Why Would I Pay Off My Home When I Can Invest?

Summary

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Episode Overview

Title: Why Would I Pay Off My Home When I Can Invest?
Podcast: Ramsey Everyday Millionaires
Date: February 27, 2026
Hosts: Dave Ramsey & George Kamel
Guest: Christiana (Caller from Chicago)

In this episode, Dave Ramsey and George Kamel tackle a common investing dilemma: Is it smarter to pay off your mortgage early, or should you invest extra funds to capitalize on potentially higher market returns? Centered on the Ramsey approach to financial peace, the episode unpacks the mathematical, psychological, and relational factors behind their recommendation, using live caller Christiana’s question as a springboard

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Main Discussion Points & Insights

1. The Math vs. Reality of the Mortgage Payoff Question

• Caller’s Question: Christiana (00:20) wonders why Ramsey advocates paying off a mortgage (Baby Step 6) when market returns could potentially outpace mortgage interest rates. She points out her mortgage rate (6.3%) versus historical average market returns (~10%).
• Dave’s Response:
  • The math calculation is “very naive” because it omits risk (00:51).
  • Carrying debt impacts people beyond just money—it affects psychological, relational, and even spiritual well-being (00:54).
  • Quote ([00:54], Dave Ramsey):

    "You left out the fact that you're psychologically, relationally, and spiritually carrying around debt around your shoulders and it affects your health, your relationships, your career choices, and everything else."

2. The Role of Risk in Wealth Building

• Risk Adjustment:

  • Dave and George explain that simple math fails to account for the inherent risk in holding a mortgage, especially when unexpected life events (job loss, illness) occur (01:42, 02:27).
  • Quote ([01:42], Dave Ramsey):

    "The more debt you carry, the more risk you carry and the more risk you carry, you have to mathematically adjust for risk if you're going to use a sophisticated mathematical formula."

  • Quote ([02:27], George Kamel):

    "Someone loses a job tomorrow, there's risk there. Now you still got to make that mortgage payment."

• Mortgage vs. Market Not Apples to Apples:

  • George emphasizes that factors like taxes on investment returns and the certainty of the mortgage payment skew the perceived benefit of “the spread” (02:27).
  • Regularly paying off a mortgage offers a “fixed savings plan”—a predictable financial win compared to market volatility.

3. Health, Stress, and Debt

• Debt-related Stress:

  • Dave highlights data linking rising American debt with worsening health statistics—especially stress-related issues like hypertension and heart attacks (02:49).
  • Quote ([02:49], Dave Ramsey):

    "Stress related health problems are the number one killer in America... they've gone up as the debt load in America has gone up."

• Intangible Value of a Paid-off Home:

  • Dave and George underscore that the psychological relief and “financial peace” of owning your home outright are benefits that transcend simple math (03:27).
  • Quote ([03:27], George Kamel):

    "Goes beyond the math. It's hard to quantify on paper, but no one regrets it. Nobody goes, man, I wish I had a mortgage again."

4. Research and Real-life Outcomes

• Ramsey Research:
  • Dave notes that “100% of foreclosures occur on homes with a mortgage”—emphasizing the ultimate risk scenario (01:38).
  • Paid-off homes are correlated with the fastest path to building wealth, granting greater freedom in life choices (00:51, 01:38).

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Notable Quotes & Moments

• Dave Ramsey on Why the Math Is Misleading (00:54):

  "You left out the fact that you're psychologically, relationally, and spiritually carrying around debt around your shoulders..."

• George Kamel on Mortgage vs. Market (02:27):

  "It's not apples to apples when you look at a mortgage payment with 6% versus what you could make in the market... you're paying down that interest."

• Dave Ramsey on Stress and Debt (02:49):

  "Stress related health problems are the number one killer in America. Hypertension, heart attack, so on. It's the number one killer."

• George Kamel on Regret (03:27):

  "No one regrets it. Nobody goes, man, I wish I had a mortgage again. That was fun."

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Segment Timestamps

• [00:20] Christiana's question about paying off the mortgage vs. investing
• [00:51] Dave begins detailed response: risk, not just math
• [01:38] Data on foreclosures and paid-off homes
• [02:27] George discusses real-life risk and the mortgage/investing false equivalency
• [02:49] Dave connects debt to American health statistics
• [03:27] Psychological benefits and “no regrets” of paying off your home

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Episode Takeaways

• The decision to pay off your home isn't just a mathematical one—it's about reducing risk, gaining psychological peace, improving health outcomes, and maximizing long-term wealth-building potential.
• According to the Ramsey team, nobody regrets paying off their home; freedom from debt opens up better life choices and lowers stress.
• Adjusting for risk—and factoring in the intangible benefits—tips the scales decidedly in favor of paying off your mortgage, even if “the math” seems otherwise.

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Transcript

[George Kamel]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor Christiana is with us in Chicago.

[Dave Ramsey]

Hi, Christiana.

[Christiana]

Hi, guys. Thanks for taking my call.

[Dave Ramsey]

Sure.

[Christiana]

So I have a question about baby step six and seven. So my husband and I are fortunately there.

[Dave Ramsey]

Yay.

[Christiana]

Yeah, it's exciting. So my question is about the order of step six and seven. So why do you recommend paying off the mortgage when the mortgage rate is like, let's say 6.3%, but the market returns your money at 10% and then with compound interest, you know, because your math is.

[Dave Ramsey]

Because your math formula is very naive, okay? You left out risk, okay? And you left out the fact that you're psychologically, relationally, and spiritually carrying around debt around your shoulders and it affects your health, your relationships, your career choices, and everything else. And so what we have found is, is that the people that build wealth the fastest are the ones with a paid off house, okay? Because they're free, okay? And nobody making them do anything. And so suddenly they start making better choices instead of trying to maximize their wealth. Building off the back of a mortgage spread, you left off risk. 100% of the foreclosures occur on a home with a mortgage. We did research.

[George Kamel]

It was easy to do that research. Didn't take a big research team fairly, fairly quick.

[Dave Ramsey]

But George, it's. It took me a while, Christiana, to get to where as a math nerd, I understood that the math formula that you're using and I back then was using the same math formula. I couldn't figure out what was wrong with it. And I finally figured out that the more debt you carry, the more risk you carry and the more risk you carry, you have to mathematically adjust for risk if you're going to use a sophisticated mathematical formula, something. And so I figured out that my math formula and Christiana, your math formula that you're using now is the same one. Leaves out risk. And when you math adjust for risk, what you perceive to be a spread that you're making is neutralized.

[George Kamel]

Well, and what we find is someone loses a job tomorrow, there's risk there. Now you still got to make that mortgage payment. And so it just opens you up. And on top of that, it's not apples to apples when you look at a mortgage payment with 6% versus what you could make in the market. And by the way, if it's outside of retirement, paying taxes on that versus the mortgage is a fixed savings plan right there. You're paying down that interest.

[Dave Ramsey]

Stress related health problems are the number one killer in America. Hypertension, heart attack, so on. It's the number one killer. And they've gone up as the debt load in America has gone up. And so the statistics keep getting worse. And so people say, well, nutrition's worse and there's more obesity. Very true. But also there's more stress. And it's just strange, you know, when we say financial peace, two words that don't go together, like airline service. What would it feel like to have your house paid off?

[George Kamel]

Goes beyond the math. It's hard to quantify on paper, but no one regrets it. Nobody goes, man, I wish I had a mortgage again. That was fun. I'll do that to make a spread.