I paid off my mortgage in less than 8 years

Published February 15, 2017   Posted in Guest Posts How to Think

Happy Wednesday, everyone! I’ve made it no secret that I hate mortgages – both having them AND paying them off. But once they are gone, the potential to build some serious net worth skyrockets. Today, I bring you a guest post by Rob from Mustard Seed Money on the ups and downs of wiping his mortgage clean. Take it away!

I was always a different kid when it came to money. Most of my friends would spend all their money on baseball cards, music, or food. Meanwhile, I abhorred spending money.

It probably had to do with the fact that I didn’t receive a steady allowance growing up. At times, my parents would start one, and then quickly it would go by the wayside. I’m not sure if it was because they expected me to complete my chores just as a member of the family, or if there were other factors involved, but I never knew when I would see another dollar come my way.

As a semi-resourceful kid, the only way that I knew I could make a good chunk of money was in the wintertime when it snowed. I lived in a really large neighborhood, so there were many prospective customers. This was before people gravitated towards snow blowers, so my friends and I would shovel
driveways all winter long and divide the profits. I remember, one winter weekend when I made $320. Though I was utterly exhausted, I felt as rich as any millionaire at that moment. I may or may not have spread all that money onto my bed and laid in it just to see what it felt like. But even as a self-made
hundredaire, I don’t remember wanting to spend any of that money. I guess I’ve always been a saver.

College Decision

Fast forward a few years, and I was excelling in baseball. When senior year rolled around, a couple schools from out of state offered baseball scholarships to me. In discussing it with my parents, they said I could attend any school that I wanted, but they threw out another small caveat. I would be responsible
to pay the difference between the in-state school and the out-of-state tuition if I decided to go somewhere out of state.

It came to a head when I received an offer to play baseball at an Ivy League college. Even with the scholarship, I would have still had to pay almost $20,000 out of pocket every year. This meant I would have had to take out some massive student loans.

Racking up $80,000 in debt was just too much for me to grapple. I decided to attend the state school where I lived, which unfortunately ended up baseball career since they didn’t offer me to play there. But, I do believe it was a wise financial decision.

Community College

In order to defray some of the college costs and to graduate sooner, I attended community college during summer breaks. My thought process was, I could work in the summer and make some money, or graduate a year early and make way more money. To say I was a bit of a math and investment nerd is an
understatement. While I had a great time in college, I was focused on the future, namely, securing a job and owning my own home.

Fresh Out of College

I obtained a great job right out school, so obviously, the next step for 22-year-old me was to buy a house. Hopefully you’re picking up on my sarcasm. But this is what I thought was the next step in the game of life. It took a while, but I finally found my dream house located a couple of minutes from work. Best of all, it was a brand new construction, so I could pick out all the designs myself.

In Over My Head

Here’s the thing about the house– it was way beyond what I could actually afford. Sure I put down 20% for the house, but I also had a $400,000 mortgage. Yes, I got the mortgage before banks were actually checking documents. But even so, who lends a 22-year-old kid $400,000, a year out of college?

Getting Roommates

I justified that I would be able to grow into the house with a family down the road and that my earning potential would also grow. But in the meantime, that meant getting roommates. Lots of them. I was fortunate that I was able to have a couple friends in the area and a work colleague who lived in my
home and paid rent.

Roommate Horror Stories

Their rent payments helped to put a significant dent in my mortgage. Anytime a roommate would move out, I would scramble to find a replacement. One time, a roommate situation did not work out so well. I had picked up a work colleague who seemed nice and normal enough. Unfortunately, he and another roommate did not get along at all. They were like oil and water. A fight even broke out, and I was afraid that they would damage the house between the mixture of alcohol and 250 lb men wrestling each other.

After that, we had a sit-down, and one of those guys decided it was time to move on. Hallelujah. However the nextOn d roommate that came along was unfortunately no better. After he moved in, he decided quit his job because he no longer liked his boss. He thought that he could find another job, but he was wrong. Soon enough, he could no longer afford the rent. I thought I’d be nice and let him stay in order to help him out a little. So here I was, spotting him each month, while he tried to get back on his feet, which in turn really hurt my finances.

