Who wouldn’t love to have a paid for house?! Steve & his wife PAID OFF THEIR MORTGAGE (woohoo!) by following these 5 simple rules.
Guess what? My wife and I just paid off our house.
Yep. We went to our local branch and plopped down some Benjamins for what remained on our mortgage.
You know what happened next? Nothing.
Wait . . . what?
Sure, the bank representative congratulated us for paying off the house - but there were no balloons, no streamers, no cake.
We just won the biggest financial race of our lives! We were able to accomplish what most Americans dream about. Shouldn’t there be some fireworks - or at least a sparkler and some rum punch?
Our society doesn’t celebrate debt freedom because, well, to them it is weird.
Our culture believes we should keep a mortgage in order to save on taxes.
They believe it is better to borrow at historically low rates in order to invest for higher returns instead.
Finally, they argue that money is cheap and we should be using OPM (Other People’s Money) to get what we want today, then pay it off over the next few months.
It all sounds reasonable, except those beliefs don’t work for those of us who are debt averse.
Let’s bust some of those debt myths:
1) Using math, it can be proven that a mortgage interest deduction isn’t as lucrative as formerly believed. For example: Last year we spent $1,150 on mortgage interest and it saved us $110 in Federal taxes. That’s it? I prefer to keep the interest and invest than pay it to a bank thank-you-very-much!
2) Borrowing at lower interest rates so that we can invest at higher rates works IF you actually invest the money. Most consumers use this as an excuse to continue living their current lifestyle instead of living on less than they make. I used to!
3) Paying money back over time results in interest charges or overspending from the start. It’s just not as efficient as paying with cash, check, or debit card.
Debt freedom is a choice. It is also a lifestyle. For eight years I haven’t owned a credit card or borrowed money. Any money. Period.
I could care less about what my credit score looks like because a 3-digit number is not my goal. Would you trade your 720+ credit score to be completely debt free? I did, and I’m not worried one bit.
My wife and I are living testimonies that you can thrive with no debt, no credit, and have no problems.
You’re invited to join me.
This isn’t an exclusive club for the 1 percent - so come on board! It doesn’t require a membership, there is no formal education, and it doesn’t take much to understand the following rules to becoming completely debt free:
Rule #1: Stop borrowing money
Rule #2: Put some cash into emergency savings
Rule #3: Pay off all existing debt
Rule #4: Close all lines of credit
Rule #5: Have a plan to pay cash for higher-priced items (Vacation, the next vehicle, a new roof, etc)
If you follow these rules then typically you can be debt free - house and all - in about eight years. Notice I did not say you need to clip coupons, cut the cable, or pack your lunch every day. Those are great ideas, and if you want to get out of debt faster then I highly recommend making some temporary lifestyle changes, but you are already reading a blog that promotes debt freedom so I’m sure you’ve explored those ideas already.
Create your own celebration path!
So what are you waiting for? A party? If they don’t throw one for paying off your mortgage then they certainly won’t throw one when you begin your debt freedom journey.
My wife and I chose to spend our Debt Free Day together at a local Missouri winery. What will you do when you pay off your mortgage?
(One couple hit a mortgage pinata when they paid off their mortgage.)
Create your own celebration path and begin following the 5 rules to complete debt freedom.
Spend wisely and pay attention not interest. Knock out your debts and I’ll send you a congratulatory message on Twitter: it’s better than flavorless icing and there’s no confetti to clean up afterwards.
Steve Stewart and his wife started their get-out-of-debt journey in 2005, paid off all their consumer debt by 2007, and paid off their mortgage early!
He encourages everyone to stop and examine their finances, get on a budget, and begin to pay attention - not interest. You can find his blog and podcast at https://stevestewart.me/blog/.
Steve is correct. When my wife and I paid off our last payment on our consumer debt, everything except the home mortgage we got some weird looks from people. Some called me crazy and others said I should had invested the cash instead. But what I know is that the peace of mind from not having to work my butt off to pay for stuff is awesome. I now work less, enjoy my life more and with less stuff and the loans that go with it. The mortgage is next.
Great site, on my way to getting the house paid off this year 22 years early from extra payments, it makes my skin burn when people thing the mortgage tax interest deduction is a good thing! Congrats!
This is great. I have a rental airbnb paid off, 2 cars paid, all credit cards paid, and 1 residential mortgage to go. My goal is 100% debt free by the end of 2020.
That will be awesome!
Built a new house and moved in 12/31/18. First payment March 2019. Paying it off 3/1/23. Finances have not changed in those 4 yrs. No money from inheritance or any other sources. no credit card debt. still owe about $11K on our car. I never thought anyone could pay their house off in 4 years. We financed 240K for 15 yrs. I guess it is remarkable, and it is nice to know that there are like-minded people (like my husband) out there but I would have rather traveled and taken a little longer to pay off the house. We will celebrate!