My Husband Is Getting Real Estate Advice From TikTok (Is This A Bad Idea?)

Brought to you by the every dollar app start budgeting for free today My husband is currently following a tiktoker who is promoting this first lean heloc and i'm Very hesitant about it. In fact, my family gives me the name dream crusher because i'm just not a risk taker but um Dream crusher. Hey, here's my big problem number one brook Your husband's quote following a tiktoker That should be your first problem right there Well, that's what I say too, but he thinks that I don't really understand the process He's following a tiktoker Right, but I look at but i'm looking at the numbers and I just don't feel I just can't see how it could work So how tell us about it? Yeah, go ahead. Tell us about the first lean This is my favorite call the whole day, there's no way a call's gonna be better than this one Are you are you are you 16 and he's 17? Did y'all get married real young? Well, no, i'm actually in my 50s, but we did we have been married for a long time Please tell me your husband's a 50 year old tiktoker. He is he is He is I I every once in a while I wake up and I just think As a society we're doomed and this is another vote for that Right. Well, I think it's once you you know, once you click on something then you see all of the same things And so this particular guy keeps coming across And the way that he advertises it sounds I don't know to him. It sounds great But this first clean he lock serves as your bank account. I know I know I know I know why and just to be clear if you typically if you take a he lock Like in the order it's like you've got your mortgage and then you get got the he lock under it So if you were to foreclose The money would first pay off the mortgage and then the he lock would go next with first lean It reverses that order. So the home equity line of credit is first as the first thing that's paid that sort of thing My question is why why do you need this? Why why are you guys to the point of doing these types of things? I don't think that we do need it that but see the advertisement is that oh you can pay this off in three to six years which What's he using the money like what's the purpose of the what's the purpose of it the grand purpose in his mind we need to get the first lean he lock because I need to get a boat or because We're funding college. Like what's what is why? The why is is the payoff in three to six years, I mean we're trying for retirement We're trying to get things settled before we retire And so that's the attraction is to pay off this early But we don't have like this huge income like minus our debts that we have to even throw At this he lock because that's what it seems like to me that you need you need this huge income right, so the The problem here is hey george here for churchill mortgage Listen with interest rates dropping this might be your window to buy a home or refinance building equity through home ownership Is still one of the best ways to create safety and security in your life? And you decide when the time is right and my good friends at churchill mortgage will give you a custom plan and a special offer So you can buy or refinance the smart way go to churchillmortgage.com Slash ramsay offer that's churchillmortgage.com slash ramsay offer This is a paid advertisement in mls id one five nine one in mls consumeraccess.org equal housing lender You still owe x amount of dollars Yes, and there's not a there's not a there's not a way to not owe that much money Well, we our income is okay that we we only owe two hundred and twenty thousand dollars on our house It's worth about five to six hundred thousand. Okay, we have it at a two Like I I get that I get that but here's what's important you owe two hundred thousand dollars Divide that by six years 72 months And I can't do that math in my head like dave can but like do you have that much money to put towards this? No, okay There's not going to be a secret atomic way to make you owe less than two hundred thousand dollars in your mortgage There might be a way that you can Reduce your interest rate maybe And so technically you owe two hundred thousand dollars after six years. You're going to be paying interest also So there might be a way to make it a little bit smaller. Maybe You get what i'm saying? Like no matter what you're doing you still owe two hundred thousand dollars And you got 72 months that this thing is telling you you could pay it off There's not a way to contract time or to contract money From what you owe Right So your gut feeling is right, you know why because it's just math Yeah, well in our mortgage is only 2.75 Right, so if I go over to a heloc, yeah, it's a daily rate of like eight percent Is it variable? Does it vary? The heloc apparently would be yeah. Yeah, and that's scary too. Why would you this there there's I can see and and I'm trying to say this in a non-incredulous way, but truly I can see no good in this none I can see no good in this and if the goal If you guys have sat around and said what's our goal? Our goal is to pay off the mortgage That's actually uh a very simple process. I'm not saying it's easy I'm saying it is a very simple process. I pay my mortgage payment and then anything in above my mortgage payment I apply it to the principal and I do that as often and as many times as I can and as As high amounts as I possibly can and every time I do that i'm affecting the amortization schedule every time I do that more of my actual mortgage payment is going towards the print like That is the way it works. That is how folks do it. That's how millionaires do it and that is probably if I were to really uh try to form an argument against this other than just kind of like sheer logic and in Simplicity, I would go back to our millionaire study john and I would just talk about how We've studied what the practices of millionaires are everyday millionaires baby steps millionaires I'm, not talking about billionaires talking about millionaires and what they do is they pay for cars and they never do car payments again And they pay off their home mortgage and they avoid debt and they budget their money these are the practices of what i'm going to refer to as the 401k millionaire the average millionaire in america, this is what they do and so for me This sounds like a very complex Heady strategy to do something that's actually simple to do Why am I going to add steps and add rigmarole to something that doesn't require it and honestly adds risk to the equation and and Let's let's like Let's say your home Mortgage was at 10 And you could get a first lien heloc at 2.75 Somebody could sit down and make the case that I have just and even though it's variable interest rate And so if interest rates go up, thank god, there's nothing going on in the world or the economy that makes me Any somewhat nervous at all about the future, right? I'm being ridiculous right now so If you could somehow magically flip a switch to where you're paying 2.75 Mortgage versus 10 I I couldn't say you were crazy. I might say that's not something I want to do. Yeah, sure I don't want to put my house on the block again But what you're doing is you're creating essentially a line of credit You'd have to be super human to never spin this line of credit There's no way you're going to get a better interest rate. Well, the heloc is acting as the primary mortgage But you can draw from it. So it's a credit card at a variable rate It's higher than your more like there's no no possible win here Yeah, and I don't like the fact that like with the temptation is there that you can withdraw anytime you want. That's right And has he has he and I don't know if he's gone so far as to say I ran the numbers like this and I ran the numbers like this and here's how much faster we could do it Here's the exact amount of money that we've saved. I mean obviously john or I I mean you would have to play a perfect game. I feel like in order for this to it still wouldn't matter though You got a 2.75. That's also you've already won the the mortgage lottery But has he done that has he even done any due diligence as far as to say? such things No Yeah Challenge him here Write me a plan to where we pay off this house in 72 months At $200,000 the remaining balance plus plus our 2.7% mortgage. Here's our plan Here's how much we'd have to pay off every month show me with your first lean Heloc math how we would accelerate that by six months or a year or two years Also with the variable interest rate that it could go up It could go way and with the temptation that we could spend against it, right? Yeah, it's just Total madness create your free every dollar budget today the simplest way to budget for your life