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Today, we're answering the age-old question, is it better to pay off your mortgage early or to invest that money instead? Listen, it's no secret, I'm a big fan of paying off your house early. The way I see it, a mortgage is like diarrhea. As soon as you get it, you should want to get rid of it ASAP. Stop.
pooping. And that's exactly what my wife and I did with our mortgage. We knocked out our 15-year mortgage in just 26 months. Now, why am I measuring this in months like a newborn baby? I don't know. And can we stop doing that, by the way? Don't tell me you have a 31-month-old and make me do the math. And that's not a baby, that's an elder toddler. He's got molars and a big boy bed for crying out loud. I've had enough of this nonsense. Anyway...
We paid off our mortgage as fast as we could and I have zero regrets. In today's video, we're going to talk about the benefits of home payoff and what I've learned living mortgage free. But first, hit those like and subscribe buttons and share this with your friends who might want to pay off their 360 month mortgage a little early. It's a 30 year mortgage in case you're doing the math. I'm just doing the baby thing. And it's also what moms call that 30 year old living in their basement that they gave birth to 360 months ago. I'm a B.
I'm a baby, I have no money. Okay, the first thing I've learned about having a paid-for home is something I already knew, but now that I'm on this side of it, I've actually experienced. And that is, you have more margin. Paying off your mortgage knocks out your biggest fixed expense, so it feels like you got a raise. And once you've freed up that huge chunk of your paycheck, now you can use that extra money for things like investing, giving, saving up for vacations, or buying a period authentic suit of armor for your monthly LARPing event.
Hey, you do you, whatever summons your dragon, buddy. But seriously, when you don't have a mortgage payment, you've got way more breathing room in your budget, which leads us to the next thing I've experienced having a paid-for home, and that is you have more freedom. Last year, when my daughter was born, my wife Whitney decided to retire from her incredible nine-year career here at Ramsey to stay home with our sweet little baby girl. And guess what?
She did because she could. We already paid off her home, so even though this decision would mean less income, she could still step away from work and trade meetings and emails for bottles and butt cream. And another way lack of mortgage gives you freedom, you don't have these golden handcuffs when it comes to a good interest rate.
I know so many people who feel trapped in their current homes because they got a super low rate a few years back, and if they move now and get another mortgage, they'd have to pick up a much higher interest rate, which could make their payment less affordable. But when your house is paid for, you don't give a rat's tuchus about interest rates. When you pay off your house, you got no payments and a 0% interest rate, which means you are now free to move about the country. And on top of that, you might be able to purchase your next house in cash since you have 100% equity in your home to roll over to the
to the next house. And to me, this is one of the biggest benefits of living a mortgage-free life. Another huge benefit, you have more peace. You know what happens when you pay off your house and the bank doesn't own it anymore? Well, the grass feels different under your feet when you step onto that lawn. It feels like a million little blades of freedom.
And also grass still feels like grass, but also freedom. When we made our last mortgage payment, it felt so good to finally not owe anything to anyone. No debt means less risk. And for me, less risk equals more peace.
If crap hits the fan at work, in the world, in the economy, whatever, you're gonna be in a much better position without that pesky payment hanging around your neck. Now, another thing I've experienced having a paid off mortgage, you have more wealth. Think about it, if you pay off your mortgage early, you can save thousands of dollars in interest payments.
Not to mention, you'll free up more of your paycheck. Now, I need to address something here. Some people say you shouldn't pay off your home early because it's cheap debt, aka money borrowed at a relatively low interest rate. And the argument here is that if you invested the money instead of using it to pay off your house, your returns would be greater than the amount of interest savings that you'd have.
Now, the problem here is that you're assuming you'll make a spread by investing the difference when in reality, you don't know what interest rates will do. You don't know what the stock market will do. Meanwhile, paying off the mortgage is a forced savings plan with a guaranteed return. It is a known variable. And according to honestmath.com, it's not likely to make that much of a difference mathematically.
Plus, in actuality, it's not a straightforward calculation because there's a lot of factors at play here. Things like sequence of returns, potential tax implications, and how close your house is to a Bojangles. And I honestly, I don't know if that would make your home value go up or down, but I do know you'd be dangerously close to some Bulberry Biscuits. These biscuits, ah!
God, I love you. And there's other intangible benefits you got to consider, like the aforementioned freedom, peace, and margin. But let me tell you, I have seen some real monetary benefits from having a paid-for home. My house has gone up in value and appreciated faster than any of my investments. And it's a huge reason why I became a net worth millionaire so quickly.
You see, your net worth is calculated by subtracting your total liabilities from your total assets. So in short, it's what you own minus what you owe. So the less you owe in your mortgage, the more equity you have and the higher your net worth will be. So on my net worth calculation sheet, I've got zero in the liability side and everything else is in the asset side. And by the way, paying it off early will save you potentially hundreds of thousands of dollars in interest.
I mean, it saved us almost $100,000 in interest compared to getting a 30-year loan and paying it over 30 years. So if you want to see how much money you could save by paying off your home early, be sure to check out our free mortgage payoff calculator. You can play around with your numbers and see how much faster you could pay off your house by adding a few extra payments, and more importantly, how much you'd save.
I'll be sure to drop a link below for you to check that out. And speaking of saving, let me tell you about a place to save your money where it can earn some sweet, sweet interest. And that's a high-yield savings account like the one offered by Laurel Road, one of the sponsors of today's video. Right now, your account balance earns 5.15% APY, which is super competitive. Plus, the perks don't end there. There's no minimum balance required to open an account, your deposits are FDIC-insured, and there's no sneaky maintenance fee.
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in the description. Okay, back to the perks of having a paid for home. Another cool thing about living mortgage free is that you have more money to give. And before you roll your eyes at me, Jerry, don't knock until you try it. Because I promise you, giving is the most fun you can ever have with money. And you can give in a whole lot of ways. You can give to your local church if that's part of your faith tradition. You can give to organizations and nonprofits that are doing good work in your community and around the world. Hey, maybe you leave a shockingly large tip for that server at Outback
who hooked you up with a free bloomin' onion because you had to wait 49 minutes for a table due to unforeseen circumcisions. What the heck's going on back at house, guys? Get it together. Foresee them. Foresee the circumcision. I don't know how I could have missed that. But seriously, whatever this looks like for you, real financial peace doesn't happen until you're giving
And side note, I believe you should be cheerfully giving no matter where you are on your money journey. And like my friend Rachel Cruz says, give a little until you can give a lot. And when you don't have a mortgage payment, it's amazing how much more you can give. So those are just some of the things I've learned and experienced having a paid-for house. And it's why I will always aim to be and stay mortgage-free. But you know what else I've learned in the process? Your life doesn't change all that much once you send your final payment in. I didn't wake up the next day and buy a yacht.
I waited a week. I'm kidding. The only watercraft I own are my daughter's bath toys. That doesn't count. I'm still frugal. I still go to work every day. I still have utility bills and property taxes and insurance to pay for. I just have a lot more financial margin, and I never have to worry about paying interest to anyone ever again. And by the way, I'm not the only one who thinks paying off your mortgage early is a good idea. And apparently, a lot of wealthy people do too. According to our National Study of Millionaires, the average millionaire pays off their home in 10.2 years. And here's another crazy fact.
Those following the Ramsey baby steps, the plan that I teach on this channel, they end up paying off their homes in about seven years. So if living mortgage-free sounds good to you, be sure to check out this video to learn how to pay off your house in 10 years or less. I'll also drop a link in the description below. Thanks for watching. We'll see you next time.