Last year I spent every waking moment thinking about paying off my mortgage. “How am I going to pay this off by the end of the year? How can I save more money? How can I earn more money?” At times, it was probably unhealthy, but I learned a ton during that 2014 year, both about myself and about others. Here is a compilation of everything that I now realize after paying off my mortgage.
1) You Will Relate to NO ONE
In that first month I was extremely excited to do everything possible to succeed in paying off my mortgage. I knew it was unconventional, so I tried not to tell too many people, but I just couldn’t help it! I still remember the first guy that I told. I was at work and we were having a conversation around personal finance and debt – that’s when I let it slip – I was paying off my mortgage by the end of the year.
His response: “Why? And what do you plan to do with all that money when it’s gone? Are you just going to sit on it all your life?”
Okay, so this first unveiling didn’t go so well. Not only was this idea foreign to him, but he also just assumed that I was a miser and would do absolutely nothing with the extra money when all my debts were gone. I was so frazzled that all I got out for an explanation was, “I want to have options in life, and paying off my mortgage is going to provide that for me.” I’m sure he didn’t really understand what I was saying due to the blank expression on his face.
Another friend of mine came back at me with this response – “Why pay off such a cheap debt? You could earn more if you just invested the money instead.”
His thought was that he could earn at least 7%-8% in the market each year, so why pay off a 3.75% interest rate mortgage? The point sounds valid, but it completely ignores risk. The risk of “earning” 3.75% by paying off the mortgage early is a whopping zero. But, investing in the market during these volatile times is actually quite risky. There is certainly a chance to earn 7% or more in the market, but there is also a chance of losing 40%! I was more comfortable taking the zero risk option.
Finally, there are those that will be jealous of your plans and they’ll just give you a laundry list of excuses why they can’t do it: kids, a bad economy, medical bills, expensive car repairs, blah blah blah. In reality, the reasons are: going out to eat too much, spending retail prices for everything, and buying more car than they can really afford.
I have always been one to make goals for myself, but setting this audacious house payoff goal made me realize just how powerful goals really are! After paying off $21,000 to my ex in six months, I realized that paying off my mortgage of $54,500 was absolutely possible. It definitely wasn’t going to be a walk in the park, but it was possible!
For those that snarkily say that I should invest instead of paying off my mortgage, they really don’t know what they’re talking about. Have you ever heard of anyone setting a goal to invest $54,500 into the market in one year? Likely not. So if I were to “invest instead of pay off my house debt”, how much do you think I would actually invest in a year? What, maybe $10,000? There just isn’t that same sense of urgency there, so it would be dang near impossible to invest the same amount, which of course would mean that it’s likely not the better option!
If you want to succeed in life, continually set goals for yourself. You’ll get to where you want to be waaayyy faster with goals.
3) The Average Person’s Crisis is Nothing
Paying off my mortgage was the last step of a three year process to get completely debt free. Along this journey, my wife left me (and took a bunch of money with her), water leaked into my house and destroyed much of my ceilings, and I had multiple struggles with vehicles that I was hoping to sell for a profit (mechanical issues and a deer crash). After this long battle against debt and the set-backs that showed up along the way, suddenly my co-workers’ crises started sounding ridiculous:
- “My car blew a tire and it set me back $150”
- “I got my check a week late and almost couldn’t make the rent payment!”
- “I couldn’t believe how much our vacation really cost when I looked at the credit card bill!”
See what I mean? I just don’t know what to say to these people anymore. I should just carry index cards with me that say, “You should have been a little smarter with your money, dingus!”
4) Your Bank Account Will Soar
Now THIS is the fun part! When you don’t have any debt, your expenses total up to hardly anything. For me, my necessary expenses each month became a laughable $460. With next to nothing for expenses, your bank account has a chance to soar incredibly quickly!
At this point, Liz and I figure that we could live fairly comfortably and still save $60,000 per year. This amount could buy us a rental property, which could then earn us even more money to buy more rentals, etc. etc. until those rentals are earning us $160,000 per year after ten years of investing. At that point we’ll be 40 years old with a TON of options! Debt freedom is awesome!
While paying off my mortgage, I realized that most people have just dug themselves into a huge debt hole that they are convinced they can’t get out of. Every waking moment of their lives is spent thinking about the next payment that needs to be made and what has to be done in order to pay it on time. It’s honestly the most terrible way to live, but almost everyone voluntarily signs up for it!
By paying off my mortgage and getting rid of all my debts, I now don’t have to think about those “have-to’s”. I have plenty of money in the bank and am earning even more as we speak. Contrary to the thoughts of those that are in debt, my time is spent thinking about future vacations, future investments, and activities that wills strengthen my prized relationships. It definitely isn’t normal, and I get crazy looks from time to time, but it is hands-down the absolute best life that I have experienced thus far.
If you want to get out of debt but just don’t know where to start, please contact me! Seriously. There is a “Contact” tab at the top of the page. Please use it and ask me anything. I would love to help!
Where are you in your debt-payoff process? Have people given you crazy looks yet?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.