Should I Pay Down My Mortgage Or Save For Retirement?

dan starts off this hour in Colorado hi Dan welcome to the Dave Ramsey show hey Dave thanks for taking my call sure what's up I'm 58 almost 59 I've had a rollercoaster life financially on my own business 21 years did really well then really bad should have finally closed in 2016 probably should have done it five years earlier took a year off and by some miracle got a job at 56 in 2017 and now I'm doing pretty decent make about 80 90 kg air my wife has makes about 54 we paid off a lot of our credit card debt that has humilated from the business and everything else probably about 40k in the last two and a half years good for you yeah well it was 92 K but now we're faced with with some decisions some of those credit card loans when they're given out cheap paper at $2.99 fixed you know ten years ago we use those as sv loans so SBA instead of the SBA loans and what happened is we still have some of that 2.99 fixed left maybe about 5,000 then I was on a disabled vet so I was able to lock in a three to five refi in 2012 and I still owe about few oh six on that mm-hmm the problem is my retirement only 40,000 and now I'm faced with investing it making more than the 3.25 or the 299 that I have left over in debt or should I go ahead and pay that off because right now I'm looking at 82 before I pay off my house mm-hmm and women you met you make a hundred and forty five thousand dollars a year why would you be at eighty two paying off your house it's only $200 I I was forced to refine and what do you you only owe $200,000 you make one hundred and forty five thousand right that's not 82 now we actually know 1982 is when we pay it off I'm sorry by when I'm aged 82 no that's ridiculous you're not let your hear me $200,000 and you make a hundred and forty five why would you wait why would you wait until age 82 to pay that off well first I wanted to get my credit card debt thank you well know at the time was a day right today you do not have an 82 year old projection on paying off your home from today you only have two hundred and eleven thousand dollars in debt to your name and you make a hundred and forty five fifty thousand dollars a year out of a hundred and forty five as you living on ninety and that puts you out of that in four years with everything by the time you're selling D right would you do that no I'm just saying I'm just saying don't don't don't throw out the dramatic eighty two-year-old because that's just dumb that's not even true so now let's go back and what what we teach is what's called what we call the baby steps baby step one save a thousand dollars to is be out of debt everything but your house you've got five thousand dollars you need to knock that in the head right now get that done as soon as possible you have any money and savings at all that's not retirement yeah we started saving up at six months we have seven thousand and write a check today and pay off write a check today and pay off the credit card and cut it up even though it's two points you have not gonna borrow money on a credit card to build wealth today stop this stop playing with his dad gum debt it is not your in its not been your friend it's still not your friend the faster you get rid of the debt the faster you build wealth so next step is write cheque today pay off the credit card then the next step is to have an emergency fund of three to six months of expenses we call that baby step three baby step three is three to six months of expenses I want you to rebuild your savings as quickly as you can for a rainy day fund you guys have seen some rainy days you know there's a need for that have that in place in your all's house that's probably 20,000 bucks I want you safe okay it's not be very high-performing any but you're gonna do really really fast cuz you make really good money and you're gonna be on a budget now or you make every dollar behave because you're 56 and you have about a 14 year horizon to get everything done and in place well I'm 59 now almost okay then you've got an 11 year horizon till you're 70 okay so we've got to get to rockin on this stuff so you're gonna get these first two or three little things done very quickly then baby step four is I want you to start saving 15% of your income that's $20,000 a year into retirement plans until we get the house paid off above that I want you to attack this house and get it paid off but you need to be on beans and rice right now you don't be running around all over the world traveling you don't need to be eating out every night you do need to be on a written budget the two of you are in agreement we've got some catching up to do because here's what I want you to do if you will save twenty to thirty thousand dollars a year for ten years you're gonna have about six or eight hundred thousand dollars and your house will have been paid off years before that say 140 is your in 145 is your income minus 20,000 going into retirement okay that leaves us a hundred and twenty two thousand dollars to live and pay big chunks on the house let's take fifty and throw it at the house a year above putting your money into retirement fifty a year in four years you're not even 65 years old your house is paid for you'll have at that point about two hundred thousand dollars in retirement and you've got five more years till you're 70 to put another three or four hundred thousand side and it'll double again so that's where you're headed if you follow the baby steps that we teach but you're not going to build wealth in the short term by borrowing on your house to invest in others not paying off the house so that I can invest more that has not been a formula that's worked for anyone hold on the line I'll send you a copy the book the Total Money Makeover it will show you exactly what to do step by step it show you these baby steps I'm talking about pay off your credit card today immediately build that emergency fund of twenty thousand as fast as you can then start putting fifteen percent into retirement and everything else on the house the house is gone when the house is gone you come back and you load retirement up and even more and use all of your income to build wealth and you guys have got to stop spending you don't have time to waste money you got to be on a budget and do this hold on I'll send you a copy the book the Total Money Makeover

Channel: The Dave Ramsey Show

Views: 77,792

Rating: 4.8972602 out of 5

Keywords: the dave ramsey show, budget money debt cash, real estate, insurance, how to make money, dave ramsey, save, credit card, compound interest, buying house, buy, snowball, Should I Pay Down My Mortgage Or Save?, mortgage, money, debt, retirement, investing, invest, personal finance, finance

Id: 9nyM9w6GRhc

Length: 7min 0sec (420 seconds)

Published: Sun Aug 11 2019