There is not one definitive reason why I decided to pay off our mortgage early. I am a double major in accounting and finance and a CPA with several years of experience working for one of the largest four accounting firms in the world, so I knew the math was NOT in my favor. Several things came into play that made this the right decision for me and my family, however. Leading up to this decision, there were some pivotal moments that caused me to pause and think – really think – about my situation and that of others in general. I didn’t like the picture or the outcome that I saw in my future if I continued on the path I was on, so many others are on, and that is the norm. For me, struggles lead to success; success that is changing and will continue to change my life, the life of my family, and our future.
So what drove me to break away from the norm? What kept me on the path when others dismissed what I was doing and thought I was crazy? That is easy – DETERMINATION, MOTIVATION, and DESIRE.
But before I get to that, let me backup a bit to where I was, which may be very similar to where you find yourself today.
I was like so many other people. I graduated from college during which time I had incurred some student loan debt, had landed a career job, was ready to get married, was planning on moving into our first house, and was doing all of the “normal things” that people do. But for me, something was wrong with the picture. I was blown away by some of the numbers – college loans, a house payment, INTEREST!
For me, doing what everyone says is “normal” did not add up to quality of life and was not something I was buying into. In addition, my future wife was debt-free. She came out of college without debt, didn’t owe on a car, had a career job, had no credit card debt, and had saved money. WHAT? That sets up two totally different situations.
In addition to that, I had experienced what can happen when people are in debt. I’m not just talking about the money aspect, but the fact that it can rob you of a sense of freedom and peace of mind.
The math didn’t add up, and I was not buying into the culture of consumerism.
Looking at a mortgage calculator, thinking about how much we would actually spend paying off the house IF we paid the minimum payments was something we were not willing to do. It was black and white.
Now that sounds easy in some ways. Make a plan, set a budget, make the payments, and pay things off. And in some ways, it was. Each month, we made a budget and stuck to it. We kept our goal in mind to pay the house off and be debt-free before the time my wife turned thirty. (She is three months older than me.)
We knew that money not going out was like money coming in. We were able to lower our monthly expenses by 40% by paying off our mortgage.
Now for those that want to jump to investing, ask yourself what 40% more expendable income would mean for your investment accounts?
But, for us it was even bigger than that. It was the WHY. I was DETERMINED to pay off all debt and to have a paid-for house, but what kept me on the path to success was the WHY. The WHY gave us the MOTIVATION to be successful.
The WHY was that we wanted a different kind of life.
We wanted freedom and peace-of-mind. We wanted to be afforded TIME to live – to really live fully.
Not having a mortgage, credit card debt, car payments, and student loans, gives us the luxury of TIME. It allowed me the ability to leave the career job that I got out of college, so I could create my own career on my time and build my own wealth. I had the DESIRE to be home with our daughter, so I could watch her grow up and not miss any of the milestones.
I did not want to be shackled to a job for a paycheck that we HAD to have, so we could make minimum payments and pay more for a house than the amount we borrowed.
Paying off the mortgage early saved us all of those years of interest, saving us well over $129,00. Remember, money not going out is like money coming in. After cutting our monthly expenses almost in half, this enabled us to invest more heavily, setting us up for even more financial stability.
Financial stability is important to us. It is worth the sacrifice of not buying into the culture of consumerism. There will always be the latest model and more things. But being debt free, and using the money we would have wasted paying off the mortgage if we would not have paid it off early, has afforded us the ability to reap the benefits of compounded interest. That is a discussion for another blog!
Bottomline, the banks and mortgage companies want you to pay the minimum. They literally bank on the masses doing just that to fill their pockets.
I promise you this is not that difficult. I did not do something revolutionary. You can do this, too. You can be just as strategic and can gain your financial freedom. I can help set up your budget, so you can gain your own peace of mind and live life without the worry of debt.
If you are ready to get started or want to learn more, check out my Budget to Financial Freedom Course. Take the first step to freedom today.