are worth 4X the value of the property. I can simply pay the entire thing off if I wish, but my mortgage rate is 2-5/8 but my ROR on my investments is 45% ytd. Why would anyone take away money making 45% in order to pay off money costing a net of only about 2% after deductions? Inflation is higher than the cost to borrowers. Avoid Ramsey retirement planning at all costs!
Didn't say a word about his steps or the bit about having an envelope for bills and setting that money aside. I've never needed anyone to tell me how to be frugal and stay within my means. I do agree with his statement 100% about the paid off mortgage though. Everyone needs a roof over their heads and not owing anyone for it is great. You're always a slave to the lender if you owe money I'll also add that I don't have the option of employer matched retirement as I work for myself. That makes for a whole lot different ball game that most people.
You’re talking specifically about you and I’m rebutting Ramsey’s retirement planning. We’re not exactly talking about the same thing. Instead of borrower/lender; the conversion and bigger picture should be about how to become the master and make your money work for you instead of against you. Net worth is the goal with me. That’s not really aligned with ol Dave’s philosophy. There’s several good posts here already about this so no need for me to rehash it all - have a look at what W. Juniper and EdM said.
Yes, I am. Dave Ramsey's plan never would have fit into my plans for building my business as some debt was needed and at times it was a no brainer, especially after those Bush tax breaks. Some of my money and a loan saved me big time in taxes and allowed me to invest in my business in such a way as to make for a better future. Working for the other guy never allows that. I'll also say that we all have different desires for retirement. Mine started 20 years sooner than most of my age group and it began with becoming self employed. For me borrowed money on something that makes a steady income is better since I never plan to sell my home so for me I want it free and clear. Some of us just have different situations. My needs are pretty basic too.
