FlyerJack wrote: ↑Fri Jun 25, 2021 9:21 am
Northern Flicker wrote: ↑Thu Jun 24, 2021 1:16 pm
So, median household income will differ from median household income of a working couple or family.
You're right, of course. I don't know how to break out the numbers for median household income only for households with two working adults, if that's possible, so that was the closest I could find.
On the general point, in my experience, $100k is well above average for "normal" households in these kinds of states. The bogleheads.org population (particularly the population of frequent posters) is not normal and there is a potential for wealthy folks to get "out of touch."
Ramsey's rule works great for him, a multi-millionaire. It works great for someone bringing home $500k. For normal incomes, there just aren't enough houses and people are being locked out of home ownership during this time of super low rates. Is it really optimal for them to just rent forever? Anyway, I feel bad for non-wealthy house buyers right now.
And I think Ramsey gives bad advice to certain people. In general, his "get out of debt" is good advice, but for lower income people who aren't investing - buying a house in a low interest rate environment on a 15 year note is bad advice. If someone is making $100k/year, they should be maxing out their 401k and IRAs and HSAs before paying down a home. A $100k household income should result in a millionaire in most states.
Ramsey's advice is targeted to people who have no self-discipline. He is coaching people out of credit card debt. "Financial Peace University" is designed for people who literally can't pay bills and stop themselves from blowing their own toes off.
Why pay off a mortgage at 3% when you can defer taxes at a marginal 22%-24% rate?? Yeah, you have to pay them eventually, but my god... the loss in present value is staggering.
At $100k income, someone should be able to comfortably afford a $250k house, small car payment (or 2), max out IRAs and IRAs. The only exception would be some sort of major expense or personal problem. I wouldn't use that 30 year mortgage to go up to a $400k house (which is what Ramsey is REALLY advising against, but knows most of his audience is too stupid to understand the nuance).