3 Key Insights to Living Debt-Free

keyring and keysI do everything early. I was born 10 weeks early.

I was early on the scene of inline skating (3rd grade). And I married early (22 years old).

It only made sense that I should pay off my house early.

In January of 2004 I set the goal to own my home free and clear before I turned 30.

In July of 2008 we purchased our home. In May of 2010, at the ripe old age of 29 1/2, I sent the lender our final payment. (If we ever get a chance to chat, ask me about paying off my house before paying the IRS…something I wouldn’t necessarily recommend, but hey, I had this goal…)

In the three years since, I’ve gained three key insights into living completely debt free:

1. The Novelty Wears Off

And I mean that in the most motivational way possible. I remember Julie (my wife) and I sitting down to do our monthly budget and we kind of had a little celebration where we got to archive the “Mortgage” category — never to have money allocated to it again. That was cool.

And the next month, I remember saying, “Isn’t it nice we don’t have a house payment?” And she agreed that it was nice.

Now… we look at our budget and wonder how anyone SURVIVES WITH A HOUSE PAYMENT! :)

The kicker is, you’ll adjust to it. Quickly. What’s fun is that the slack in the budget can be used to tackle some other Big Things.

2. You Get to Pick Your Next Big Thing

A lot of people are set to pay off their house early. Maybe they throw their two extra paychecks per year at the mortgage, or always send their tax refund off to the lender. Either way, they’re setting themselves up to be mortgage-free by the time their 50-55 years old.

The Next Big Thing for a 50-55 year old couple may be to accelerate their retirement contributions, or help with a grandchild’s college expenses. Both excellent.

What has been mind-blowing for me, is that my Next Big Thing has come a lot sooner, and because I’m in a different life stage than most, it means I can likely choose a few of them:

- Turn the after burners on with my retirement contributions.
- Buy a rental property.
- Fund my kids’ college in a meaningful way (I have five, so this is actually a big line-item for us).
- Build myself the best home gym ever.

Being able to tackle the Big Things earlier in life has been a huge blessing for us. What would you tackle if the money you sent to the lender stayed in your pocket instead?

3. You Get to Smirk (To Yourself) When Sophisticated Folk Talk About “Investing the Difference”

I generally keep to myself (in the offline world) about paying the mortgage off early. Assumptions are made, and weird things come out of people’s mouths.

My favorite, by far, is “Oh, I wouldn’t pay off my mortgage. First, I’d lose the tax deduction, and second, you can make a much bigger return investing the difference.”

Here’s why that argument falls flat (and I’ll just ignore the tax deduction bit):  NOBODY EVER INVESTS THE DIFFERENCE.

Listen closely when someone argues the point with the “invest the difference” mantra. They don’t say, “So I’ve calculated the extra I could pay toward my mortgage, and now I’m investing that in the stock market.”

They never say that, because they never do that. They speak with suppositions, and then go home and play Call of Duty.

You know what it feels like to be truly debt free.  It’s not about the math. It feels GREAT. Yes, the novelty wears off, but only because you’re tackling other Big Things financially, and putting those dollars to work!

I’m a big fan of doing things early.


About the author:

Jesse Mecham is the founder of You Need a Budget, a financial management software tool, that helps you gain total control of your money. He’s also a sponsor for The Debt Movement.

Find him on Twitter.

  • http://www.facebook.com/profile.php?id=1491636218 Maureen Hosick Herman

    Care to share any info on HOW you paid your house off in less than 2 years? Thanks

  • http://www.facebook.com/jplynn Jarim Person Lynn

    Great post!

  • Stacie S.

    Excellent post, I especially like your point that no one ever really does invest the difference. My family has paid off over $100k in non-mortgage debt over the last three years. I wish I was where you are at 30 but I’m where I am at 43 so that’s where I get to start from. I hope your “next big thing” is awesome and that you thoroughly enjoy it, you deserve it for working so hard to get there.