![]() Invest in a low-cost index fund, and don’t let short-term movements sway your decisions. So, unless you’re extraordinarily risk-averse and can’t take the risk in the market, you shouldn’t pay off your mortgage early. Idea for Impact: Ramsey measures opportunity cost as the difference between paying down your mortgage and the worst-case stock market investment scenario. ![]() On balance, investing in the market while carrying a mortgage is tantamount to leveraging debt. He accepts the risk of missed investment returns in exchange for the guarantee of reduced financial obligations. In sum, Dave Ramsey’s advice just doesn’t make as much sense today with how low-interest rates are comparatively.īut some nuance is in order: Ramsey promotes financial stability. The average stock market return for buy-and-hold investors over the long term is about 7% annually, even after considering inflation. His mantra is simple: the faster you pay off your mortgage, the quicker you achieve financial peace. But with the low-interest rates today, you may want to consider investing instead of paying off the low-interest debt. Dave Ramsey, a respected finance guru, champions the idea of freeing yourself from the chains of debt.He consistently advocates for the early payoff of mortgages. You could pay off your mortgage quicker if you’d like. ![]() Today, however, interest rates are 2.5–4%, making a different story. With interest rates that high, paying off your mortgage was a no-brainer. Yet, depending on your circumstances, he may be dead wrong on paying off your mortgage early.Ī generation ago, mortgage rates were 6–10%. ![]() Sure, personal finance guru Dave Ramsey’s advice has encouraged thousands of devoted followers to get out of debt and stop living paycheck to paycheck. ![]()
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