Meanwhile, I was still contributing any extra money I had towards my mortgage because I hated it. I hated that I was required to live with guys that couldn’t get along, and I felt stuck in a job where I was losing motivation.

The final kicker for me was when this jobless roommate finally got a new job, he decided to buy a new car instead of pay me the back rent. Needless to say, I was angry. He moved out shortly after that, but not before I got paid in full.

Making Some Changes

So while some may think buying a house and picking up a couple of roommates is super easy, I can attest that even with the most vetted roommates, that things can and will go wrong.

After that I decided that, I decided to cut down on the roommates. The drama and issues associated with it started to wear on me. Plus, my salary had basically doubled since the time that I had bought the house and was making tremendous progress on paying down the mortgage. I ended up having a friend
as one roommate for another year until I got married in 2012.

Mortgage Pay-Off vs. Stock Market

Some may think I would have been able to achieve FIRE sooner if I hadn’t paid off my mortgage so soon. I actually ran the analysis and found that if I had invested the money into the S&P 500 instead of paying off the mortgage, that the difference would have been 0.1%. The 2000s were obviously a lost decade
for the stock market, so I was fortunate that paying off my mortgage didn’t hurt me more from an investment standpoint.

My last roommate moved out in September of 2012 when my wife and I got married. The final mortgage payment was made in December of 2012, and we were officially debt-free.

Would I Do It Again?

Absolutely, and let me share why. Over the 7 years that I had roommates, they paid close to 1/3 of my mortgage off. Through that help, I was able to pay off my mortgage in 7.5 years and start my marriage off debt-free.

Initially, my wife was unsure of my bachelor pad, but she was able to transform it in no time. I said goodbye to my old, torn up couches and dinged up coffee table. We hauled a big truckload of items to the local dump. The best part was we had extra money that she could use to buy new furniture since we
didn’t have a mortgage payment anymore.

Freedom and Flexibility

Because we were able to pay off our mortgage early, my wife’s income wasn’t essential in order to pay our bills.  She is able to serve as caregiver to her special needs sister full-time as we have greater financial freedom without a mortgage.

While my peers were having fun, I spent most of my 20s working hard and trying to get ahead. It was a grind. But I believe hard work pays off. I would take every hard assignment thinking that it would get me ahead no matter what. I figured if all my money was going towards a mortgage, why not work
harder to get ahead?

But, while I was working harder, I was not working smarter. I was taking terrible assignments that made me miserable. I had no time to take vacations, and I felt worn out all the time.

Traveling

When I finally paid off the mortgage, the first thing that I did was go to Europe with my wife. I had always dreamed of visiting Norway, where my great grandparents were born and immigrated from. It was definitely one of the most memorable trips that I had ever taken, and I thought, why didn’t I do this
before now?

When I got back, I purposed to seek out jobs that aligned with my passions and to focus less on climbing the ladder. I was able to find some really interesting projects, which also allowed me to indulge in my new passion of traveling.

Promotions

You know what the crazy part was? I have had 2 promotions since returning from that trip. Being able to follow my passions has increased my productivity and value at work to the point where I am now managing multiple teams within my organization.

With a mortgage, I was always preoccupied with needing to make more money. I wonder how different my career path would have turned out if I still had a daunting mortgage to worry about. I know I was on the road to burnout but was trying to push through it all for the sake of money.

On Our Way To FIRE

On our current trajectory, it appears that my wife and I will be able to achieve FIRE by 2020. We are planning out the potential adventures that we will have once FIRE becomes a reality. Of course, paying off my mortgage may have been a risky decision in hindsight if the market had taken off. Nonetheless, I
am thrilled with the end results of paying off my mortgage.

So, what do you all think? Are you trying to pay down your mortgage, or are there other debts you are tackling first? Please share your thoughts below.

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Comments

64 responses to “I paid off my mortgage in less than 8 years”

  1. This is amazing! Thanks for sharing guys. I am currently paying off my consumer debt which should all be gone by the end of next month. Eek! I am unsure what to do about my house as I am thinking about moving. But I would love to pay my mortgage off!

  2. We don’t go all out on the mortgage but there is definitely a tilt towards paying more on the mortgage. We are on our second house and around 75 percent paid off 3 years in. So I can understand the sentiment. The recent decade has been more favorable to investing then payoff, but sometimes it’s not all about return.

