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An Oregon man is facing a tough choice regarding a house he inherited from his grandfather.<\/p>\n
During a call to “The Ramsey Show,”<\/a> Jordan told host Dave Ramsey<\/strong> that the loan on the house carries an unusually low 1%interest rate with only five years left.<\/p>\n Despite having the cash ready to pay it off, friends \u2014 and even his CPA \u2014 say that paying it off would be stupid because the money would earn a higher return in a high-yield savings account.<\/p>\n But Jordan wants to pay it off to eliminate the debt he took on after the death of his grandfather, who originated the loan, which left a complicated relationship with his widow.<\/p>\n Don’t Miss:<\/strong><\/p>\n Ramsey immediately dismissed the conventional advice and urged Jordan and his wife to eliminate the debt today.<\/p>\n “Who cares what everyone says? Everyone’s broke,” Ramsey said. “Don’t take financial advice from broke people.”<\/p>\n Ramsey and co-host John Delony<\/strong> counseled that while the simple math of a 1% interest rate versus higher savings returns might suggest keeping the loan, the formula ignores factors like risk and the psychological and relational strain of indebtedness.<\/p>\n However, the allure of those higher savings returns from a high-yield savings account is what drives the conventional advice to hold onto the 1% mortgage. Logic suggests earning up to 4% more<\/a> elsewhere, according to Bankrate, to pocket a net profit \u2014 a scenario the caller’s CPA also endorses.<\/p>\n