➡ The video discusses the common belief that paying off a home mortgage early is a wise financial decision. It challenges this idea by explaining that even without a mortgage, homeowners still have ongoing costs like taxes, insurance, utilities, and maintenance. The video suggests that instead of focusing on paying off the mortgage early, homeowners should consider investing extra money in high-yield accounts or stocks. This could potentially generate enough income to cover the mortgage payment, providing financial security without needing to fully pay off the home.
➡ The text discusses the financial benefits of investing extra money rather than using it to pay off a mortgage early. It suggests that investing in assets like the S&P 500 or Bitcoin can yield higher returns over time due to their average growth rates. The text also highlights the impact of inflation on mortgage payments, suggesting that a fixed payment becomes less expensive over time due to the decreasing value of money. Lastly, it emphasizes the importance of strategic financial planning to achieve desired outcomes, rather than following traditional advice without considering other options.
➡ Most financial advice focuses on safety, but in today’s debt-based economy, this approach may not lead to success. It’s important to understand your financial goals, whether it’s paying off your home early, increasing cash flow, or building equity faster. Once you know your goals, you can strategize on how to achieve them. This involves turning your income into wealth, which can be learned through programs like the Wealth Operating System.

This is the biggest financial mistake homeowners make and most people lock it in for decades without ever questioning it. Now paying off your home feels like the responsible move. It feels like security. But what if that feeling is costing you far more than you realize. When you pay off your house, what exactly are you winning? Now I’ve spent my career inside markets and balance sheets watching how real wealth is built versus how people are told to build it. And by the end of this video, you’re going to say that there’s two very different financial games and paying off your house often puts you in the wrong game.

So let’s go. All right, we’re jumping right in and we are going to break down one of the biggest sacred cows in wealth building. We’re going to talk about your home. We’re going to talk about real estate and we’re going to change it, the frame in a way that you maybe haven’t ever really thought about this. So first of all, should you pay off your home? Should you pay it off early? Should you take a 50 year mortgage and drag it out, pay two extra payments per year to pay it off in 15 years, apply extra principal, whatever you’re going to do.

Should you pay off your home ever? Should you pay it off early? Well, so to really answer this question, it’s not should I pay it off? Yes or no. Okay, so that’s binary thinking. Let’s destroy that right now. You’re never going to get ahead in life with binary on off. Yes, no thinking. The real question that you should be asking yourself because the quality of your life comes down to the questions that you ask. The real question that you should ask is should I pay off my house? But more importantly, why? Why would I want to now from coaching now 6500 students or more, I’ve come up with typically three reasons why you might want to pay it off.

So let’s break those down. So reason number one, you might want to pay it off is security. So if I don’t have a house payment anymore, if my house payment is free and clear, I no longer have to worry about that monthly payment to the bank, then I feel secure. Okay, that’s one. Number two would be cash flow. So some people say, well, if I could pay off my monthly payment, and I no longer have that payment anymore, that means I’ll have more disposable income that I could use. So I have more spending money, more purchasing power, whatever.

So maybe it’s a cash flow thing. Or maybe the third reason why we want to pay off our home is because of equity, we want to build up the equity, the asset value that we have there. So it’s not should I pay it off? Yes or no, it’s why would I want to? And then we can start to break down each of these questions separately. You follow me? Okay, let’s dig in first, and let’s talk about security. So the payment illusion that we have. So again, right, if I can pay if I can get rid of my payment, if I can pay it off early apply the extra prints or whatever, pay it off in 20 years or 30 years instead of 50.

The payment illusion, but what do I mean by illusion? Well, let’s think about this clearly. Okay, so first of all, we have 1234. Let’s go to five different, actually, monthly payments that I have on my home. So number one, the first big monthly payment that we’re discussing right now is my mortgage payment, right? I have to pay the bank every single month for, you know, 30 years or however long the mortgage you get. Number one, number two, I also have to pay taxes. So I have to pay property taxes every single month on my property that I own.

