Before You Pay Off Your Mortgage in 2026, Watch This

Have you ever thought about paying off your mortgage early? For a lot of people, it seems like the responsible thing to do. A lot of people really want to do it. But if you're planning to pay off your mortgage early, that decision might actually cost you $400,000 or more. This is an important money decision that a lot of people don't actually understand. So in this video, I'm going to show you the real math behind paying off your mortgage early, why it actually might cost you more to pay it off early. And finally, I will share a strategy that you can use to begin growing your wealth immediately. Let's get into it. Pillar one. Why paying off your mortgage might be a terrible decision. But it feels so good. I was speaking to a couple who had just paid off their car loan and credit cards, and now they had an extra $1,300 that they were excited to throw towards their mortgage every single month to pay it off early. Sounds smart, right? But after we talked more, we discovered that that one decision was going to cost them over $240,000. Millions of Americans are obsessed with becoming debt free. A lot of us believe that debt is bad. We need to make it go away. And this is an invisible script that we've been carrying our entire lives. This idea that debt is terrible, it's bad, it guides our behavior, even if we have no idea where it really came from. What I want you to do is look at the math of how prepaying your mortgage is actually works. This couple's mortgage was only 4.3%. Now, they could take that $1,300 every month and they could pay it off early. Or they could invest that same amount and make roughly 7% after inflation, which would end up netting them about $812,000 over that 22 year period left in the mortgage. In other words, even if you account for the interest on their loan, they would net at least $242,000 by investing that $1,300 instead of paying off their loan earlier. This is such an important concept to understand. Yes, you can pay off your mortgage and you can pay it off early and you will save some interest. But the question is, compared to what? What if instead you took that money and invested it? What more could you make? You have to run these numbers. And this is not an isolated example either. Consumer Reports ran a simulation comparing what to do with an extra hundred dollars per month. Option one, prepay your mortgage. Option two, invest in an index fund that returned 8%. They then ran the simulation over a 20 year period. Guess what? The index fund won 100% of the time. Now, listen, I understand the urge to pay off a mortgage. For a lot of us, it feels like a major accomplishment. For a lot of us, it feels like freedom. And there is some real value in being mortgage free. It's great not to have to worry about that payment ever again. But. But before we make a decision, we actually need to understand what our alternatives are and what is the right decision for us. So here's what you need to do right now. Take your situation, plug it into a mortgage calculator and an investment calculator. I'll link it below. Plug in your actual numbers, including your mortgage balance, interest rate, and how much extra you're planning to pay each month, and then compare it to investing the same amount at a conservative 7% annual return. Honestly, you're going to be shocked. The difference between those numbers can be as high as 100,000, 200,000, $400,000 over your lifetime. Like if I asked you, hey, do you want to pay $400,000 extra just to feel a little better? You'd be like, no, I want $400,000 in my freaking bank account. So I want you to pause and ask yourself, what would my rich life look like if I had an extra $400,000? Here's, here's a good guideline to simplify this process. If the interest on your debt is less than 5%, I personally would pay the minimum and I would invest the extra money that I have. I would set up automatic payments and automatic investing. You could do this right now so you don't even have to think about. If your mortgage is at 6 or 7%, I would probably split the difference. I would put half towards mortgage payments, half towards investing. That way you're making progress on both fronts and you're making a decision based on what the numbers actually say. Let me take a second to talk about something that a lot of us overlook. Your personal data. If you've ever googled yourself and you've seen your name and your phone number and your home address, even your family members listed on random websites, that is not an accident. Those are data brokers who are quietly collecting and selling your information to anyone who wants it. And when your data is everywhere, you're more exposed to spam, phishing attempts, scams and, and even identity theft, all of which can wreak havoc on your finances. That is why I personally use Deleteme. Today's sponsor, Deleteme, is a hands free subscription service that removes your personal information from hundreds of data brokers and people search sites, which reduces the risk of your data ending up in the wrong hands. You sign up once, and their team continuously scans and removes your information from all of these different sites online so your data stays safe. I also like that Deleteme has been doing this for over 15 years. They were recently named by Wirecutter as the number one data removal service. So when I log into my dashboard, I can literally see which sites had information of mine and confirmation that it's been removed. If you want to reduce your digital footprint and lower your risk of scams and identity theft, go to joindeleteme.com ramit and use the code ramit at checkout for 20% off a plan for you or or your family. I love this service. I use it personally and I highly recommend you use it too. You can click the link in the description