Should I Rush to Pay off a 0% Interest Loan?
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4 жыл бұрынShould I Rush to Pay off a 0% Interest Loan?
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@Hamamiz1 4 жыл бұрын
Just the idea of owing money is energy consuming. I would pay it as fast as i can
@financiallift6185 4 жыл бұрын
Agreed, and over time, owing money can really cause some mental health problems.
@breadwinningbiscuit1086 4 жыл бұрын
This is where Dave Ramsey loses me
@speakingtruths4215 4 жыл бұрын
Hamza Arfaoui I have no debt at all, which is pretty sweet. Just the one loan I had felt like an albatross around my neck, until I paid it off earlier this week. People Have no idea of what a difference it makes to have the feeling of no debt.
@blackworldtraveler3711 4 жыл бұрын
I just save and pay cash as always.
@dete503 4 жыл бұрын
Bread Winning Biscuit you like debt?
@Elisabet00 4 жыл бұрын
The idea is to achieve freedom. Always
@hmmichael438 4 жыл бұрын
Debt is the worst in all forms
@financiallift6185 4 жыл бұрын
I think it can work for some people to pay the mortgage first, but for most people, the mental lift of paying off every form of debt excluding the mortgage can be very motivating
@standupp4755 4 жыл бұрын
As soon as it was 0% on student loans the world said hooray! We can wait it out for longer! I said SHOW TIME! Guess who’s taken a commanding lead over their finances... this guy!
@ireneissomewhere 4 жыл бұрын
Me too
@judithep.8604 4 жыл бұрын
Me three
@brokgrl85 4 жыл бұрын
Same here ....paid off Federal student loans& feels amazing!
@jacobg8640 4 жыл бұрын
I mean, I've just been keeping the cash to collect interest so I can keep it after I pay back the debt once I start getting charged interest, but whatever.
@jacobg8640 4 жыл бұрын
@@connordavis2345 Never bet on the government. Since when are politicians known for keeping their promises? We can't even pass the parts of the second stimulus bill we agree on. Besides if it's all forgiven without tax exceptions, you'll still have one nasty tax loan.
@PassportBrosBusinessClass 4 жыл бұрын
With a 0% loan, you don't need to "rush" but you should try to make more than the minimum payment so you pay it off a little faster. 0% loans are a trap if you make the mistake of waiting beyond the 0% period - and end up getting hit with interest later. Taking a 0% loan can work fine if your tax return is enough to pay the debt off. Personally, I'd pay it off ASAP, but during this pandemic CASH IS KING. Better to hold onto as much cash as possible up until the loan would mature. CASH is buying power right now - especially when banks are reducing credit limits.
@capitalize7775 4 жыл бұрын
Actually most places are not accepting cash and now the government is saying we have a “coin shortage”. Now on a regular basis I would agree but in these weird times we live in it’s a little different. Government is trying to push us to a cashless society. Credit cards, wire transfers, and even cryptocurrency (Dave would disagree) is the future. Also I personally don’t believe we have a coin shortage lol
@rayj.9568 4 жыл бұрын
@@capitalize7775, Good comment. What is the cause of the coin shortage?
@RandomVids823 4 жыл бұрын
Wow didn’t expect to see you on here but can’t say I’m surprised
@andrewbaker4652 4 жыл бұрын
@AZ No, what you are doing is correct. You just need to reevaluate when the 0% period ends. Always pay the debt with the highest interest rate first and minimums on the rest.
@rayj.9568 4 жыл бұрын
@@tomw485 , A perfectly stated. You said it better than I was going to.
@ireneissomewhere 4 жыл бұрын
I'm paying my student loans while they are zero percent because they are the only debts I have. If I had other debts, I'd pay them down first. I'm a data based person and financially it makes more sense. But I understand the theory of doing it the other way.
@BadMannerKorea 4 жыл бұрын
One day in the future student loan forgiveness will be a thing and you’ll regret paying off your loans. I wouldn’t pay back anything until required and I would delay it.
@chillaxstudio3742 4 жыл бұрын
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@BlackGoddess143 4 жыл бұрын
@@BadMannerKorea You think so?
@BadMannerKorea 4 жыл бұрын
Cayla Y It’s a good chance, but who knows. It’s been talked about by presidential candidates and this next stimulus may have assistance for student loan holders. You have 10 years to pay off your student loans, why bother aggressively paying it off.
@BlueDauntless Ай бұрын
@@BadMannerKoreaBecause you took out the loan and promised to pay it back! Why are you waiting for the government to give you a handout?
@ericcarbonell9927 4 жыл бұрын
Average income is 60k/year. 10% of that is $500 a month. Anyone who saves $500 a month starting at 30 making an average of 8% will be a millionaire by age 64. It’s simple math. And easily attainable. So the obstacle isn’t math or income. It’s ourselves.
@mattschmitt9924 4 жыл бұрын
You've been listening to Dave so long that you forgot about taxes. He does it often. I do see your point and agree.
@mph5896 4 жыл бұрын
@@mattschmitt9924 Exactly. Take that 60k and multiply it by .65. Thats what you are netting. Minus all the other mandated fees/taxes in your life and you are closer to .50 net. Throw in a couple kids and you are scraping by. I do agree, it is very important to save early on and consistently as much as possible. BUT Daves math is comical.