Number three, I have to pay insurance. So I have to keep my property insured. You know, if catastrophic loss happens, I have that. Number four, I have maybe my utilities. So you know, I have electricity, water, gas, things like that. Number five, I have some maintenance. All right, so every month, I have to pay these if I want to stay in the home. Obviously, the mortgage, if I don’t the bank takes it, it takes it. Number two, taxes, if I don’t take it, the state takes it. Number three, insurance, my mortgage company might require that or gonna I need it for a catastrophic loss, utilities, and, and maintenance, I suppose you don’t have to pay those, but the house won’t be inhabitable.

If you don’t, right, you need electricity, gas, etc. Okay, the reason why I want to point this out is this payment illusion. So if I pay off my mortgage early, then I have no more payments, so I feel secure. But what you’re really saying is, if I get rid of that, all of a sudden, I feel way more secure. The reality is I still have to pay all of these. So while maybe I take my payment from 3000, maybe down to 1000. The point is, I still have to come up with money every single month, just stay in my house.

So then it’s not really a question of security, I still have to come up with money every month. The question is, how much money do I have to come up with, which really takes us to the second reason why you might be considering paying off your mortgage early. And that’s cash flow. So now that we’re on the same page, you have to pay every single month to stay in the home, whether you have a mortgage or not, we’re clear on that. The now the question is, how much do I have to pay to stay in the home? Okay, so for cash flow, let’s look at this a little bit differently.

And for this illustration purpose, I am using the California median home price. So I don’t know where you live or what home prices are. But I’m in California. So we’re going to use the California home median value, which is $873,000. It’s pretty crazy. And we’ll use just a typical loan, 75% loan devalued. So I put 25% down on my home where I have 25% equity. So I have about a $650,000 mortgage payment. Let’s say I have a 4.9% interest, I got it a couple years ago. I’m sure we’ll see those rates again here, not too far in the distance.

And I got a 30 year fixed down if you’re outside of the United States, you don’t have 30 year fixed, you have adjustments. Sorry for you, but you can change the math to make it work for you. So let’s say in this example, my monthly in payment is about $3,400. All right. So in this example, now let’s say that I want to pay an additional $365 per month down, it’s about 10%. So I’m going to make an extra 10% payment so I can pay off my loan early. Well, let’s run this through the math.

Let’s run through a couple scenarios. So option number one, I am cutting down again, $365 a month. And basically what I’m saving is the 4.9% interest. So if I keep the money, the $365, I have to pay 4.9% on it. If I pay it down early, the money disappears, it just goes into my equity, it’s locked up for 20, 30 years, however long left out my mortgage, so it disappears into my mortgage, but I don’t have to pay the 4.9%. But really I do because the loan is amortized for that. So even though I’m paying extra principal, unless I actually go through and refinance my home, which I may not want to do because I might get a higher rate, unless I actually go through the hassle of that, even if I pay extra principal, my payment actually stays the same.

So really what I’m doing is I’m hoping that I’ll just pay my payment down sooner. But let’s take a look at option number two. So let’s say that I take the same amount of money, same $365, but instead of putting it down into the black hole of my home mortgage, let’s say that I put it into a high yield interest account, I put it into treasuries making 5%, which is more about the same that I’m making now, let’s say that I put it into a dividend stock, let’s say I put it into something like I talked a lot about like STRC, you can buy that in a brokerage, right now it pays 10.75%.

So I’m saving the 4.9% over here, but I could make 10.75%. What does that mean? Let’s break down the math. Well, if I took this 365, and every single month, instead of putting it down on my mortgage, I put it into this at 10.75%. Within 20 years, the interest on the 365 at 10.75 is enough to cover my mortgage payment. So in 20 years, I have enough cash flow coming in from this to effectively wipe out my mortgage payment effectively pays off my home for me. Technically, I still have the mortgage debt, but there’s enough cash flow coming in from this investment to make that zeroed out.

But that’s only the beginning. Because if I go out to 30 years, or let’s say I go out to 40 years because of the law of compounding, in 40 years, it’s enough to equal $67,000 a month of income. Let me just circle that $67,000 a month, but my payment was only 3400. So option one, sure, I could put the other extra 365 per month into my home, it disappears into the black hole of my equity. And yes, I’m effectively saving 4.9% kind of maybe if I were to refine it to my home, or number two, I put it into an account like this, an income account that would effectively make enough income to cover my payment for me, but ultimately could grow enough to provide a serious income.