  3. I have always been in the pay-off-the-mortgage camp. I tried for a bit to ignore my gut and go with the statistics of likely getting a better return by investing the money instead of paying down the debt but, ultimately my gut tied me down and beat me into submission. Alas, I’m back to focusing on eliminating the mortgage. Having fewer living expenses is as close as I can get to living in an trailer or an Airstream – here’s lookin’ at you, Steve! 😉 #jealous

    Awesome work, Rob! In my opinion, financial flexibility is worth the possible earnings you might miss out on by keeping the debt.

  4. Go Finance Yourself says:

    Thanks for sharing more of your story. Do you ever regret not pursuing baseball? I played for a year in junior college before realizing it wasn’t going to take me as far as I wanted.

    Man, I would be pissed at the guy who bought a new car instead of paying rent. That’s a shitty move if there ever was one. I bet that conversation went over well :). Roommates can be a huge pain. I roomed with some of my best friends with college. It becomes really difficult to have those tough conversations when someone isn’t pulling their weight.

    Personally, I’ve never made additional payments to our mortgage. We have a small house that is way under what we could afford. The mortgage balance will move under $100k in a couple months and we have a low interest rate. I’ve never really felt overburdened by it and the market has returned more over the past 11 years even going through the Great Recession.

    • I try not to look back at anything in life with regret. While baseball was my #1 passion at that time, I suffered an injury that prevented me from further pursuing the sport. To me, that was a sign that my baseball career was over, and I pretty much accepted it and moved on to other interests. I definitely have tons of great memories though and hope my son will gravitate towards it when he gets older!

      Yeah, roommates can be tough. Thankfully overall, I had great roommates (most of which were close friends from college), but of course, there were a select few who stood out and were a bit frustrating at times…

  5. Apathy Ends says:

    We jumped into a house we could barely afford to get away from roommates shortly after graduating college. We couldn’t deal with it anymore – so I feel the pain there

    We are tackling the rest of my student loans and 10k on a low interest car loan – but our main focus has been investing for the last few years. Once we are consumer debt free sometime next year we will up our investment % over paying off the mortgage.

  6. Way to slay that mortgage! Eliminating our mortgage is a big part of our long-term financial plan, but the bulk of that work is going to come a few years down the road. We abruptly decided to do some home remodeling and took on a very small loan at an even smaller interest rate so we could maintain liquidity. Once we’re all finished paying that back later this year, we’ll shift back into high gear on investing. We were fortunate to have bought our house near the bottom of the market, and now that our local market has rebounded, we have over $100k in equity.

    • Wow, that’s a great jump up to over $100k in equity! Timing can be everything, right?? Like I said to the commenter before, that’s great that you have a plan in place to tackle debts and focus on investing. Strategy is everything!

  7. Wow I didn’t know the whole story! Roommates can be the best or the WORST! Luckily I never relied on them since Ive aways been a renter, but I had my fair share of nightmares over the years. I do sometimes feel that now owning property somehow puts me behind the curve of early retirement, but I live in LA and I don’t want to be tied down by a huge mortgage, so I have to deal with those cards.

  8. katrun27 says:

    This is great! I am especially impressed that you turned down the college scholarship to avoid debt. I feel like people tend to give you a free pass on debt as long as you get some level of scholarship, not thinking through the additional costs not covered by those scholarships. You hear people make all kinds of excuses for overspending if it’s for schooling, or they get emotionally attached to a certain school, and it’s so foolish. I know I loved my time at Wheaton College, but I still wonder what kinds of funding I’d have received if I’d applied to more state schools. I was a good student, so I bet I’d have saved a bundle going a different route. Congratulations to you and your wife on debt-free living!

    • I couldn’t agree with you more! A lot of people assume that going to a “better” college will definitely yield a higher salary, so the debt incurred is less substantial. I definitely don’t think this is always the case, but it’s a common train of thought! Thanks for your feedback!

