I make $9,000 a month and followed most of Dave Ramsey’s advice – except I took a 30-year mortgage

When it comes to deciding how to best navigate financial advice, there are a host of voices you can listen to. One such voice is that of Dave Ramsey, whose podcast and social media content have helped establish him as a go-to voice for financial advice. 

This brings us to one Redditor who posted on r/DaveRamsey asking how they should proceed with a 30-year loan they took out without following Dave’s advice. Instead of following Dave’s belief that you should go with a 15-year loan, they chose a 30-year option to avoid feeling financially pressured. 

Unfortunately, the Redditor now wonders if they are doing something wrong by overpaying their mortgage every month in the hopes of paying it off sooner. 

Dave Ramsey Advice

If you’re wondering what advice Dave gives that the Redditor is specifically talking about, it’s all about handling interest on a loan. To start, Dave recommends the “100% down plan,” as in not having a mortgage at all. If you do want to take out a loan, he emphasizes the benefits of the 15-year (or less) term, again, due to interest.

When you consider that a $175,000 30-year mortgage with 4% interest will cost $68,000 more over the life of the loan than a 15-year mortgage, Dave’s advice isn’t exactly wrong. Based on this point, Dave believes this extra money spent on interest could be better spent building up a 529 college or retirement fund. 

Dave also advises not to allow your monthly payment to exceed 25% of your take-home pay, as he believes that anything beyond this number takes up too much of your income. As a result, worries of finances can and do lead directly to the anxiety the original poster feels about paying $3,000 monthly against $9,000 take-home pay. 

The Redditor’s Situation 

Regarding the Redditor’s financial situation, he takes home about $16,000 gross after taxes and 401(k) contributions, but only ends up with about $9,000 net monthly. With this in mind, he took out a 30-year loan on a $500,000 2-bedroom, 1.5-bath townhouse that we have to imagine he plans to keep for some time. 

He put down 20%, or $100,000, to purchase this home, keeping his mortgage payment to around $3,000 monthly. However, to somewhat follow Dave’s advice, he has also put an additional $1,000 monthly toward the mortgage principal to pay the loan off in a 15-year timeframe. 

If additional monthly payments aren’t the right approach, they ask if they should consider refinancing to a 15-year loan instead. As it stands, $3,000 already feels like it’s pushing it financially, and this Redditor is listening to “personal finance people” say that it would be better to invest any extra money in the stock market rather than paying off a mortgage early. 

At a mortgage rate of 6.375%, it goes without saying that the faster you can pay off the mortgage, the more the original poster will save on interest. This is especially true when considering that a $400,000 mortgage would cost $898,373 at this interest rate if it were taken out in 2025 and then paid off in 2055, which is undoubtedly a lot of money. 

What To Do Next

From the moment you start with the first comment on this post, you will, surprisingly, find plenty of advice that questions Dave’s approach to mortgages, even in the Dave Ramsey subreddit. There is almost universal agreement here that Dave’s advice might be worth listening to if you are stuck financially. However, if you are not in a sticky financial situation, you and you alone must decide what is best for you and your situation.   

In this situation, the slightly lower interest rate on a 15-year mortgage with a higher payment isn’t best for the original poster. Instead, a 30-year loan with a lower interest rate and faster payment is the better choice. This not only keeps the payment lower, but it also gives you the freedom to stop paying extra in the event of a job loss, so you have some flexibility with this option. Knowing this is true, the original poster shouldn’t feel any anxiety over their situation, at least as far as paying extra.

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