Now, the beauty is, is that continues to come in year after year, until the day I die. And when I die, my kids can have that income. And when they die, my grandkids could have that income versus just paying the home down. Okay, so that’s number number one. Alright, so now let’s look at maybe the third reason why you might want to do this. And this is really the equity game. So homes provide equity, right over a long period of time, it’s like a savings account, right? I’m paying down into it every month.

And so my equity is growing. So a lot of people might recommend just buy your home. And like I said, you just you make that payment every month. And then it’s like that that retirement account for you. But let’s take a look at that. Now, there’s a couple things that I like to point out here. And number one is inflation arbitrage. So the benefit of having a having a mortgage is the inflation arbitrage. So if your payment is locked in for five years, or 30 years, it’s fixed at today’s dollars. But because of inflation, I can have the arbitrage, meaning that, you know how it’s, we might say like, it’s $100,000.

But in today’s dollars, that would be like, and that’s because as the government continues to print more money, the dollars are worth less and less and less. So in five years, in 10 years, in 20 years, the dollars will be worth less. So let’s say again, back to that hypothetical payment of about $3,000. $3,000, maybe a lot of money today, but in 10 years from now, or in 20 years from now, $3,000 will be much less. So that’s the arbitrage. Today, it’s expensive, but inflation makes it cheap for me in the future.

That’s one benefit. But we have this capital immobilization trap. But as I said, like, even if I’m paying into my, my house payment early, to pay it down early, the money is locked in there, it’s like a black hole. So it’s immobile. And so we want to have our money mobile, because the faster we can move our money, the more we can make, if I can get $1 to do two jobs, or three jobs, or five jobs, I can build my wealth, two times, three times, or five times faster. And so the capital becomes immobile in here.

And that’s a trap. But then also, we have time asymmetry. And so what we want to think about with our capital, and get into multiple jobs is using it in different time. Alright, so what do I mean by that? Well, let’s say option number one, I can continue to put this $365 into my mortgage. We talked about this kind of a black hole doesn’t really change my payment unless I want to refinance my home. But option one, I could take this $365. And I could put it into the S&P 500. So instead of paying my mortgage down sooner, I’m putting the S&P 500.

Now if we look out over the last several decades, the S&P 500 averages about 7%. I know it’s a little bit higher in recent times, but this is a long average over decades 7%. Now, if I continue to do that over the, say 30 year timeframe that I’m making my house payment, I’ll end up with about $450,000. So I’m putting the $300 into an account every month instead of putting down my mortgage. And I’ll end up with about $450,000 of equity. Okay, that’s pretty good. But again, I have other options I could put into options that give me something higher than 7%.

Something like Bitcoin. Obviously, you know, I love Bitcoin. It’s been the best performing asset in history in 15, 10, 5, 3 years. Over the last three years, it’s about a 70% compound annual growth rate. Really, we call it about a 50% compound annual growth rate is what we’ve seen in more recent times. Not going back too far, but the number is way too big. But that number might seem unrealistic moving forward. So let’s cut that number in half. Let’s call it actually, let’s call it 20%. Now, if we take Bitcoin, and we put the same $365 a month into Bitcoin, and it compounds not at 50%, let’s say it compounds at 20%.

That number would be closer to somewhere between 18 to $22 million. So again, if I’m playing the equity game, and I want to play with my balance sheet, and the growth, then I don’t want to put it down into my mortgage, it’s only making 4.9%. I would want to put into something higher, like the S&P 500 at 7%, or like Bitcoin at 20%. And I could do half and half, I could do whatever. But now you see when we instead of asking the question, should I pay off my mortgage, we say, why would I want to pay it off? And then we can start to break down each one of these.

Now, I will just say that these are financial reasons. The first one we talked about was this feeling of security. And so that’s more of like an emotional reason. Typically, we buy a home for emotional reasons, like I have a home for my family and my kids. It’s a pretty bad financial decision. But it wasn’t a financial decision. It was a home, it was more of an emotional decision, I wanted a home for my family to grow up in. And so I can’t really break down all the emotional decisions. But from a financial standpoint, you don’t really have the security like you think you do, because you’re still going to be making four of the five payments, even if it didn’t mortgage.

