I started following Dave Ramsey via his radio show sometime back. I was really impressed initially by how he helped people and his solutions for all debt related issues and growing money for retirement. I was also surprised to find out how lot of people do not handle money wisely and go into sometimes uncontrolled debt ruined their lives either due to adverse life circumstances or due to spending habits. The section of debt free screams (“We are debt free”) on his show is great giving you motivation to be debt free. On deeper analysis I am not able to find the reason behind payoff mortgage argument. This is my open honest analysis and would love to know what people think.
I like how Dave has rightly put purpose of money, every dollar you get you can allocate it in three buckets, with whatever ratio you feel comfortable :
- You should give some for help/charity
- You should spend some of it for living life you want
- You should invest some for growth
I might be oversimplifying but at a high level this is what Dave proposes for your investment bucket :
- Pay off all high interest loans like credit cards debt
- Put 15% income for retirement as investment
- Put remaining to pay off your mortgage for goal to be mortgage free
This is where I respectfully disagree. There has to a difference in strategy if you have a mortgage…
