Ramsey says a mortgage is OK "as long as it’s a 15-year, fixed rate
loan."Our 30-year fixed-rate mortgage is also OK. It's at
3.75%, and I definitely wouldn't pay it off with money we have in accounts
that constantly earn 6-7% interest. You come out behind doing that, especially
when you consider that we get a tax deduction on mortgage interest, which has
the effect of lowering our mortgage interest rate to about 2.8%. Same thing applies to the car loan we got in 2011 at 1%, although we
didn't get a tax deduction on the interest.Debt is often a good
You should consider Dave's perspective on debt, especially student loans.
He regularly gets calls from people who have used student loans to get an
undergraduate degree, and the loans are sometimes in the $100,000 plus range!Most of my friends in the '70's easily cash flowed college,
it's harder today, but still possible to get through college without debt!
Properly managed debt can be a benefit. It can pay for the education that
improves your lifetime earning potential. It can put you in a home rather than
renting you entire life.And it can even be used to a profit. A few
years ago I was purchasing a vehicle, I had the money to pay in cash at time of
purchase, but the dealer was offering 0% interest. So I financed it, put the
money in an interest earning account with automatic payments and earned interest
on the money as I was paying off the vehicle. It wasn't a lot, but it was
more than I would have had if I'd just paid the cash up front.Ramsey has a lot of great advice, but as with many such "experts"
he's a zealot who takes his message way to far.
Is Ramsey up for paying the tuition and housing costs of students across the
nation? If not, then by telling them that "all debt is bad" he's
telling people to irrevocably damage their lifetime earning potential because
they weren't born to wealthy parents who can front that kind of money.