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What comes after the baby steps and Financial Peace University? Bringing your spouse on board with FI, the benefits of paying off your mortgage and the next Dave Ramsey steps
What you’ll hear on today’s show:
- How Andy brought his wife on board with Dave Ramsey and FI
- What his life looked like before
- The importance of finding a balance
- How he started with talking about the benefits of FI
- Using a monthly budget party to keep finances in check
- The benefits of paying off your mortgage
- How Andy paid it all off
- The next Dave Ramsey steps
- Using travel rewards
- Hotseat questions
Listen to Brad and Jonathan's thoughts about this episode here.
Links from the show:
- Andy’s blog: Marriage, Kids and Money
- Dave Ramsey’s Peace University
- Blog: Retire by 45
- What having it all taught me about money by Making Your Money Matter
- Andy’s article: $400,000 Home Paid Off in Less Than 4 Years
- Andy’s podcast
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8 thoughts on “068 | Financial Peace Graduates | What Next? | Andy Hill”
I still wonder why there is so much criticism against paying down the mortgage when it is a huge hedge against sequence of returns risk and other unknowable events. Think about it this way, when your mortgage is paid off, you have the option, but not the obligation to invest that “new cash flow” anyway you see fit. If you do not pay off your mortgage, or you rent, you have the obligation to continue paying, regardless of whatever your investments are doing. You reduce the number of unknown variables (housing cost) and lower your susceptibility to other unknown shocks (drops in other investments).
How much easier is it to plan for the unknowable when you have an asset that returns the equivalent of a mortgage payment each month?
Full disclosure: Wife and I paid off mortgage in 3.5 years from 2013-2017 and I have no regrets at all. Like Andy said, “Who has that crystal ball?” no way to know what the market will do. At least with the payoff, you know what housing is going to do. I fully believe it is a lot easier to ride out any market storms when you don’t have to worry about keeping a roof over your head.
Great episode.
I believe that Dave Ramsey has a newish book and event/class focused on legacy building. I think that is his answer to “what do I do now that I’m debt free.”
This was such a good episode! It bridged the gap between the two communities and Andy demonstrated how he is successfully straddling them both. It gave me insight on how to have peace with different methodologies while finding what works best for me and my journey.
Re: the Ramsey approach.
Ramsey advises fully funding your retirement account at 15% of income, and funding your children’s educational fund, prior to paying off mortgage debt, so you are only paying of mortgage debt with additional discretionary funds available after investing for retirement and kids. Arbitrage of mortgage debt for stock investment is poor risk management. In order to make it work you have to basically dollar cost average or buy and hold for many years, possibly decades to come out ahead. Young, aggressive FIRE investors may well be tempted to move in and out of the market during this long investment period, trying to time the market. We know this cannot be done. Everyone thinks they have nerves of steel and won’t flinch… but as Mike Tyson advised, “Everyone has a plan, until they get punched in the face.”
This is probably my favorite episode. I am a Dave Ramsey Alum, and I also have had those same feelings of “now what?” after being debt free and aggressively saving for retirement. I love the blending of the Dave Ramsey philosophy with the FI philosophy. Together they give you financial Super Powers!
+1 to BoA Cash Rewards Cards.
We are in the process of parking $100k of VTSAX at Merrill Edge. Doing so will give us a 75% boost on CC rewards. After boost, here are the rewards:
5.25% gas (BoA cash rewards)
3.5% groceries, including Costco (BoA cash rewards)
3.5% dining (BoA premium or travel rewards)
3.5% travel (BoA premium or travel rewards)
2.625% everything else (BoA premium or travel rewards)
I think this strategy trumps most others for those that don’t care for travel rewards. The BoA cash rewards card has a 2500 quarterly spending limit which can be defeated by getting 2 cards (1 spouse on each card).
Interesting discussion about the intersection of FI and Dave R.