@andrewbaker4652 4 жыл бұрын
@@mph5896 Haha, he does have a tendency to ignore real life sometimes.
@blackworldtraveler3711 4 жыл бұрын
m ph People should know this already and able to figure it out on their own instead of expecting everything from 3-5 minute videos.
@blackworldtraveler3711 4 жыл бұрын
Ayawrxsti If you can’t live on a million for 20 years or more you are a failure.
@conman823 4 жыл бұрын
Dave thinking HVAC was a vacuum was unintentionally hilarious
@ballerr45 4 жыл бұрын
That is just bad mathematical advice. Absolutely destroy the mortgage before you get to the HVAC. Both are debt and one has interest. This should have been a no brainer
@Swimfit998 4 жыл бұрын
Yep agree
@flavf2494 4 жыл бұрын
I had this same situation, 0% loan for my HVAC system and just the mortgage. I have the money to pay it off tomorrow but I'm still earning more than 0% on the money.
@brokgrl85 4 жыл бұрын
Isn't the HVAC zero interest until a certain time while mortgage interest is steady? Better off killing HVAC so you don't pay more than you have to. He didn't say how much he had left but remaining Mortgage debt can to be massive ex. over 100K & you may lose heart. Going after the HVAC while it has 0 interest will motivate you ever more to attack that mortgage aka death pledge.
@flavf2494 4 жыл бұрын
@Johnny Five nice job Johnny! Unfortunately I don't have that same prior experience and probably wouldn't feel comfortable doing that myself despite you tube. Although I have done other things myself like car repairs, another place where consumers get charged too much.
@elkellenhabla 4 жыл бұрын
Or just knock out the HVAC and then take that additional freed up cash and throw it on the mortgage every month...
@doggylover92 4 жыл бұрын
Took advantage of my student loan being at 0% until September and as of Friday I am student loan debt free! I didn’t have much left at the beginning of the year (about $3000) but I feel so relieved to be done with that! Now I can focus my energy on paying off my car! If all goes well, I should be done by October/November of this year! I cannot wait to be debt free and finally start saving up for a house!
@heauxmade1456 2 жыл бұрын
Where did you go for your student loans?
@Maatkare 3 ай бұрын
@@heauxmade1456 They are 0% through the Canadian Government.
@CaseyBurnsInvesting 4 жыл бұрын
If you don’t owe anybody you’re free. Especially if no one is paying that debt for you in the form of rent, I’d pay it.
@SteveRam 4 жыл бұрын
0:56 Dave turns to her like: You want to take this one or do you want me to say what I’m thinking
@ThinkBlueAZ 4 жыл бұрын
And later reveals what he was thinking....”vacuum”.
@rayj.9568 4 жыл бұрын
@@ThinkBlueAZ , Yes. Dave heard "vac" not "hvac."
@BrianVelez 4 жыл бұрын
Man, I could hear Dave’s Thoughts already.
@rayj.9568 4 жыл бұрын
0% Interest. No emotion decision for me. Just pure mathematical.
@fmaz1952 4 жыл бұрын
You already paid the financing fees upfront. But if you ever miss a payment, there might be some penalties.
@blackworldtraveler3711 4 жыл бұрын
More than math. Read the documents you signed. There's a reason why zero percent loans are available. It's definitely not a charity.
@alexc5369 4 жыл бұрын
Lol Ray your 'pure math' isn't taking into account that the interest rate is built into the monthly repayments, the 0% thing is just marketing tactics. And as above, a lot of difference between this type of loan and a mortgage. Read the docs. .. pure math😂
@rayj.9568 4 жыл бұрын
@@alexc5369 , I know how to divide the cost of an item by the number of months that the 0% interest applies. If you don't go past that term, you pay no interest.
@RyanD2558 4 жыл бұрын
@@alexc5369 do you not understand how math works? If an item at the store cost 1200 dollars to buy, and you pay 100 a month for 12 months, then you did not pay any financing fees. It's simple division to figure out if you're paying extra or not. No 0% APR loan I've ever had has required me to pay extra fees.
@ladolcevitauk1474 3 жыл бұрын
I can’t thank you both enough for this advice. Thank you so much!
@DrJack144 4 жыл бұрын
Reminds me of all the people bragging to me about how buying a new car on 84 month 0% loans a few months ago was a genius move & great deal.
@joelboy26 4 жыл бұрын
3 to 4 year car loan is all I'll do. And always paid off early
@clarifyingquestions 4 жыл бұрын
They are the same people who buy more house because interest rates went down!
@joelboy26 4 жыл бұрын
@Ayawrxsti ha!
@smileyface985 4 жыл бұрын
Ayawrxsti 😂😂
@blackworldtraveler3711 4 жыл бұрын
I don't drive enough to justify paying so much. Don't want to live in my car either.
@TheFinancialFreedomDiary 4 жыл бұрын
I needed to hear this. I have been paying of as many of student loans as I can during this 0% interest time. I know some don't agree but I'm finally making a dent in them and I can see myself finishing them off.💕
@erind2261 4 жыл бұрын
I'm currently doing this even tho I have other debt. I've already paid 2 loans thru target payment. I can finally see the needle move.
