You can earn more than 2.9% guaranteed in a HYSA. You should probably not pay it down early if you want to be most efficient. 4.5% is about the point where you should consider paying it down imo. Under that…probably not.

Why would you pay it off early? That doesn't make any sense

That’s dumb.

Run that 3% mortgage out as long as you can. With a HYSA at 4.5% you are making money by putting money there instead of paying down your mortgage(but should just go an index fund in reality)

Dave’s advice is for those in a financial emergency and/or those who are very irresponsible. For the rest of us his advice is detrimental to positive long term financial outcomes.

I have the same mortgage rate. I am choosing not to pay it off. This reduces future liquidity risk.

Everyone has their own risk scenarios, but I thought I would share my perspective.

Essentially, if I lose my job, I don’t want to have an asset that I can’t liquidate since my family needs shelter. Do you have other assets that could be used to pay for basics if needed?

There’s no way Dave should be making an appearance in a HENRY page.

I find Dave to be a pretty abhorrent person and disagree with most of his financial advice, but his advice is targeted at people in real financial emergencies who are, for all intents and purposes, financial addicts.

Giving an addict leeway or workarounds or nuance is often not what they need. They need strict logical rules to follow, which says to part off debt first.

If you’re not an addict (you make good money, you don’t have a ton of debt, you can maintain a household budget, you spend within your means, etc), his advice doesn’t make a lot of sense.

Investing will outperform paying off a 2.9% mortgage 10 times out of 10.

Do not pay off your mortgage. Huge opportunity cost that will hinder your NW in the future. 

Most people outside of the Dave Ramsey community would agree paying off a 2.9% mortgage early is overly conservative. I agree especially if you're even relatively young and have years of compounding ahead of you.

I have a 3.125% mortgage with 10 years left and will not be paying it off early.

That means the Dave Ramsey subreddit is dumb

Dave Ramsey’s method is great if you have spending and debt problems—assuming you’ve cleared your consumer debts (credit card, maybe auto loan) and you’re in a position to save money, there’s no need to payoff your mortgage early. There is a psychological piece to this which some people may say payoff mortgage early, but that’s not something most folks would do.

In my opinion financial “comfort” (freedom, whatever words you want to use) comes from having money available to do things whether that be buying things/experiences or moshing for necessary items like repairs, health, etc. dumping all your free cash flow into a home which is an asset which requires constant upkeep and the only way to get that money back out is through seeking or loaning against it seems like a bad way to park hundreds of thousands of dollars.

Please change to the money guy steps. It’s significantly better for HE and anybody who can manage to not overspend on their credit cards every month.

It’s a question of mathematical optimization vs mental comfort. Mathematically you’re better off investing that money and earning more than 2.9%. The S&P500 averages roughly 10% per year annually over the long run, so that’s a 7% net gain. But maybe paying off your house gives you mental comfort that you’d enjoy more.

Leave Ramsey and subscribe to the Money Guy FOO. They are better at math.

This is rage bait

If I had a mortgage of 2.9% I wouldn’t pay it off at all. I’d make the minimum payment required each month and invest the rest.

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Dave Ramsey speaks nonsense, don’t pay this off and put the money in mutual funds

If it makes you feel better, do it.

Dave Ramsey is for people who can’t be responsible with their debt. If that’s you then by all means follow it. Otherwise you can make more money in a savings account than you would paying off your mortgage.

I think when we look at it purely mathematically, people will say don’t pay off your mortgage. I feel like the Dave Ramsey baby steps are helpful to get out of debt, and also for people who may not be the best savers and are prone to spending (Dave has admitted he is one of these people). So if you know yourself well and think “I would love to put my money in a HYSA but I know I’m the type of person to impulsively spend it,” then honestly it may be better to pay off the house.

It’s kinda analogous to people who take the lump sum lottery winnings and spend it all. Mathematically, it would be better to take the lump sum and invest it, but people who have spending problems may be better off with an annuity payment for this reason alone.

You are getting a lot of good replies on not paying it off early. I’ll be the contrarian and lay out a couple of points to consider in favor of paying it off.

1. Asset protection. This is state dependent, but a handful states has robust protection for your primary residence in terms of lawsuit/bankruptcy. If you are a doctor living in Texas, it may very well be worth it.

2. Risk mitigation. Once mortgage is paid off, it’s a lot easier to come up with the cash flow for living expenses in a worst case scenario.

3. Peace of mind. Investment is as much behavior as mathematics. Will paying off the house give you the peace of mind to stay the course in financial crisis vs selling at low to preserve capital for mortgage?

Paying off a sub 3% mortgage is one of the silliest things I’ve ever heard. It’s all emotional debt aversion at that point - not financial, not numbers at all - the math is obvious on that in this inflationary environment!

Just no. Do not pay that off. That makes zero sense. You can make more money putting it in a cd. You will never have a rate that low ever again.

People are seriously so stupid. I have friends like this who swear their financial geniuses and they're paying off a 3% mortgage instead of opening a money market account.

The primary goal for them is "no debt" even if that's going to lose them shocking amounts of money. I ran a calc for them a while back that showed the paying off their house early was going to lose them about $500k in real dollars if we use 15 year market averages.

There's no getting to people like this, their minds have been corrupted and they are destined to be middle class forever.