below or go to joindeleteme.com ramit now let's get back to the video that leads us to our second pillar. I hear this all the time, Ramit. Once my house is paid off, I'm finally gonna feel secure because nobody can take it away from me. Okay, There is a lot of validity. There's something very psychologically powerful about the idea of owning your house outright. But what then? If all of your money is tied up in your house, are you actually safe? Because every dollar you put towards your mortgage is a dollar that you cannot easily access. Think about it this way. If you put an extra $300 a month into your mortgage for five years, you've paid down an extra $18,000 in principal, which is great. But what if you lose your job or your kids need braces or your car dies? You need $8,000 for a replacement? Where's that $18,000 that you put in your house? Where is it? Hey, where do I. Somebody give it to me. It's locked up. You can't access it without selling your house, taking a loan, or taking out a line of credit. Except now you're taking out more debt and you're securing it with your house. And also, what if you've lost your job now? It becomes tough to get approved. Or maybe rates have spiked and that credit line is now a very high percentage. But if you'd put that $300 a month into a Roth IRA, for example, you could withdraw that contribution anytime, tax free, penalty free. Or in a regular investment account, you can sell shares and have cash in your account in days, even your 401k. Yeah, there are penalties for early withdrawal. And I don't encourage it. But in a true emergency, you have options like hardship withdrawals. Again, the point is liquidity. The point is, is the money accessible? And most of these investments are not only more accessible, they actually make you more money. Here's a simple framework. Before you make any extra mortgage payments, ask yourself four questions. 1. Have I maxed out my 401k, especially if my employer offers a match? If not, that's free money you're leaving on the table? 2. Have I paid off any other high interest debt like credit cards? 3. Do I have a solid emergency fund, ideally 6 to 12 months in case I lose my job? 4. Have I maxed out my Roth IRA which is tax free growth for decades? If my answer to any of these is no, then I would strongly reconsider paying extra towards your mortgage. This is what I call the ladder of personal finance. You climb it in order, starting with your 401k match. Only after you've climbed all of these rungs would I consider paying extra on a low interest mortgage. So stop asking can I afford extra payment and instead ask what else could I be putting that payment towards that will pay me more and be available when I need it over the next 30 years? Now, if you've been nodding along and saying, yeah, I actually need to do this, I need to figure out how to do this for my own numbers, then, then this is your moment where you can stop watching and start doing. Because here's the truth. Running these calculations can feel a little overwhelming. They can be a little tricky. Most of us don't calculate any of this. And so we end up quietly paying hundreds of thousands of extra dollars over time that we don't even know about. But you don't need to guess. You can actually get clarity over these major financial decisions. And that's exactly what we do. Inside my Money coaching program. In just 48 hours, I'm going to walk you through building your complete financial system. The same one that I've used with thousands and thousands of students and couples to pay off debt, invest automatically, and actually feel good about spending money on the things they love. So if you want to know how you are invisibly bleeding tens of thousands of dollars that you didn't even know about, you should join money coaching. You'll also get live calls with me, step by step, guidance to set up your accounts and personal feedback. So you're never asking, am I doing this right? If you've been watching my videos thinking, I really need to do this, this is how you do it right now. Scan the QR code here or click the link to join inside the Money coaching program. Let's build your rich life together. Remember, the real goal is not simply to be debt free. It is to live a rich life, to have your money working harder than you do. So stop and think about this. Where did you originally learn about money? Who talked to you about it and what did they tell you? For a lot of us it was our parents and they said simple phrases like debt is bad. Pay off your house as fast as you can. It's the American dream to own your house. And in 1985 when they were buying houses, it kind of made sense. Mortgage rates were 12%, so you would want to pay them off. And the stock market was not as simple and accessible as it is today, especially with today's low cost index funds. But if you're still following your parents money scripts, especially when it comes to debt, you probably haven't adapted to today's environment. Again, there is much more to a rich life than being debt free. It is about having a full picture of what's going on. It's about having control. Let me give you an example. If I have a credit card balance with 26% interest, that is an emergency, it's high interest, it's dragging me underwater. I'm going to pay that off immediately to get back control. If I have a mortgage at 3%, that's freaking great. Which means I'm in no hurry to pay that off early. I would rather use my money somewhere else. Specifically, I would invest it to make me way more money over the long term. If you have extra money, you don't just put it on the thing that's in front of you. We want to avoid this kind of one dimensional thinking and putting our money at whatever's urgent and immediate. Maybe paying off debt for your mortgage is a smart move. Maybe investing in a smart