@brokgrl85 4 жыл бұрын
You can do it! Found Dave's videos early on this year as lockdown started in my state. Listed my debt from smallest to largest.. my Federal loans was 3rd on list & was done with them on the 16th. Felt amazing seeing that account say ZERO!!!! I wish paid more attention years ago but that low interest rate I received from consolidating from the Recession put me in the mindset of "I've done time... don't worry"
@mxerb5912 4 жыл бұрын
No but Dave will say yes. Did Dave actually think it was a vacuum? 😂
@rayj.9568 4 жыл бұрын
It good that his daughter was there to correct him.😁
@speakingtruths4215 4 жыл бұрын
mxer b I’m afraid you totally missed Dave’s point. He incorrectly identified the item because it is irrelevant. The point is that a zero interest loan is still stupid.
@Raec123 4 жыл бұрын
Lol right! I had to rewind 🤦🏻♀️
@dete503 4 жыл бұрын
Ayawrxsti have fun having that debt hanging over your head for 6 years or whatever the stupid term car loans are at now. Im debt free and investing my cash. Already gained 125% in the market since January. Thank you Tesla
@blackworldtraveler3711 4 жыл бұрын
@@dete503 He's calling people stupid everywhere.
@Je.rone_ 4 жыл бұрын
Notwithstanding it being so much more than math, the math usually shows what's the best option if you have the uncommon ability to keep your emotions out if it.
@trancendental5373 4 жыл бұрын
Yes and the wealthy are uncommon in this way.
@andrewbaker4652 4 жыл бұрын
The problem is that it should only ever be about the math. As soon as emotions become involved, people get into trouble. The problem is that very few people are able to emotionally distance themselves that way.
@Je.rone_ 4 жыл бұрын
@@andrewbaker4652 i agree. Perhaps unfortunately, they're are a lot of thing one shouldn't have to do but they do because of factors that have not been controlled that should've been.
@ImVeryBrad 4 жыл бұрын
I gotta tell ya, having no payments other than a mortgage is a great feeling
@sandyseibelhager7131 4 жыл бұрын
Here's how I have and would handle this. I had a 0% 12-month and a 0% 18-month and I divided the amount owed on each by 12 and 18 respectively. I paid each of them that amount every month so that when the time came I had them paid off without any interest. I continued to pay extra on my mortgage while also beefing up my emergency fund and saving for retirement. I know, I know-not Dave Ramsey's steps, I'm paying $120 per month in interest on that mortgage and $0 on those cards. It made sense to me and still does.
@andrewbaker4652 4 жыл бұрын
That is exactly how I would do it too in the same circumstances. Dave does not give the best financial advice from a math standpoint. If someone can do math and emotionally distance themselves from finances, there are better ways and you can pay off debt a lot faster. Dave gives advice from a behavioral and emotional standpoint which works better for the majority of people.
@johnhwang339 4 жыл бұрын
It's practicing discipline.
@Sexy40baby1 4 жыл бұрын
I would divide it by 11 and 17/to ensure is paid off on time. Aha... But I would also actually have the money aside to pay it off at any time. Done and done
@chaderickson5647 4 жыл бұрын
Some on those 0 interest loan if not paid in full on a certain date you get charged all that interest from the beginning the day you bought it.
@misspriss2482 4 жыл бұрын
Exactly. I started paying my student loan back long before it was due while it had an 0% interest rate. Everything I paid went to the principle and I was able to pay it off faster.
@actuallyterry 4 жыл бұрын
The first thing this guy said is "zero interest right now" and I took that to mean eventually there will be interest.
@andrewbaker4652 4 жыл бұрын
Just divide the total balance by the number of months in the 0% interest rate period and pay that. Put the rest in something that has an interest rate.
@blackworldtraveler3711 4 жыл бұрын
Most don’t even read that part of the contract and others will fail. There’s a reason why zero interest loans are so popular with companies.
@Sexy40baby1 4 жыл бұрын
@@andrewbaker4652 well he is messing that up because he is only paying the minimum. The minimum possibly won't have him paying it off by the time the interest kicks in. This is something that Dave isn't going to tell folks
@theatomicflounder1 4 жыл бұрын
Dave - you helped me become debt free. Thank you 🙏🏽
@gmar4454 4 жыл бұрын
Wait !! Remember- numbers don’t lie. Emotions DO !
@RichardWalls 4 жыл бұрын
It's going to depend on the person. If he commits to putting that money in an interest producing savings account or in an index fund, then it's going to pay off more than if he pays off this 0% interest debt. If he doesn't plan to do that with his money, and/or simply dislikes debt regardless of how low interest it is, then sure, pay it off. It wouldn't be the best ROI decision, but it's up to them.
@johnhwang339 4 жыл бұрын
When I had my mortgage at 3% rate, I was told that I could make more by investing in a mutual fund rather than paying off more of the principal. My response was paying extra off my principal is a guaranteed 3% savings while investing it I could lose value if the markets turned sour. With my mortgage paid off, the peace of mind I have now being debt free is so satisfying.
@ThinkBlueAZ 4 жыл бұрын
The correct answer is don’t expedite payments on HVAC and don’t make extra payments on home.
@johnhwang339 4 жыл бұрын
My dad told me when he gave me my first credit card in college. "Control your debt before your debt controls you." That stuck with me to this day.
