I will admit, I’m a Dave Ramsey fan. I don’t necessarily agree with everything he says, but this I do agree on. He often says that the paid-off home mortgage has taken the place of the BMW as the new status symbol in America.

I love that so much! Cars are such a waste of money. If you can afford it, buy whatever you want. But buying a fancy new car and working to pay off your mortgage are polar opposites.

If your mortgage is $2,800 and you add another $1,200 for a car payment, you’re out the door $4,000 on the first of the month without moving a finger. That kind of financial pressure can destroy financial dreams, strain relationships and seriously limit your ability to build wealth over time.

On the other hand, if you stick to the $2,800 mortgage and buy a simple car, you can use some of that extra money to pay down the mortgage faster. On some 30-year loans, making just one extra principal payment per year can shave several years off the loan. In certain cases, it can be around 7 or 8 years. The more extra principal you pay, the faster the mortgage disappears.

Fifteen years of BMW payments versus 15 years of extra mortgage payments can lead to dramatically different financial outcomes. Once your home is paid off, not only does your biggest monthly expense disappear, but you also gain a level of peace of mind that money CAN buy.

Personal finance is one of my passions. It’s a big part of why I’m good at what I do. If you’d like to discuss anything real estate related, give me a holler.