Rachel Cruze: Why You Should Actually Pay Your House Off Early
Written by
Nicole Spector
Edited by
Molly Sullivan
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
When we hear money experts talking about how the accumulation of debt seriously hinders our ability to build wealth or comfortably retire, they’re usually talking about high-interest debt, like that associated with credit cards. Usually, they’re not talking about mortgage debt, which many money experts go so far as to call “good debt.” Why?
Mortgage debt is sometimes called good debt because it’s associated with an investment that is expected to appreciate in value over time. Additionally, the vast majority of mortgages in the U.S. (92%, according to the Federal Reserve Bank of St. Louis) are fixed-rate, meaning the interest rate remains the same over the life of the loan and don’t, for example, change when inflation goes up.
Both Cruze and Dave Ramsey Are Pro Paying Your Mortgage Down ASAP
The general consensus may be to not be in a hurry to pay off your mortgage — unless, of course, you have a ton of excess cash and are already well ahead of your retirement savings goals. Rachel Cruze is one of the few famous financial experts who doesn’t agree with this thinking. And actually, her father, fellow financial expert Dave Ramsey, doesn’t either. They both passionately argue the importance of paying off your mortgage ASAP. Why does Cruze, in particular, believe you should pay off your house early?
A Mortgage May Not Be ‘Bad’ Debt, but It’s Still Debt
In a recent video posted to her social media channels, Cruze shot down the common retort she hears when advising people to pay off their mortgage early. They say something along the lines of, “But why not invest that cash in the market and make 10, 11% returns on it?”
This argument seems to make sense if you locked in a low-rate mortgage for, say 2% or 3%. But there’s a flaw in it that Cruze sums up perfectly in her reply.
“My question back always is, ‘If your house was paid off, would you borrow on your house to go invest in the market?’ The answer is usually no.”
Having No Mortgage Will Give You Peace of Mind
Mortgage debt may not be destructive the way credit card debt is, but it’s still a liability. It doesn’t feel good to carry it around or to be held responsible for it. We may fantasize about the day we’ve paid off our mortgage. How liberating will it be to finally not have to pay for shelter? To just have it all taken care of and behind you? It would be a real kind of freedom.
Cruze gets that. And that’s why she wants to see us all tackle our mortgages and make them disappear earlier than we have to by law.
“There is something about peace of mind,” Cruze said. “When you don’t owe anyone anything.”
More From GOBankingRates