@johnhwang339 4 жыл бұрын
@Johnny Five I only used that Amex card for emergencies only. Back in the day, Amex cards had to paid off in full when the statement came.
@blackworldtraveler3711 4 жыл бұрын
@@johnhwang339 Yeah my dad told me to get the green American Express years ago because it was the only card at the time that had to be paid off by end of month. He never believed in having debt and the green card will get me in the habit of paying it off completely as soon as possible. I have AmexBlue now and Platinum Visa now and have been using them like debit cards before there were debit cards.
@rayj.9568 4 жыл бұрын
Your dad is smart. Young people have to learn to control their spending. There is no trouble that you could have gotten into with that credit card that your Dad could not have gotten you out of. It could have been a painful lesson, but it had to be learned.
@Eyore82 4 жыл бұрын
As someone suffering through the summer with extremely undersized a/c.. i would consider a reasonable size, 0% apr loan. However, in my situation it's not feasible to throw almost 100k (already quoted) at a 75k house, just to upgrade (entire ac package, furnace, 3 stories of ductwork and whole house electrical and insulation update) to central air. We'll just buy another window unit, or 2.
@cutlerylover 4 жыл бұрын
lol, calls Dave Ramsy starts off by telling Dave what 0% APR means...
@hayden2169 4 жыл бұрын
Ben: Hey Dave what's up! Dave: Better than I deserve what's up? Me: ???
@DJ9630. 4 жыл бұрын
Better off not paying the 0% off early, no real point aside from emotional feel. Although if you're going to get emotional about that, then good luck when you start investing
@mxerb5912 4 жыл бұрын
No kidding. You need to decouple the emotion with money otherwise you play it safe and lose money because you don’t take risks. I’m including myself.
@ireneissomewhere 4 жыл бұрын
Agreed
@blackworldtraveler3711 4 жыл бұрын
Really? Well I wish people on here and other places will stop getting angry and saying things like “life happens” when I question their past actions after they get in trouble hanging on to that debt.
@blackworldtraveler3711 4 жыл бұрын
mxer b Just eliminate all emotion by just saving and paying cash.
@GApeech08 4 жыл бұрын
@@ireneissomewhere , I agree with you. They have a "Dave Ramsey" narrative, which is fine. I'm not attacking them for that. They need to have a narrative, a brand, or else they'll be all over the place with their advice. To me, it just doesn't make sense to pay off that kind of debt first. Now, if you've been burned before, pay it off as soon as you can!
@shakemiz 4 жыл бұрын
2:14 That's a really poor way to look at things. By that train of thought you shouldn't do anything but work. You shouldn't have hobbies because they don't make you millionaires.
@Ketchup584 4 жыл бұрын
Huh?
@vpj6097 4 жыл бұрын
How many many months does he have left to pay off the HVAC before interest kicks in? How ever many months that is, take that # and divide it into the total $ amount owed on the HVAC. That becomes his monthly payment amount on the HVAC. Then all the rest of his money for that month should be used to pay off the house. That way, he can attack the house debt as much as possible while still maximizing the time afforded to him by the zero APR on the HVAC.
@andrewbaker4652 4 жыл бұрын
Pay the minimum on the 0% then put the rest into the mortgage. Emotions should never have a place in finances. That is when you run into trouble. Focus on the math. Pay the debt with the highest interest first. Dave is right that you should pay off your debts but I disagree on the order.
@rayj.9568 4 жыл бұрын
Seems like Dave believes that the people that he serves are emotional.
@alexc5369 4 жыл бұрын
Its not 0% when you understand that the interest is built into the repayments
@andrewbaker4652 4 жыл бұрын
@Johnny Five You are right. At that interest rate it is much better to invest it in stocks or save it to buy another rental property or just keep some cash on hand.
@andrewbaker4652 4 жыл бұрын
@@alexc5369 That is why when you get a 0% loan, you divide the balance by the number of months you are at the 0% rate and pay that amount. You still don't pay any interest but it is also true you don't pay the "minimum" though I would argue that this is the "minimum" you should be paying.
@alexc5369 4 жыл бұрын
@@andrewbaker4652 0% loans where I'm from are 0% for first 12 months then convert to a higher than normal rate - which is where the store makes back that money. Or 0% for the whole term with 'fees' either at start and/or throughout the repayments. - mainly for car loans there is no free lunch.
@jakemartinez1354 3 жыл бұрын
I stopped listening to Dave when he thought HVAC was short for a vacuum
@JoseRodriguez-wb9vb 4 жыл бұрын
Should i pull equity on paid off house for down on second house ? Convert first house into rental
@bradleymaravalli2851 4 жыл бұрын
Well said Rachel!
@andymckenna5387 3 жыл бұрын
I'm paying £37 a month on a long term loan repayment. I can pay it off, but I have other debts to pay. It's technically not a massive issue to me. As other money owed it to parents and friends at higher amount. Should I stick with the snowball and pay it off now? Or paid my family and friend and then come back to it?
@nickwilliams8302 4 жыл бұрын
It's bizarre to me that someone would ring up Dave with this question. If you know enough about the guy to call him up, you _know_ what his answer is going to be: walk through the baby steps.
@private6095 4 жыл бұрын
may be he knew the answer but needed confirmation....
