Dave Ramsey (Atlanta, Columbus, Macon: coupons, renting, house)

[neil0311]

Again, you can always pay off a 30 year fixed loan in 15 years. You'll pay a little more interest but you also have some flexibility.

[VJP]

Originally Posted by equinox63

I just assumed that it's always good to owe no one. With the house paid off, i figure that you'd have more capital to invest however you choose, even if you decide to rent it out. After all, 30 years is a long time to live in or to pay on a house prior to actually owning it. I am currently not involved with stocks and such... But, please explain your comment:

"his strategy for paying your home off early instead of investing it in retirement funds are longterm hold portfolio will not hold up over time".

This is purely based on your level of risk vs reward. I would not pay my house off anytime soon if I had the money to do so. I feel I can find (and have done so in the long run) index funds, etfs etc that earn well above the 6% interest I am paying for my mortgage. I feel no real peace of mind by not owing the bank money I borrowed when I am using a large chunk of my money currently to build my compounding base. For a lot of people at a glance, without running numbers this looks counter intuitive. It isn't and it's not rocket science.

[VJP]

Also, not everything Dave Ramsey says is correct and not everything he recommends is one size fits all.

Do you have kids? Do you have student loans? car payments? I have none of these and spend more than 1/4th of my income on my housing + taxes + bills. So? I don't have a problem and still invest plenty left over. If you add a kid or some other loan or CC debt then it would make sense to cut down.

[onemanarmy]

Originally Posted by equinox63

I just assumed that it's always good to owe no one. With the house paid off, i figure that you'd have more capital to invest however you choose, even if you decide to rent it out. After all, 30 years is a long time to live in or to pay on a house prior to actually owning it. I am currently not involved with stocks and such... But, please explain your comment:

"his strategy for paying your home off early instead of investing it in retirement funds are longterm hold portfolio will not hold up over time".

I think a couple of posters have given you the nuts and bolts of my argument. It's basically an opportunity cost scenerio. I like Dave Ramsey and I think most of his advice is good advice. He preachers zero debt, which really equates to zero risk. His plan is perfect for a person who has extreme risk aversion, but not very practical for individuals who would like to invest. Nothing is wrong with this plan, it's just most individuals have some type of risk taking personality. Dave just preaches an extreme risk averse model.

[equinox63]

Originally Posted by neil0311

Again, you can always pay off a 30 year fixed loan in 15 years. You'll pay a little more interest but you also have some flexibility.

You all don't think a family that makes $100k paying double on a 30-year mortgage of $1500 is cutting it kind of close? Even with no debt, that is around half the family's monthly take home pay. Is that what most intown residents in that price range do?

Are your cars, etc. paid off too?

[aries4118]

Originally Posted by lastminutemom

I think that many families intown do bring home 6 figure incomes plus. I think I told the story that a few months ago I attended a party where most of the moms were much younger than me and had very young children. Without exception everyone of them was working -- mostly to be able to afford to stay intown.

This is so true. People in the City of Decatur often talk about how the climate of many of the schools "changed" once Decatur became very sought-after. Before say like 2002, most of the mothers in the northside elementary districts were stay-at-home...but after, most of the newer, younger families were two income because it was so necessary to afford the homes they were moving in to.

There was less volunteering/parent involvement as time went on. City Schools of Decatur...a victim of its own success!

[lastminutemom]

Longtime parents at many successful schools report the same thing. When housing prices become prohibitive to most 1 income families, it may not change the test scores at the local school but it does change the pool of available volunteers.

[BobKovacs]

Originally Posted by equinox63

You all don't think a family that makes $100k paying double on a 30-year mortgage of $1500 is cutting it kind of close? Even with no debt, that is around half the family's monthly take home pay. Is that what most intown residents in that price range do?

Are your cars, etc. paid off too?

How do you figure? Most folks bring home +/- 70% of their gross, so at $100k/year, that's around $70k take home, or $5,800/month. $1,500 is far closer to 1/4 of their takehome than it is to 1/2.

That said, if you've got little to no debt outside of the mortgage, I can't see how a $1,500 mortgage on $100k gross is "cutting it kind of close". The problem is, most people in that situation also have 1-2 car loans, credit card debt, etc., so they are "cutting it close"- but it's not the mortgage that's causing the problem.

[onemanarmy]

Originally Posted by equinox63

You all don't think a family that makes $100k paying double on a 30-year mortgage of $1500 is cutting it kind of close? Even with no debt, that is around half the family's monthly take home pay. Is that what most intown residents in that price range do?

Are your cars, etc. paid off too?

It seems logical that if you pay double payments on a 30 year mortgage you will pay off your loan in 15 years, but its not. If you are paying 1500 on a 250k loan at 6%, you can pay your loan off in 15 years by paying and additional 615 dollars a month, not 1500.00. Just an example if you paid 3k a month on the same loan it would take your around 9 years to pay off the loan. So making 100k annually is affordable for intown for some great neighborhoods, but not the top intown neighorhoods.

[Merin]

If you add an extra payment a year, you can take about 10 years off of the mortgage.