  9. Arrgo says:

    You came up with a plan and made the best decisions you could at the time. There are always unforseen rough spots especially when you are young. But going through that it seems you have really come out of it much better off. Paying off your mortgage is a great thing and will free up your life more in the future. I used to hustle and shovel snow too. I was about 10 or so and can remember being half excited to be off school for the day and the other half was I could go out shoveling and make a few bucks. I used to get out early like a little after 7am to beat out the other shovelers who would be out around 8am. I didnt make a lot but it was good money at that age. Learning how to hustle is how you get ahead. I never had roommates but lived in an apartment with thin walls. It almost was like I had roommates downstairs. To me, having your own house with you own space and privacy is definitely worth it. People can be so annoying.

  10. I have two mortgages, one on an investment house/rental that generates about 1500 in cash flow each month and primary. I always wanted to pay off the mortgages off but something more interesting always comes up 🙂
    Both mortgages are under 3.5% and I rather have the liquid cash on hand in case anything happens. But I guess when mortgage is paid off, there is not really anything that can happen

  11. JD says:

    My wife and I just refinanced to a 15 year mortgage at 2.5%. If I were to make extra monthly payments, I could have it paid off in 7 years. We are not planning to stay in this house long term, so we are choosing to invest in our taxable accounts at Vanguard and make the auto-monthly payment on the house. Once we reach FIRE, we will sell the house and put the equity into our same taxable account.

    I definitely do not fault someone for paying off their house. If you are planning to stay there long term it makes complete sense. Also, in times where the market is not yielding, paying off your primary home is a sure fire way to see a good return on your money.

    I’m in the same club as Steve. I don’t see the mortgage as any sort of ‘good’ debt. I’ve argued with many of my close friends that there is no such thing as ‘good’ debt. Some debts are worse than others, but none of them can be considered good. Usually those that consider some debts ‘good’ like to keep them around and justify that they are better off having them.

    • Yes, I agree that if you don’t plan to stay in your house for very long, it may not make sense to pay off the mortgage. Everyone’s situation is unique and different. I also don’t consider a mortgage to be “good” debt, although I do lump it under the category of wealth-building debt.

  12. Joe says:

    $400k loan for a 22 yo. That was a crazy time. It’s great that your roommates helped pay off your mortgage, though. If I could do it over again, that’s what I would do. We got married a few years after I started working so we didn’t have a chance to do the roommate thing much. We tried renting out, but it’s just uncomfortable when you’re married…
    Great job!

    • I couldn’t imagine renting out a room now that I am married and have a kid. Although, my neighbor rented out his basement for a while, and he has a wife and kid. I think in that case though, the renter mainly stayed in the basement, so she didn’t encroach upon his family’s space all that much. Either way, slightly uncomfortable!

  13. These are great thoughts, MSM! I know a lot of FIRE bloggers are torn between paying off a mortgage and investing. I’m very much on the pay-off-the-damn-mortgage side since the numbers work in our favor in that scenario. We also want as *few expenses as possible* during FI, and a mortgage is a hefty expense ($1,000+/mo).

  14. Mrs. BITA says:

    I’m firmly on the “keep my low interest mortgage and invest the difference” side of this debate. I do enjoy stories like this though. I remember from your other guest post that you had roommates and that you helped them out financially – what you didn’t say then was how they chose to buy a new car instead of paying back rent! Some people just suck.

  15. Tucker says:

    We are in a weird position because we live in my familial home, in which is a wonderful neighbourhood. My grandparents bought it from plan in 1959 and it’s been handed down to my mom, and now I have the chance to buy it. It used to be at the edge of the city but now it is considered central and it has all the benefits of a great neighbourhood: great public transport, access to an extensive system of bike paths, amenities such as shopping but also a park (with a wading pool in summer, ice skating in winter), a local library, great schools, and a YMCA all within walking distance. It’s also far back from a main artery so my kids can wander all over our neighbourhood and I don’t have to worry.

    Currently, we pay rent to my mother (and she lives in my condo downtown & her rent covers those bills) so we just switched homes when I started a family, and she retired and wanted the freedom to travel & have no house maintenance. As she wraps up her financial affairs, she wants me to buy the house off her which we are set to do in early 2018. If I save 50k this year we will also be able to be mortgage free, which is a huge boon. For us – with two small kids and roots in this community – buying is a good choice, especially since we will be getting a deal. Rent in our city is such that if we had to rent in our area it would be way more expensive than owning. Also, as a kid who got shuffled around and moved a few times, I am not interested in uprooting my kids away from the neighbourhood.