@rayj.9568 4 жыл бұрын
I agree. This type of call is for the listeners entertainment though. It gives us something to discuss.
@miketucker3571 4 жыл бұрын
We replaced our HVAC system in April. All cash. $9K. Thanks Dave. Zero percent loans have pretty hefty fees for late payments...or place interest back into the loan. They are betting you will miss a payment.
@blackworldtraveler3711 4 жыл бұрын
I did the same thing a few years ago. When I bought my place I knew I would need to get new units and a water heater so I started saving monthly. Bought them with cash 5 years later and done. This way of doing things is so foreign to most. I would bet at least 50% miss that payment.
@allanriley4070 4 жыл бұрын
I have a zero interest Toyota Camry and not rushing to pay it off. We add more to our mortgage instead because of the interest is 3.75%. Is this wrong?
@mikeyserrano9748 4 жыл бұрын
No, you're doing better by putting more money towards something with interest. You save more money by paying off the debt with the highest interest rate first and making your way down. Dave's way of going with the smallest amount just works to give instant gratification
@miketucker3571 4 жыл бұрын
You can do whatever you want. What Dave says is to get out of debt as soon as possible. Even zero and small interest loans you still owe money to someone. That $24,000 you probably paid for that Camry is digging you a hole, not lifting you out. Paying cash for a good used car instead of a new one with a zero percent loan is better. That $24,000 (less a good used car) could have been used to pay towards your mortgage and become totally debt free faster. Your income is what is going to make you wealthy. The sooner you get debt free the sooner you can begin to invest in things that make you money.
@johnhwang339 4 жыл бұрын
You should take a look at the mortgage interest rates today. It's the lowest ever and depending on your situation, it may make sense to refinance. If going back to a 30 yr mortgage at a lower rate may not sound appealing, you can refinance and pay the same amount you were paying before and pay off sooner. This would also give you flexibility to pay lower P&I when you're short on income.
@anthonystone1748 4 жыл бұрын
The technology in cars and the way they’re built now is good there’s no reason a car can’t get 250k. 10-15 years paid off car can save a lot of money. Keep up maintenance, oil changes, etc.
@blackworldtraveler3711 4 жыл бұрын
People keep saying Toyota but it's most cars nowadays. It's up to the individual for care and routine maintenance.
@cardinalefamilyofsix3706 4 жыл бұрын
Bad advice. He admits that it is an emotional reason behind his answer. You lose on the interest you saved and could have put toward the mortgage. Sorry. Do not agree with this answer.
@BlueDauntless Ай бұрын
Dave Ramsey is always about the behavior and having financial peace. If that doesn’t work for you, don’t do it. But it’s not bad advice. It could still take him a few years to pay off the mortgage whereas he’d pay off the HVAC much sooner. Then he can go after the mortgage again.
@COMMANDRofAWESUM 4 жыл бұрын
Sorry, but this makes no sense. No, keep paying the amount you need to to maintain the 0% rate, but do not pay more.
@MoosePhorus 4 жыл бұрын
I disagree with this. I think it depends on the circumstance with your income, saving, the term and amount owed.
@edwardkostreski6733 4 жыл бұрын
Also, there probably enormous penalties for the HVAC loan; if a payment is late or not paid by a specific date, it is best to get rid of the snake can't bite you.
@anthonykence9954 4 жыл бұрын
Dave likes to smirk at a callers hvac system , it's funny his daughter does it to. He taught his daughter well
@blackworldtraveler3711 4 жыл бұрын
The price people pay for being financially stupid.
@waterbottle4782 4 жыл бұрын
Kids remember do not borrow money.
@sociopathmercenary 4 жыл бұрын
In this situation, the interest I would save by making extra principal payments on the mortgage would be a much higher reward then getting rid of a debt with no interest. YMMV
@tigerrx7 4 жыл бұрын
Dude seriously!? Sometimes it’s just math, don’t pay extra on the 0% interest if it’s not a student loan. Pay off the mortgage man fast man. If something happens to your income, you can manage losing on the HVAC. But having your house taken after paying a lot on it? That hurts. This one is pure math Dave.
@cerebralcaustic 4 жыл бұрын
O% financing is a trap Pay it off ASAP
@marcopolodarts 4 жыл бұрын
I would agree with Dave to not pay extra on the mortgage until you pay off the HVAC 0% rate. If it's the only other debt you have then clearly Dave is correct. If your cash flow allows you comfortably to pay over a short period a large amount then do it. However, if he had another card balance charging interest Dave advice would likely be to pay that off first, but also ensure he pays the zero % within the time and ASAP. Otherwise we all know he will be charged the entire interest per the agreement. Then he would have wished he paid it off immediately like Dave advised.
@zoozooni1 4 жыл бұрын
While thee loan is zero interest... If its not paid in time all that interest will be added. So if its 12 months zero interest... 12 months and a day will add all that deferred interest. Typically at enormous rates. It's a trick that many fall for. Read your contract.
@lowermichigan4437 4 жыл бұрын
Normally on board with Dave but not for this. Purchased a loader 2 years back. One of the incentives was 0% 5 year loan. Could have paid cash. Automated payments and set aside the whole amount. Even with todays low interest that adds up to a decent ammount. If you are disciplined and avoid debt like this caller, this is bad advise. This advice is for someone who has no discipline and collects easy payments.
