I Paid Off My 2.875% Mortgage…Dave Ramsey Was Right

Get free life insurance quotes from America's top insurers and start saving today with Policygenius: https://policygenius.com/graham Thanks to Policygenius for sponsoring this video! | Let's talk about paying off your mortgage and the benefits of being debt free | Add me on Instagram: GPStephan START BUILDING WEALTH WITH MY FREE NEWSLETTER: https://grahamstephan.substack.com KEEPING LOW-INTEREST DEBT For years, I argued that paying off a sub-3% mortgage was mathematically irrational. But after asking nearly 4 million people on Twitter whether they regretted paying off cheap debt, almost no one said yes. HOW DEBT BECAME A TOOL Growing up, I was taught that all debt was bad. I avoided credit cards, car payments, and loans entirely. That philosophy changed at 21 when I tried to finance real estate and was denied because I had no credit history. I realized debt wasn’t inherently bad; it was a financial tool. If I could borrow at 5% and invest at 12%, the 7% spread represented profit on money I never originally had. That realization became the foundation of my real estate strategy. HOW LEVERAGE BUILT MY WEALTH Over the following decade, I used excellent credit and cheap fixed-rate mortgages to buy real estate instead of paying cash. Properties could generate rental returns above the mortgage rate while appreciation multiplied returns on my original down payment. With mortgages around 3–3.6%, inflation also reduced the real cost of the debt over time. This strategy helped create millions of dollars in equity, which is why I spent years telling people not to pay off cheap mortgages early. THE MENTAL COST OF DEBT What I failed to account for was the psychological burden attached to every loan. Even an affordable mortgage creates an ongoing obligation: payments continue if income falls, tenants leave, markets crash, or you want to stop working. When millions of dollars of debt disappeared from my accounts, I realized those obligations had occupied mental space even though I was never worried about making the payments. WHY DEBT FREEDOM FEELS DIFFERENT Research suggests that eliminating debt can reduce anxiety and improve decision-making and cognitive performance. Interestingly, the number of debts eliminated may matter more psychologically than the dollar amount eliminated. Closing several separate obligations can therefore provide a larger mental benefit than simply reducing one large balance. That helps explain why debt freedom can feel disproportionately valuable even when it isn’t mathematically optimal. PAYING OFF A 3% MORTGAGE IS EMOTIONAL, NOT FINANCIAL Paying the mortgage off means voluntarily giving up expected returns. But the calculation ignores peace of mind. Financial well-being and how secure people feel about their money can materially affect happiness, meaning the value of simplicity and lower stress deserves to be included even if it cannot easily be modeled in a spreadsheet. DON’T SACRIFICE YOUR LIQUIDITY Debt freedom can also be taken too far. Using every available dollar to pay off a mortgage converts highly liquid cash into illiquid home equity. If an emergency happens, you cannot simply ask the mortgage company to return your money. Research also found that some households accelerated mortgage payments while neglecting more valuable tax-advantaged retirement opportunities, leaving themselves financially worse off. THE PRACTICAL ORDER OF OPERATIONS The priority should still be an emergency fund first. After that, take advantage of an employer 401(k) match and aggressively eliminate high-interest debt, roughly anything above 7–8%. Only after those priorities are handled should paying off extremely cheap debt become a serious consideration. At that point, the decision depends less on maximizing every percentage point and more on how much you personally value simplicity, flexibility, and peace of mind. SIMPLICITY HAS VALUE As I’ve gotten older, squeezing every possible dollar out of leverage matters less to me than having fewer obligations, fewer accounts, and fewer things to think about. The purpose of building wealth eventually becomes having more freedom—not simply maximizing the spreadsheet forever. TIMESTAMPS: 00:00:00 - Dave Ramsey vs Investing 00:01:21 - The Downsides Of ZERO Debt 00:03:33 - Why I Borrowed Millions Of Dollars 00:06:22 - Getting Peace Of Mind 00:08:06 - Paying Off My Mortgages 00:10:50 - The Benefits Of No Debt 00:13:39 - Paying Debt vs Investing For business inquiries, you can reach me at grahamstephanbusiness@gmail.com *Some of the links and other products that appear on this video are from companies which Graham Stephan will earn an affiliate commission or referral bonus. Graham Stephan is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. This is not investment advice.

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