Dave Ramsey says: Put your money where your house is
Jun 20, 2023, 1:00 PM
I bought a house about a year ago. Currently, I have $45,000 sitting in an account with a money manager. I’ve had this account for a little over three years, and the investment hasn’t grown much, if at all. Under the circumstances, and being single, too, would it be better to pull the money out of that investment and put it toward my mortgage?
I recommend putting 100% of any non-retirement savings, above your emergency fund, toward paying off your mortgage until the mortgage is paid off. I’d still tell you to pay down the house, even if you were making 20% on your money. Just make sure you’re following the Baby Steps, and you’re already putting 15% of your income into good retirement investments before attacking the house. Paying down your mortgage is not an expenditure that’s just lost money. The cash is sitting there, you’re just banking it in land. And on a side note, with all the craziness in the market over the last three years, you might come to realize breaking even over that time wasn’t so bad after all.
Johnny, the shortest distance between where you are and your first $1 million to $5 million in net worth is getting your house paid off. After that, load 15% to 20% of your income into a serious retirement plan. And by that, I don’t mean playing financial footsie with some little brokerage account. Investing in good, growth stock mutual funds with a proven track record of at least 10 years is a proven way to build wealth the right way.
I’m sure you can find someone on TikTok telling you to do the exact opposite of what I’m suggesting. But you won’t find that kind of advice coming from real millionaires.