Caller: my situation is a little bit different. [Proceeds to describe EXACTLY the situation Dave's advice is for]

Pulling from a retirement fund is just about the worst thing someone can do financially. Penalties, compound interest loss…etc. just terrible!!!

FYI your situation is NOT different. Pay off the house like everyone else does. Increase your principal payment each month. Tackle it. Don't rob your retirement accounts.

0:44 That look on Dave's face of "no your situation isn't going to be different." 😂

If $1600 a month is to much debt when making $150k a year, then they really need to reevaluate their budget.

It’s so much more than paying the penalty and taxes!! You lose out on compound growth which is the worst of them all. Stop obsessing on paying off the house! A paid off house doesn’t buy your food or pay your bills, money does. Even when your mortgage is paid off, you don’t have a paid off house. There are taxes as well as expenses. Focus on growing your assets so you will have enough for retirement and by then you should have the mortgage paid for anyway.

Plus loss of tax deferred compound growth. Really bad idea

When I left my job I cashed out my 401k and payed off our house in full. With the interest saved over the course of a 30-year loan, only made sense at the time. I was lucky enough to find a career that offers a pension, and my wife's 401k we feel confident about our retirement. Fast forward 5 years, we now rent out the house we paid off which generates $3000 a month in rent, and including our combined monthly income of $7,500 were actually doing better. We're using the income from the rental to put towards the principal of our current mortgage, but I would say cashing out my 401k was the best decision I made 🤷‍♂️

NO On 150k income. In a couple years it can be paid off easily. If he wants to pay it off faster. She should get a job.

They need to let the callers speak. They never asked why? I got the impression this guy was tired of working while his wife is at home. I think his real question was "can I pay off my house and quit my job and do something less stressful since we'll be debt-free with over 300k in the market at a relatively early age?" But they just steamrolled the guy. And yelled at him about how much he was making. If you're going to hang up on callers and give every single one the same blanket vague advice why even take calls? Their advice could have been "plan to work 5 more years. Pay the house off early then go do something else. By that time you'll be debt free with over 700k in investments."

Dave always exaggerates this. It’s really only the 10% penalty he’ll lose. Caller will have the 25% taxes (depending on his retirement rate) taken out when he withdraws his money eventually anyway, so he’ll lose that money eventually.

Dave’s right of course, but what is interesting is that he uses math to explain why he’s right here while ignoring emotion. If the caller had a very low interest mortgage with the payoff amount in cash earning more someplace else, Dave would rant on about how he should just pay it off while ignoring the math.

I just inherited an IRA and I don't think I'll ever live long enough to see retirement. I honestly just wanna pay what's left on our house... maybe rent it out... I wish I wouldn't have to take a huge hit pulling it out.

Knoxville, TN is the home of the University of TN. I assume the caller is not a graduate of the school's College of Finance.

Guy already is convinced to pay $80k to pay $253k. @3.5% interest he has about 17yrs off. Paying $100 extra per month would already be 76k in interest. If he paid an extra $1600 a month. He’d only be paying $34,500 in interest and have it paid off in 9.5yrs. With $150k income that’s very possible.

Wow.. the fact the he was even seriously considering this option blows my mind. Especially if he bought this house or refinanced back when interest rates were in the 2-3% range.

Why do people call in with this dumb question all the time?

This is why I don’t invest in a Roth ira but instead I do a taxable account. I can pull money whenever I want and it’s simple.

This guy called in expecting to get praised by Dave for paying off debt but with a really stupid idea. Mortgage your future retirement to pay off lower interest mortgage debt LOL!

Summary of call: Dave finally discovers math. With $150k income, its not going to take much to get bumped into the 32% tax bracket and then shortly thereafter, into the 35% bracket. Add in the withdrawal penalty and you are at 45% tax rate for much of the money withdrawn.

Stop contributing as much to your IRA and use the excess to pay off the house faster

Add to his bad decision the record low mortgage rates. We are paying off our mortgage soon, and I feel almost sad to let go of that low rate.

This guy is bringing in about $7500 a month after taxes, 401K, and even the worst healthcare costs imaginable. $1600 a month is not a huge burden. He could pay off his house in a few years making that kind of money. If he's on BS6, he should just throw $5000 at the mortgage every month if he's that keen on getting out of debt.

I don't know why this is in the Millionaires area. This guy may not get there.

It kind of depends on what the IRA's are invested in. If he's just holding cash in them then yes this solution makes sense. If he's invested in the stock market with it and making ~8% per year with that $500k then no it makes no sense to pull it.

The only cost is the 10% penalty. He will have to pay the taxes either way at some point (maybe at a smaller rate though).

My worry is Uncle Sam coming up with some "emergency" so they can call in the mortgages they have in Fannie Mae and Freddie Mac...then I might consider this.... maybe

He'd lose $15k of growth every year by pulling 250k from his 401k. Don't do it!

Didn't really understand what Dave was sayin till here 4:09

I didn't invest anything in 401ks or IRAs. I made a fast fortune. I went into Art dealing with Hunter Biden. We sell $ 500,000 original Hunter Biden Art pieces to anonymous buyers. We have made a fortune by giving buyers access to " The Big Guy".

You’re making much more in IRA than it costs for your mortgage. Don’t make quick poor decisions.

What if it was from a Roth?

So I have an important question regarding an 401K to IRA rollover situation. I plan on retiring when I'm 55 with an estimated 2.3 million just in my 401K pending the market holds up. Now not waiting until 60 would cost me about another 1.2 million so I'd much like to retire on 3.6 million instead. The only problem is I want to retire at 55 and be done working. My question is if I rollover my 401k to a Roth IRA or another IRA option, will I still hit that goal even without my company 5% into my 401k? In those 5 years that is?

I have 60,000 in a 529 account. My daughter chose not to go to college. Question??? Should I pull it and pay the 10% penalty and pay taxes on the earnings to pay off my Boat. Or should I let it stay in the market??? I owe like 52,000 at 5.49% intrest. Surely this is more than the 10% penalty and taxes on the earnings in the long run

Might as well 👍🏻

PENALTIES! No....

Don't do it....never pull from a retirement fund - you're going to get HIT WITH TAXES and PENALTIES....

Sell the house

One of the dumbest questions I have ever heard.

Can't eat the house. This guy understands nothing about interest and sunk in costs. He makes $150k wow who employs him for that much.

people should stop socking away all that money into their RETIREMENT accts and instead use the money for life things.

Ww3 is gonna start in December. Just take all the money out and enjoy our last month's Alive