TLDR; Pay down high interest debt first, don’t keep too much in your savings account, and invest instead (in your mortgage or stocks, either is fine)

I also think the following video is a worthwhile example to see how easy it is to trick people by complicating things a bit, and leading their attention. If you take a simple concept, inject a bunch of complexity, it's easy to confuse people:

https://www.youtube.com/watch?v=4ZpUjcLJEqwAt first, everything seems sound, but you know that -20 = -20 and 0 =/= 1, so something broke down amid all the complexity.

Answer:

(As an aside, there are plenty of nitpicky things to call out (never mentions taxes, assumes you can use a credit card for a mortgage payment, among others), but I think we’re better off focusing on the meat of the video, case study style.)

On to our video. Assets and liabilities. Lets summarize these.

Assets: Home 250,000 (Obviously we put 20% down, right? Right?)

Saving 0

Car ???

Liabilities: Mortgage 200,000 @ 6%

Credit Card 12,000 @ 21%

Car Loan ??? @ ??% (but 600/mo, can't be caught riding around in a beater, obv)

She's going to give us a lot of details, but neglect to give us other important details. There’s also a false dichotomy in here. She presents two scenarios: 6% and 21%. Then she's goes on to prove that we’d rather pay 21%. Our bullshit radar is, hopefully, blaring sirens at this point. So let's look at the two cases she presents.

Case 1 monthly:

Income 5000

Mortgage 1200

Credit 600

Car 600

Other 1200

Saving 1400

So we assume perfect conditions for this, and spend our cash this way for 4 years. Cool, let's break that down. The 950/250 constant principal/interest split isn't quite accurate, but simplifies numbers, and is close enough. OK, so 12k paid to principle over 4 years, 45,600 to interest. Is that the end of the story here? No. You're also paying interest on your credit card and some is going to reduce your principal. In fact, after 25ish months of paying your credit card at 600/mo, you're free and clear! All gone! You can now save that 600 as well, so the last 23 months, you're now saving 2000/mo instead of 1400. Great! Where am I at now, 4 years down the road with assets/liabilities?

Assets: Home 250,000 (Assuming no appreciation/depreciation)

Saving 81,000 (1400*25 + 2000 * 23, remember how we paid off that CC and saved it?)

Car Probably paid off, gotta be worth something

Liabilities: Mortgage 188,000 (Darn thing won't go down!)

CC 0 (Hooray diligently paying down a CC!)

Car 0 (If I've paid 48*$600 = $28,800 for a car, it better be paid off by now...)

So the dust settles, where are we? Well, our income is $5k, our expenses are now 2400 (we cut out the CC and car over the past 4 years, she forgot to mention that). And what's that sitting in my bank account? 81,000 bucks? She forgot to mention that too! What gives? She had some nice advice though, don't let that much capital rot in your bank! Pay down that mortgage, or invest in stocks!

So to summarize: $2,600 net positive monthly cashflow, assets of $331,000, and liabilities of $188,000. Not bad. Just go invest that savings somewhere!

Net worth: 331,000-188,000 = 143,000

Case 2 monthly:

Income 5000

Mortgage 1200

Credit 2000

Car 600

Other 1200

Things are going to get weird now. We'll stop saving any money. We're going to pay off our credit card debt of $12,000 as fast as we can (aka redirect saving dollars to pay it down), and then run out and get a cash advance somehow of $12,000 more when we've paid it off. Rinse and repeat for 4 years. I'll make the same car-related assumption as above (pay the car payment for the full 4 years, at the end of which it's paid off.)

So now, we're paying $2,000 to the credit card each month. She cites 6 months as the payoff time, but that's assuming 0 interest. Well we're assuming 21%, so I'll just fix that for her here. After 6 months, we still owe $792 and paid off $12,000. So lets re-up that credit card to $12,000 by getting a cash advance of $11,208, and paying down our mortgage principal, as suggested.

This mortgage calculating gets a bit complicated, but that's where spreadsheets come in! We need a normal mortgage calculator spreadsheet, and to add in a principal payoff every 6 months of 11,208. So making our 1200 a month mortgage payment, and adding this payment will eventually leave us with (if someone wanted to check my work here, go for it!):

Assets: Home 250,000 (Assuming no appreciation/depreciation)

Saving 0

Car Same as above

Liabilities: Mortgage 101,000

CC 0

Car 0 (Same as above)

Net worth: 250,000 – 101,000 = 149,000

Wow! She's right! Her way is best! Right? Well, insofar as case 2 is better than case 1. Rats. But to assume these are our only options would be a false dichotomy. Let's try case 3. Let's pay down the CC ASAP, by using what we would have saved. Once we've paid that off, let's then dump any extra cash into the mortgage straight away each month.

Case 3:

Income 5000

Mortgage 1200

Credit 2000

Car 600

Other 1200

After a little over 7 months, we’ve more than cleared that pesky CC debt and can go whole hog into the mortgage. 3200/month. Nice. Do this for the remainder of our 4 years. Nice and simple. Where do we end up?

Assets: Home 250,000 (Assuming no appreciation/depreciation)

Saving 0

Car Same as above

Liabilities: Mortgage 97,500

CC 0

Car 0 (Same as above)

Net worth: 250,000 - 97,500 = 152,500

The only thing to learn from her original video is to not just let your money waste away earning 0%. Stay away from the (for lack of a better term) credit card debt rollercoaster she described here. Just keep it simple. Pay down consumer debt, highest interest first. Then invest in stocks/bonds/real estate/whatever.

Hope I haven't confused the issue further.