move, maybe actually taking 5, 10% of it and spending it on eating out or travel is a smart thing. For example, if your kids are 14 years old, you have four more years while they live with you. Maybe that $5,000 extra you have available is actually worth more to you now on a family vacation than paying off a 3.75% mortgage. So if you have extra money, take a second and ask yourself, what is my rich life? What do I value and what is the right decision to make for me? I call these areas money dials. They are areas of your life where spending money brings you disproportionate joy. Like for Example, maybe for you it's eating out at incredible restaurants and paying for a friend. Maybe it's health and wellness. Could be a personal trainer, organic food, yoga retreats. Maybe it's convenience. This is actually my money dial. It might be hiring someone to clean your house so you have more time with your spouse, your kids. Here's the key. When you turn those dials up and you spend extravagantly on them, your life will feel far richer than if you simply try to cut back 5% on everything and then spend a little bit more on whatever. If you run the numbers and you decide you still want to pay off your mortgage early and that is important to you, I'm all for it. I just don't want you to get caught in a one dimensional approach where all of your extra money goes to the places it should go instead of taking a full bird's eye view of your entire financial system. Now, with over a million subscribers on this channel, I really want to thank you for being a part of my community and I really want to share the best money psychology resources in the world. So if you're not already subscribed to this channel, hit that subscribe button. I'm going to be sharing even more videos and resources just like this, so stay tuned. You know, when I talk to people about money, I notice a lot of them seem to only live for the future. They'll basically say things like, once I pay off my mortgage, then I will finally feel good about money. Then, then I can travel, then I can finally enjoy my money. A lot of us delay good things until some magical future date. And you know what happens? You get to that date. Mortgage is paid off debt free, everything responsible checked off the list. And then you still don't spend the money. Because the problem was never the mortgage. That was just a convenient excuse. The problem was you spending decades training yourself to say no. No to the occasional nice dinner, no to. No to the vacation, no to getting a minor upgrade on your airline seats. No to spending your money at all. And after 30 years of saying no, it's hard to know how to suddenly say yes. This is a problem that I encounter all the time in the frugality community. They have spent so long defining their identity by what they don't spend that when they finally reach the promised land, they checked off all the boxes. They've hit their number. They actually don't know what to do with the money. It has become part of their identity to not use it, making it impossible to use it. Work hard, pay off debt, save for retirement, maybe enjoy life when you're 80 years old. In my opinion, that's not a rich life, that's a deferred one. So here's what I want you to take away from this. Don't wait until your debt is paid off to start living. You actually need to practice spending money now while you are living life so that you are building the skill along the way. In other words, you can actually live a rich life if you have debt. Yes. Even if you have credit card debt, you can still live a rich life. That is why I teach this exercise. When it comes to paying off debt, like around a mortgage or credit card, I'm going to show you exactly what to do six months before your debt is about to be paid off. Let's say that you're about to pay off a debt like a car loan, which is going to free up $700 a month. Now, most people wouldn't think twice. They would finish the payments and then they wouldn't actually make a plan of what to do with that extra money. And then months later, they would look back and be like, hey, where did all that extra money go? It just got absorbed into your financial system. Instead, I want you to make a plan for how you're going to use your money six months before you pay off the debt. How much of that new money is going to go to investing savings, guilt free spending? Decide before the debt is paid off. So, so that when the money frees up, you can spend it intentionally. This is how you use money to live a rich life. It's not about hoarding it. It's not about putting every single extra penny towards debt as a reflexive fear of debt. No, it's about being intentional with your money and looking at the full board. So here's what I want you to do right now. First, ask yourself this question. If I didn't have to pay my mortgage, what would I do with that money? Really think about it. Would you take your family on an amazing trip? Would you upgrade to business class? Would you, Would you eat out? Would you hire some help so you have more time with your family? What would it be? Write it down. Be specific. Then go test a version of that rich life today. Not in 10 years. Not when your mortgage is paid off. Just try it right now. You don't have to book the full European vacation if that's not financially affordable. But maybe you can do a staycation. Maybe you can send a little gift to your parents. Maybe you can buy two appetizers. Whatever it is that would make your life richer. Try a small version of it right now, and what you're going to realize is that the sky doesn't fall. You can actually afford a version of your rich life today instead of a theoretical one 30 years from now. If you want to know how to invest even more so you can live a bigger, richer life even faster, check out this video right here.