    On top of that, we are looking to buy back my defined contribution pension for $17300, so it is a tight year!

    • Wow! What a neat and interesting story. I’m sure there is a lot of family history tied with that house! How special that you and your family plan to stay there, and potentially mortgage-free at that!

      • Tucker says:

        Definitely! It’s an adorable post-war bungalow that is small, which is my preference. I plan to keep the condo as a rental sort of indefinitely considering it is only a few blocks from Parliament Hill right downtown and is in a prime rental area. It still has a mortgage but it is low and as an income property it will be worthwhile to keep.

  16. brian503 says:

    I don’t think I would have been responsible enough at 22 to take on $400K of debt for a home. Kudos to you Rob, seems like you’ve been on a great path from early on. Some bumps along the way but the room mates facilitated the mortgage payoff, so I would see why you’d be willing to endure it again. Good luck reaching FIRE!

  17. makingyourmoneymatter says:

    I knew you had paid off your mortgage, but didn’t know it was $320k! That’s an amazing accomplishment. My relationship with paying off my mortgage is “it’s complicated”. Buying our current home with a large mortgage was not my favorite financial compromise with my husband and I put it on autopay and try to ignore it. We have no issue affording the payment, so I’ve just decided to focus on retirement, college funding and HSA accounts instead.

    • I don’t think you are alone in having a “complicated” relationship with your mortgage. They are a necessary evil these days, but that’s good that you have no issues affording the monthly payments! I always encourage people to focus in on what gives them the most peace of mind.

  18. I was so scared of investments until 3 years ago, then took 12 months to take the plunge, so we really hammered our mortgage. In our case, we would have been better off investing rather than paying off the mortgage, but complete debt freedom does give a huge psychological boost and the security of your own home.

    • Thanks for sharing Sarah!!! I can definitely understand some of the hesitation with stock market especially going into year number eight of the bull market. Hopefully the psychological boost that you got by paying down your mortgage outweighs the investment piece 🙂

  19. I think you were so smart to buy a house and have roommates early on. I wish I had thought about that back in my 20s!

    Congrats on paying off your mortgage so early! We have 3 investment properties and have incrementally started increasing the principal payments on one. We’ve also grown a sizeable savings account with the intent of either paying off a mortgage or purchasing another investment property. I go back and forth on what we should do. I admire you for making the decision at such a young age and following through!

    • Wow three investments properties is pretty impressive. I have a friend that has a couple as well and he is making bank. I asked if he was planning to expand more and he said “Why, I’m making enough money that I don’t have to work anymore so why take a chance on a potential headache.” I couldn’t disagree with him 🙂

      • Two of them were unintentional investment properties and simply pay for themselves. 😐 Your friend has a good point and I don’t think we would even consider purchasing another if we were meeting our passive income goals.

  20. I focus on investing more than paying off mortgages. The interest rates on mortgages are very low and the market typically does a lot better than 4% or so.

    It’s an age-old question of whether it is better to pay down a mortgage or invest. You really can’t go wrong with either.

    • Thanks for sharing Lazy Man!!! I definitely got lucky paying off my mortgage during the lost decade of the 2000s. I think I would definitely think differently if I started to pay off the mortgage in 2009 and lost out on the tremendous growth during this eight year bull.

  21. Michael says:

    It is awesome to see that you have always been a saver and been very money savvy. It took me slightly longer to get into that bandwagon.

    FIRE by 2020, that’s COOL! We are debt free besides the home mortgage.

    Given the extremely low interest rate, I don’t intend to pay it off. When the kids go to college, we plan to downsize and buy a home without any mortgage.

  22. Awesome story MSM! I can’t wait until my mortgage is gone too. My journey’s been much slower but I’m planning to be mortgage-free by 40!

  23. Being mortgage-free is SUCH an awesome feeling. We paid off our mortgage at age 44 and felt such a relief. Everyone should consider this as one of their financial goals.

  24. Chelsea says:

    What an incredible story! Thanks for sharing! A young colleague of my father’s did the same thing right out of school and I was always very jealous. Not an easy path for you or him but the benefits sound tremendous.