@hajipaj 5 ай бұрын
bingo!
@steelcastle5616 4 жыл бұрын
For me, it's all about the math. When emotions enter the equation (I want this/I've been convinced I need this), that's when people start going into debt and calling Dave. Do the math!
@blackworldtraveler3711 4 жыл бұрын
Half of these people wouldn’t need to call in if they just learn to read and use basic math.
@alexc5369 4 жыл бұрын
That math will tell you to pay off the '0%' loan fast because the interest rate is built into the repayments.
@steelcastle5616 4 жыл бұрын
@@alexc5369 It still makes no sense to do it, but OK.
@waynemiller6070 4 жыл бұрын
uhh... said no millionaire ever " the 0% on my HVAC caused me to become wealthy." Wrong! When I found out there were no cash advance fees on my Visa card at my credit union AND they were offering 0% for 12 months, I took the "balance transfer" and applied it directly to the principle of my mortgage. That saved me over 5% at the time. And I did that for 3 years in a row. Yes, I'm a millionaire. Big deal. Being a millionaire today is not like being a millionaire in 1950. I used that card for the 0% transfer and I still use a different card for cash back. I never carry a balance on an interest bearing card. I know plenty of millionaires and they all use their credit cards for the perks. Credit isn't evil. But there are far too many people that don't handle money very well, much less credit.
@Indyzato 4 жыл бұрын
If not hurrying to pay off the zero percent loan, pay attention to the dates of payments or they may come after you for all the interest.
@RooRichy 4 жыл бұрын
Hi from the UK! I was wondering just this, but I also have the twist of our third baby on the way and my wife is working full time and I am too but I'm in my probation period so... I can pay it off right now but it would leave us with 1.5 months expenses left and would have a 3 month EF by the end of my probation period. Then our baby is due 2 months after that. I keep switching in my head... One day I want to pay it all off and only have our mortgage, but then I think having 12 months of EF is good at the moment. Also, when baby comes we need to buy a car that fits 3 baby seats plus the two of us but could try to part ex our car for another without paying any/much extra.
@waynemiller6070 4 жыл бұрын
I think Dave would say pay minimums on everything, and pile up cash until baby comes and everybody is back home and okay. Then continue the baby steps.
@MIKE-kz7ld 4 жыл бұрын
Did they just say don't manage your money based on math?! Instead manage it based on emotion?? You are saving money by paying off the house faster, and thus, by not paying off the house faster and instead paying on a 0% loan it is effectively costing him money in house interest to focus on the loan with no interest.
@lanceknuth5300 4 жыл бұрын
What people rarely seem to take into consideration is the effect of inflation on mortgage payments over thirty years. After twenty years my parents owe less money monthly on their thirty year mortgage for a house on acreage than I pay for a two bedroom apartment. Also it is important to this call to note that at 0:29 Ben says that he doesn't owe any interest on it "right now". I've seen plenty of loans with 0% interest up front with a healthy interest rate on the back end.
@rvjason 4 жыл бұрын
And they probably still owe 1/2 of what they paid. The first 20 years of payments have been mostly interest. I'd rather have no payments than cheaper payment.
@ThraxMan84 2 ай бұрын
Even at 0%, you still owe somebody.
@too-da-loo 4 жыл бұрын
Sometimes math and emotions work together. I would see when the 0% ended, divide the payments so I paid it off on the end date and put extra money to the mortgage. Sometimes, you use all the tools available. The recent student loans 0% under the cares act is an exception. The loan is so high that increasing payments to reduce the future interest was the way to go.
@clembark 4 жыл бұрын
It is so much more than math. That’s great.
@ColdSprite 4 жыл бұрын
So I owe about 20k on my truck with a 1.5 interest.. and I owe 15k for a kitchen remodel but it has 0% interest I did for my parents house. What should I pay off first ..
@Sexy40baby1 4 жыл бұрын
How long is the 0% rate for? 12 months? 18? 24?
@ColdSprite 4 жыл бұрын
Mz Tweety 5 years no interest was the contract
@Sexy40baby1 4 жыл бұрын
@@ColdSprite make sure you read all of the contract. Make sure it doesn't have some special tricky clause like....if you're late or miss payments then 'xyz' happens. Can they call the loan or sell it to someone else. And if they did sell it does the next company have to honor that 0%? Next question to ask yourself is if you really want to be paying on something for 5years? That's a long time to not be putting all your money into your personal savings acct. And we all know that things will happen in the meantime, like vehicle repair needed or replacement. You start off with a note you're comfortable paying on a remodel and now you have to replace vehicle and you don't have the money so now add that note to the pile and so on until you're in over your head. You want to get to the point of not liking notes and to get there you have to get free of notes and be free of all of them for at least 6 months. The feeling of no notes is just something that is truly hard to explain you have to experience it. I'm there with the no note crowd so I know what I'm talking about in that aspect.