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I'm sure Dave Ramsey means well, and has probably helped a lot of people by sticking to simple guidelines, but I can't imagine how much money he has cost people with this advice.

Thats an incredibly low rate. I know Dave's whole thing is to pay off any debt but that is because it is for beginners. At 2.9 percent you could easily make more in a HYSA or the market. The opportunity cost loss of sticking that cash into paying off your mortgage vs working for you in the market is too much for me. If it were high interest debt, say 5 percent, it would be a different story.

There is no good reason to pay off a 2.9% mortgage early. If it was some crazy high rate like 7% then that would be a different story.

Take the money that you would’ve spent on the mortgage payments and stick it into an S&P 500 index fund ETF instead. Even a high-yield savings account would be a better choice.

That’s a great rate—what’s the point of paying it off early? Your money could be doing more efficient things for you. I don’t know Ramsey—is he like anti-leverage? Seems questionable.

Have you heard of The Money Guys? I like their “baby steps” methodology better. Like others have said Ramsey is more for financial troubled / illiterate people and some his methods are extreme.

To answer your question, I would only pay off that mortgage if you are good with your other financial targets. You can probably get more in the market or in a hysa/mm account. Paying off a mortgage and having no debt is a good piece of mind though

Dave Ramsey is not really about wealth building. He is about helping folks get out of debt and save enough to be solvent.

Wealthy people use leverage. To buy more house, buy investment properties, to invest in businesses. A 2.9% interest rate is an absolute steal - AND it’s deductible. It would be foolish to pay this down. Definitely invest your excess cash flow.

Are you trolling for engagement?

Did you just start out, saving for an emergency fund now? How do you then have a $732K mortgage from 4 years ago?

What's your financial picture? Other debts? What is your annual income? Is your job stable?

How old are you and what’s your planned retirement age?

How much is your HHI? How much is in your retirement account?

How stable is your/spouse’s job?

With the nonstop offshoring and AI taking over crap, I see legitimate reason to pay off mortgage early. Regardless, no conclusion should be made without understanding your financial picture first.

2.9% vs earning way more in the market? Keep paying your mortgage at 2.9% and earn way more in investments in the market.

That being said, there is something really gratifying about paying off your home loan. It frees up a lot of cash to invest, and while it does not always make sense financially, it does give you a lot of freedom.

I wouldn’t pay off a mortgage at that low of an interest rate. The bank has almost given you free money.

Take whatever you were going to use to pay off the mortgage and put it to work for you in a brokerage account, Roth IRA, HYSA, or any other asset you feel comfortable with. A few years ago, I would have recommended gold or silver—now unsure. Or pay off any high interest debt—credit cards.

Obviously, do whatever makes you feel comfortable and able to sleep at night, but my mortgage would be the last thing I would pay off at that rite.

I’m going to answer a slightly different question to the one you asked.

This question: under what conditions would it be preferable to pay off a 2.9% mortgage early vs. investing in a brokerage account.

If you don’t have the investing discipline to deal with discretionary cash flows, and there’s some likelihood that you’ll spend the money instead of investing it, then paying off the mortgage might be preferable.

If you can’t stomach being down 20% or 30% after a couple of years in your investments and end up selling them due to drawdowns (or because you need the money), then the mortgage might be better.

If you have a very high tax rate and you can’t deduct your mortgage interest (because you don’t itemize, for example), then the equivalent pre-tax return to your mortgage could be in the 4.5-5% range, which is actually higher than a guaranteed return on long-term bonds right now. This makes it financially more reasonable to pay the mortgage (compared to having low taxes or being able to itemize).

Would I pay off a 2.9% mortgage early? Absolutely not. But if you find yourself in one of the 3 scenarios above, you could do much worse than paying off the mortgage.

That 2.9% is gold. There is no world where I would pay that off early. You’re only decreasing the banks risk. If conservative, invest in a guaranteed vehicle alongside it and enjoy the liquidity/options. I would choose to invest that extra money in the market, which does bring risk. You could always use a balanced portfolio (e.g 1/2 in HYSA, bonds or whatever).

Also married or single? Tax benefit from itemizing if single. If married, you’re likely under the standard deduction.

Don’t listen to Dave Ramsey unless you’re absolutely terrible with money.

A HENRY doesn’t have emergency fund. You are insanely bad at money. Please don’t listen to the comments here and just follow Ramsey. If u don’t pay off mortgage, you would spend that money.

Do whatever makes you sleep better at night.

The /r/personalfinance prime directive flow chart is pretty useful:

https://i.imgur.com/lSoUQr2.jpeg

Agree with others about the limitations of Dave Ramsey.

Dave Ramsay gives dumbed down personal finance advice.  Because he believes the vast, vast majority of people can’t handle nuance and just need the simplest set of rules for a path to success.

He gives pretty good business advice with good nuances.

Treat this like a business decision and the choice is clear.

The dave Ramsey sub is inherently for people bad with money. My rate is also below 3pct and I would never pay it off early when a savings account is higher and stock market on average is more than 2x.

I paid off my 2.75% mortgage, 24 years early. I just take all of that money and invest it every month at this point.

The peace of mind was worth it to me. It may not be worth it to you. Having zero debt empowers me to do whatever I want in life with my job, etc, and that was worth whatever additional money I might have made by keeping the original loan.

Edit: It's hilarious how my own story is downvoted here when a majority of you people are pretending to be rich.