Number two, you’re not going to really make more cash flow versus other options that you have. And your payment doesn’t really change anyway, unless you refinance it. And then number three, the equity game, sure, I can pay it down to save the 4.9%. But if I could invest it for 7%, or invest it for 20%, I actually end up way ahead. All right, now, like I said, at the beginning, I know this is sort of like a sacred cow. This is the home, this is the real estate, this is the way that we build wealth, right around the world and in America, especially.

But really, what this is, is the collapse of the default. I talked about build or be built, that’s the philosophy that I build my life on, which is we either intentionally build the life that we want, or we just live the life by default. And so most of us are just sort of running through these pre-programmed tracks. And we’re not really thinking about it. And that’s through social conditioning. We were taught to go to school, get good grades, save for retirement, contribute to a 401k or to a home for 20, 30, 40 years, cross our fingers, hopefully we have enough.

But we have to understand that we’re playing by old rules in a system that’s changed. As I talk about all the time, the answers have changed. And so the industrial-era school system that we were brought up in, and the industrial-era tools that we were given, no longer apply in this new system. In this new system, we have late-stage inflation, rapid inflation, where wages are not keeping up with the rate of increases of your cost of living. And so we have to find a way to survive in this new system, and the old rules aren’t going to work.

And we also want to think about the outcome that we want, not the default outcome. So the default is, again, we just save. Just close our eyes, we save over long periods of time, and we hope that there will be enough on the outside. But strategy is about engineering, engineering the ideal outcome that I want, and then working backwards. So then rather than thinking, well, I guess I’ll just pay off my home early. Why? What are we trying to achieve? And then once we determine what it is that we want to achieve, the question then becomes, well, how do I get more of that? Well, if what I really want is more cash flow, well, how can I get more cash flow? Well, if what I really want is more asset, more equity, well, then how can I get more equity? And then how could I take the more equity and turn that into more cash flow? That’s another question that we can get to at some point.

But most financial advice is designed to keep you out of trouble, not help you win. Right? So most financial advice is all about safety and protection. And again, in that old world, in that old system, that was okay, we used to be in an equity based system up until 1971. But in a debt based monetary system, the old game of trying to play it safe, it’s not going to cut it if you want to win. But the real takeaway is what game are you actually playing? And again, most people just haven’t really thought through this.

If I came over to your house with a new game, and you’ve never played it before, I’d say let’s play this game. And you say, Sure, let’s play. But what is the game? What are the rules of the game? What’s the objective of the game? What are the mechanics of the game? Who are the other players of the game? And you’d ask these things. Most people haven’t really stopped to think about this in their own life. So when it comes to, should I pay off my home early or not? Well, I don’t know.

I can’t answer that question for you. But I can answer it with a question. What game are you actually playing? What are you trying to achieve? And once you determine what it is, do you want the safety of getting rid of one of your five payments? Do you want the increased cash flow of when that’s paid off? Do you want more equity faster? Once you can answer the question of what is that you’re actually trying to achieve what game you’re trying to play, then we can figure out the next step, which is how do we get more of those things? Now, this is the engineer, as I say, revenue is what you earn.

But wealth has to be engineered. That’s why six figure earners are 60% of six figure earners are still living paycheck to paycheck because a high income, high revenue is not enough. You have to then turn that into wealth. That’s the engineer’s mindset. And it’s what we teach inside the wealth operating system, how we can stack these systems to build wealth, much faster investing in layers, getting a dollar to do three jobs, five jobs, 10 jobs. And I’m gonna be going live for three days teaching you the wealth OS system right from this stage, coming up January 7, I’m going to put a link to it down below, put a QR code here on the screen.

If you want to come check it out. I’m only doing it one time this year. Typically, I only do this in small in person events. But I’m going to bring it all to you live directly from here. Check it out. There’s a link down below. But either way, think through what game are you playing? What am I actually trying to achieve? And how can how can I get more of that? And that’s what I got right to your success. I’m out
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