@ColdSprite 4 жыл бұрын
Mz Tweety I didn’t even think about that when it comes to reading the contract carefully. I’ll look at it better to see if there’s any shady stuff on there. I have a 2016 Nissan paid off my 20k note is on my Chevy Silverado 2018 which I kind of regret getting and sometimes want to sell it but I’m half way paying it off so I’ve also been wondering to keep or sell and save up for the house instead.. this year I’m looking at making around 80-90k Which in California isn’t that much either way but I know I can be saving a ton if I didn’t have to pay 600 a month on a truck a use on the weekends and sometimes not
@Sexy40baby1 4 жыл бұрын
@@ColdSprite look up the value on that truck. Used nada to find that out. Whatever the difference is in value from what u owe, you will have to pay yourself if you sell it. The thing about financing is that the interest charges immediately puts u upside down on the vehicle. Decide if you really want the truck and if you do and can pay it off within 2 years then pay extra and knock it out. If you can get all of your debts paid off within 2 years that would be awesome. You want to start using your money to save for items you want and to invest to have money in retirement.
@ThePatriots010304 4 жыл бұрын
Personal finance is about behavioral decisions not mathematical decisions.
@nickzema4683 4 жыл бұрын
Why throw in chunks of money when you can invest it at a high return?
@mecheckraise 4 жыл бұрын
I am not sure I agree for me but I guess Dave knows best for most. I became debt free in 2018 and it really felt good. I am a recent millionaire from stock market and low cost rentals. I guess it depends how much you make on your idle cash. I took $19,000 idle cash waiting to pay some deferred interest stuff and jumped into the down market in March and have made over 80% since on the market recovery. I earned almost $16,000 in four months. I think that is not normal for most though so just paying it makes sense for many people. At 7.5% I decide to pay off my modest house but today for under 4% I think there is solid thinking that if you actually saved the difference and invested it that you COULD easily make more than 4%. Math really does work when you are talking about larger numbers and longer time periods.For large loans in the 3x and 2x range I am not excited to pay them off.
@KnowUrEnemy 4 жыл бұрын
I owe $700 on my credit card with 0% interest until 10/2021. Should I be in a rush to pay this off? 🤔
@lynninfinite 4 жыл бұрын
You’ll save more if you pay it off by 10/2020.
@KnowUrEnemy 4 жыл бұрын
Lynn Ly How?
@lynninfinite 4 жыл бұрын
Michael Marcano - if you pay it off now, then the money you’d put into the monthly payments can go into your sayings or investment accounts instead. Also, the 0% interest rate is TEMPTATION LAND...! You will be tempted to swipe it and increase your credit usage, which will increase your unnecessary debt. The day you have 0 debt is when you really start building your net worth and wealth. But if you keep it at 700 and just slowly do small payments and pay it off before 10/2021, sure... do what you want, but if I were you, I’d pay it off and starting saving and investing. It’s best to invest when you have 0 debt.
@KnowUrEnemy 4 жыл бұрын
Lynn Ly Sorry, I was being a little facetious and rhetorical with the initial question. In general, I do agree with your advice, but I do believe it is also situational and person dependent.
@lynninfinite 4 жыл бұрын
Michael Marcano - lol. All good. Wishing you wealth and health!
@christianclaudio4382 4 жыл бұрын
Simply put, YES
@Matt-ic1po 4 жыл бұрын
I already knew the answer. Of course pay off all debt first before paying on the home.
@wmarkj 4 жыл бұрын
But but but Dave, I can get debt free on the house faster...
@JustineCarissa 4 жыл бұрын
Dave Ramsey changing people's lives for the better!
@JiisTube 4 жыл бұрын
Might be worth reminding that paying off mortgage is baby step 6. Home mortgage is not part of baby step 2.
@jordanbaldi2832 4 жыл бұрын
epic quote, "The zero percent APR vacuum made me rich" said no millionaire..
@alexc5369 4 жыл бұрын
Going to get it put on a t shirt
@illmatic33 4 жыл бұрын
Nothing is greater than math 😆😆😆
@markparent4914 4 жыл бұрын
Eh, you’d be better paying more on the mortgage
@totalpackagedetailingllc4413 4 жыл бұрын
One thing Dave needs to start talking about is the fact that the “definition of success” in THIS COUNTRY is a paid off house etc and we are programmed to be monetized from the very beginning in the US. The definition of success in other countries is having a glass of water.
@DavidGeorgiaPersonalFinance 4 жыл бұрын
You know what's better than 0% APR? No principle or interest! aka paid off forever!
@waynemiller6070 4 жыл бұрын
You got a point there 😂
@stuartclubb4302 4 жыл бұрын
0% invariably means you just prepaid the interest charges on the price of the furnace. Or worse, it's a limited time 12 months same as cash with a sky high default rate they hope to hit you for.
@rayj.9568 4 жыл бұрын
You are making this up. You do not prepay the interest.
@stuartclubb4302 4 жыл бұрын
@@rayj.9568 I just went through this. They offered me 0% interest, or when pressed, 5% off for cash. They admitted they were subsidizing the 0% by inflating their bid to compensate because most people can't cut a $10K+ check for a furnace and AC. I took the 5%. That's more like 8% after tax.
@DanielGarcia-zz9eg 4 жыл бұрын
No. 0 is 0. You not saving any money. Just keep paying monthly and focus on other debts or do something better with your money Tomorrow the vehicle could be totally out Could be stolen Could catch on fire. Then the insurance write you a small check. Less then what you pay for early . The vehicle is liability. Your home is Carrying value and you saving more money by paying it off early
@onstandby4230 4 жыл бұрын
OK Dave Ramsey it’s time to get off the air.Thank God he had his daughter explain to him the difference between an HVAC and a vacuum.
