The Power Of Zero Show The Huge ERROR in the Dave Ramsey-George Kamel Plan to Pay Off Your Home in 10 Years
This episode is a critique of a recent video by George Kamel on the supposed benefits of paying off your house in 10 years.
David McKnight examines Kamel’s viewpoint on early mortgage payoff and whether it’s truly beneficial – do you really come out ahead by eliminating your mortgage as fast as possible?
A major point David sees as a disadvantage is the fact that by paying off your mortgage early, you may lose access to the equity in your home.
David highlights the opportunity cost of using funds to pay off a low-interest mortgage (as low as 3%) instead of investing them in the stock market for potentially higher returns.
Kamel believes that the longer you take to pay off your loan, the more interest you pay.
According to Kamel, how much interest you pay depends on three things: the loan amount, the interest rate, and the time it takes you to repay the loan.
David shares an example that illustrates why following the advice of George Kamel’s video isn’t a good idea – and why it could cost you (a lot!) of money.
“Dave Ramsey is so fixated on getting people out of debt that he hasn’t bothered to calculate the opportunity costs associated with doing so,” says David.
Mentioned in this episode:
David’s upcoming book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track
David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code
PowerOfZero.com (free 3-part video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David's Tax-free Tool Kit at taxfreetoolkit.com
George Kamel’s Video How to Pay Off Your House in 10 Years or Less