Dave Says: A 15 vs. 30 Year Mortgage

Dave Ramsey

CBN.com – These days it pays to be smart about money. That's why it's important to take this wise counsel from financial expert Dave Ramsey.

Child support in the budget?

Dear Dave,

My husband and I can’t agree on how we should handle the child support payments I receive. He thinks it should be put in the pool with our household budget money, but right now I keep it in a separate account. Who’s right?

Leslie

Dear Leslie,

I’m sorry, but in my opinion you’re wrong on this one. My guess is you got burned in the past somehow when it comes to relationships and finances. If this is the case, I don’t blame you for having your momma bear claws out, because these feelings probably come from a desire to protect your kids. But if your husband is a good guy and is willing to raise and treat these kids like they are his own, then the money should go into the pile where it helps take care of the kids and the family.

I’d advise having it right at the top of the budget, along with the rest of your household income. Your job as parents is to be a blessing to your kids, and that means feeding them, clothing them, educating them, and providing shelter for them. As long as these things are happening, and we’re talking about a functional, loving marriage, then all the money should be combined and be part of the family. If this isn’t happening, then you’ve got issues other than just money issues.

If you’ve been through what I think you have, then it’s okay, too, for you to keep an eye on things and make sure your kids—and the money—are treated and cared for appropriately. Money is important, but I’m more concerned about your marriage. A healthy, loving relationship is one of the best gifts a couple can give to their kids.

—Dave

Why only a 15-year mortgage?

Dear Dave,

Why do you only recommend 15-year mortgages?

Nikki

Dear Nikki,

I recommend 15-year mortgages, and never more than that, because the normalization of the 30-year mortgage has helped created a constant state of financial bondage for the middle class. It’s caused average, everyday people to lose hope of ever paying off their homes and being totally debt-free.

I understand that it costs a little more per month when you have a 15-year house note instead of a 20- or 30-year mortgage. But really, it’s just a few dollars more—like 20 percent more than you’d pay on a traditional 30-year mortgage. Plus, it gets you out of debt at least 15 years earlier!

Think about this, too. Did you know that people who take out 15-year home loans have a higher probability of paying them off early? It’s true. It’s because they know from the start that they’re not going to have a house payment hanging over their heads for the rest of their lives. They can see light at the end of the tunnel right from the start.

Broke people ask questions like how much down and how much per month. Rich people, or people with a plan who are going to be rich one day, ask how much or what’s the total price!

—Dave

* For more financial help, please visit daveramsey.com.

Dave Ramsey is a nationally-syndicated radio talk show host and author of the New York Times bestselling books, Financial Peace Revisited and The Total Money Makeover. His life-changing advice in the area of personal finance helps people get out of debt, stay out of debt and build wealth that will last a lifetime and beyond.