@________________9862 3 жыл бұрын
How Dave Ramsey keeps people poor. Don't rich people use other people's money?
@69TDUB 4 жыл бұрын
Physical Silver is wealth insurance.
@blackworldtraveler3711 4 жыл бұрын
Until someone bigger than you takes it.
@shawnsgirl4ever1 4 жыл бұрын
Yeah why would you wait it’s interest free
@aimanadzhan5135 4 жыл бұрын
Obviously not
@shanechostetler9997 3 жыл бұрын
We are never free of debt, even if we have paid the mortgage off. Property taxes never disappear.
@Sexy40baby1 4 жыл бұрын
Well if you wait too long then it won't be at 0% anymore. So yes pay it OFF
@johnhigginbotham8291 4 жыл бұрын
Is Rachel a qualified financial adviser?
@blackworldtraveler3711 4 жыл бұрын
Nope. I think she has a bachelor Arts degree.
@themomentalist 4 жыл бұрын
More terrible advice. Ramsey really needs to stop pretending to be a competent financial adviser. The correct advice is to make the minimum payments on the zero percent loan and overpay on the mortgage instead.
@idadho 4 жыл бұрын
I don't understand why Dave does not tell people the truth with 0% apr loans for home improvements and cars. The dealer, HVAC company takes a big discount to the loan company. A $6000 0% loan has interest built into the principle. The dealer/HVAC company likely only got 90-94% of the $6000. Offering to pay cash for a cash discounted price can save 5 to 10%. You save $400 to $600 by paying cash rather than taking the ZERO% loan. Always negotiate a good cash discount when a ZERO% loan is offered.
@dexterm1285 4 жыл бұрын
They won't give you a discount just charge same if you pay cash most likely. What would be the incentive to charge you less... they want to make more money not less. Same with buying cars never tell them it's a cash deal to the very end otherwise they really wont negoiate with you.
@idadho 4 жыл бұрын
@@dexterm1285 I used to be a retailer and loan companies offered me this Zero% interest plans for my customers. I would get 94% of the sales price. The customer got 6 months Zero interest then the interest jumped. If I was buying an HVAC and they gave me a Zero interest price, I know they can offer a discount for cash.
@blackworldtraveler3711 4 жыл бұрын
I saved around $3k by negotiating with cash.
@dexterm1285 4 жыл бұрын
@@idadho Ok I'll try it when the time comes for ac.
@brendantuomey3910 4 жыл бұрын
Wrong
@jimjames335 4 жыл бұрын
Forgive me for being stupid. Please What is the answer to the question?
@catherinep2034 4 жыл бұрын
Pay off 0% interest loan first was the answer
@jimjames335 4 жыл бұрын
Catherine P Thank you 😀
@catherinep2034 4 жыл бұрын
@@jimjames335 You're welcome
@bossmann6358 4 жыл бұрын
I disagree with Dave when it comes to zero interest and other debt when doing the debt snowball.
@waynejones1511 4 жыл бұрын
She makes a good point. People forget to calculate the 'Emotional APR'.
@jds3535b 4 жыл бұрын
Huh? Terrible advice..
@hypersonic6649 4 жыл бұрын
Hi
@NeoAndersonReloaded 4 жыл бұрын
Pay it off because life will happen and you will get another 0% loan later. Now you will have two. Since you'll ok with 0% loans
@blackworldtraveler3711 4 жыл бұрын
I'm beginning to think people can't resist debt drama.
@danieloliver4320 4 жыл бұрын
"A healthy breakfast and daily exercise made me rich" said no millionaire ever. It's such a stupid red herring that Dave just uses to dismiss anyone who has used debt to buy anything other than a mortgage (a weird distinction considering this HVAC unit is an expense directly related to maintaining the value of the home, and the purchase of the existing HVAC was included in the mortgage at a nonzero interest rate). I understand the debt snowball is helpful for some desperate people with a lot of debt, but how do you justify advising a financially stable person to stop optimizing their finances by focusing on higher interest debt?
@cerebralcaustic 4 жыл бұрын
'Optimizing their finances'? 😂Harvard Business Review and Kellogg School of Management both found debt snowball is the best method to pay off debt.
@danieloliver4320 4 жыл бұрын
@@cerebralcaustic yeah optimize. It's when you run the numbers and make a rational decision, kinda like not buying a house you can't afford just because you live in California. As Dave would say, the numbers don't lie
@John3.36 4 жыл бұрын
After we die, what happens to us?
@waynemiller6070 4 жыл бұрын
I'm not sure, but I think it's just like before you were born.
@John3.36 4 жыл бұрын
@@waynemiller6070 check out the webite! :)
@coasteyscoasteys 4 жыл бұрын
J If we knew we wouldn't be here
@John3.36 4 жыл бұрын
@@coasteyscoasteys God knows.
@coasteyscoasteys 4 жыл бұрын
J so ask God
@Optimus-Prime-Rib Ай бұрын
This is terrible advice. One is literally costing u money in interest, the other debt is a ‘free’ loan. Attack the mortgage and make sure the 0% item is paid off in full at the end of the 0% period. No brainer.
@JadeTrading 4 жыл бұрын
Debt-free 👍
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