    My husband and I are working to pay off our mortgage as fast as possible now, but that balance still makes my skin crawl. Good luck with FIRE!

  25. Wow, that’s a great story! Good for you!

    I still can’t believe the way they were giving out loans back then… that was totally part of the cause of the real estate bubble and burst.

    My husband and I own four properties free and clear and then we have mortgages on three others that were previous residences and now are rental properties. We are going to sell the one with the most equity and pay down the unit with the smallest mortgage, but after that, I don’t intend to pay down the last mortgage. I don’t want too much of my own money wrapped up in equity for a rental unit. Plus, our main residence is paid for, and also love seeing someone else pay that mortgage nut. 🙂

    • Wow, that’s a lot of properties! That’s awesome. I understand you not wanting all your money tied down in rental unit equity. And how great that someone else is paying your mortgage for you 🙂

  26. Great story, MSM! Paying off a mortgage quickly is very intriguing… one less fixed expense to worry about. As I get closer to knocking out my student loans, I find myself thinking about what I want to do about our mortgage. Pay off quickly? Invest the difference? I might hedge a bit by making the standard payments while putting aside extra money in a separate “mortgage payoff investment fund.” We’ll see…

    • Thanks for sharing SRGO!!! I was nervous when the market was imploding so I thought it made sense for me to pay off my mortgage. With the market at an all time high I do wonder how much higher it can go but timing the market is a fools game or at least I’m not very good at it 🙂

  27. Congratulations!! I almost felt like I was reading my story here minus the roommates. I bought my house very young too right out of university. We paid our current mortgage off in 5 years and it was the best decision ever. Perhaps the frugal way of life both Mrs. CBB and myself lead from a young age helped get us to this point but we don’t feel like we were deprived of anything. We’d do it again if we had to.

    • That’s awesome to hear that we have similar stories. It’s definitely been a huge blessing that we paid off our mortgage. I’m so glad that my wife was on board with the decision because she could have easily said no. Although I have a feeling that if our money values didn’t line up that we wouldn’t have made it this far 🙂

  28. Gary says:

    We just paid off our house last November. Bought it in 2000. I had an overpayment plan set up to be done in another 7 years. But I looked at one of our mutual funds which had made us a good amount of money since 2006 and a couple of stocks which had done very well. You never know what the stock market has in store, but I did know that at that moment we had enough to pay it off. Our mortgage was pretty inexpensive, and we have no other debt. It does feel real good not having a mortgage payment. I also calculated that we only losing $175 a year in tax write offs.

    We took our new found money and 25% we keep in checking just to make life easier (groceries, bills, etc)
    40% we keep in checking to offset the extra money that gets taken out from her paycheck because we now can maxed out my wife’s 401k to 24,000 a year (which also get us an extra $1,200 a year in free matching money from her company), and the 35% we put into our Roths every month.
    Glad we paid it off!

    • Congrats Gary on joining the mortgage free club 🙂 Sounds like you have definitely found useful ways to use the money and invest. Seeing that you have 25% in checking just to make life easier was definitely one of the key factors for us as well. Not seeing that mortgage payment leave our checking account each month gives us plenty of room. I definitely don’t feel like I am living paycheck to paycheck anymore.

  29. Paying off a $400,000 mortgage in 8 years is impressive! Congrats. It took me 13 years to pay off mine after originally having a goal to pay it off in 10 years.

    The problem is, I have a couple more mortgages! I’m going to slay my vacation property one within 5 years. It has a 4.25% rate for a 30 year.

    But I’ve got a primary at 2.35% for a 5/1ARM that’ll I’ll not accelerate payments until the month of the ARM adjustment.

    Sam

    • Since I have only one property, I’d say it’s much more impressive to have multiple properties that you’re paying down 😉 That primary interest of 2.35% is unbelievable. I can definitely understand why you don’t want to touch that.

  30. FinancePatriot says:

    I’ll have to dissent here. I love having a low interest rate mortgage. The money I am saving from not paying off my mortgage early is being invested into high yield equity investments. For fun, I track my “mortgage payoff ratio.” That is, taxable investments, plus cash in savings/ divided by existing mortgage principle.

    I used to pay extra on my mortgage until I realized the math simply didn’t make sense.

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