Mortgage Free At 31: Worth The Sacrifices

The following article is a guest post by Sean Cooper who blogs about personal finance at Sean Cooper Writer.

According to a poll by CIBC, the average homeowner won’t pay off their mortgage until right before retirement – age 58.  I plan to do it a lot sooner – by age 31.  I bought my house at age 27 in Toronto, Canada’s second most expensive real estate market, yet in only two years I’ve paid off over half my mortgage.

I received a lot of feedback from my recent article in the Globe and Mail, I’m on track to be mortgage-free by 31.  While some people thought my goal was ambitious, other people questioned my desire to reach mortgage freedom at such a young age, saying I was sacrificing too much.

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I’d like to address those concerns and explain why I still strongly believe in my dream of being mortgage free at age 31.

Time on my side

At only 29 years old, I have over half my life ahead of me.  Some readers thought I was sacrificing too much, mainly my youth, to be mortgage-free; I see it differently.  In only four years I’ll have my mortgage paid off, sooner than a lot of homeowners who hold onto their mortgage for 25 years or longer.

Four years may seem like a long time, but I believe it’s worth it.  By working hard for four years, I won’t have six figures of debt looming over my head once it’s paid off.

A lot can happen in 25 years – with my mortgage fully paid off, I’ll have the financial flexibility to handle any curveballs life throws me – illness, job loss, or otherwise.

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If striving towards mortgage freedom has taught me anything, it’s that we give too much meaning to material possession as a society.  Instead of always trying to keep up with the Joneses, we should be happy with what we already have.

Even though I work hard, I still manage to have fun.  You don’t have to travel to Europe to have a good time.  I’ve learned to appreciate the little things in life – there’s nothing more relaxing than a walk at the beach on a hot summer’s day.

Traveling

Why am I paying off my mortgage when I could be traveling the world?  Traveling is an enjoyable and life-changing experience, especially when you’re younger, but who’s to say I don’t plan to travel?

I strongly believe in paying off debt before self-gratification.  Perhaps if more people shared my vision, the household debt-to-income ratio wouldn’t be near a record high.  I still plan to travel the world – just after I’ve paid off my mortgage.

At age 31, I’ll still be young enough to enjoy traveling and best of all I won’t have to worry about a boatload of debt when I get home.

House rich, cash poor

Don’t put all your eggs in one basket – it’s one of the most common pieces of advice from financial experts.  Why pay down my mortgage so quickly, when I could be investing my money instead?  What if there is a major housing correction and home prices drop 20%?

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When it comes to housing gains and losses, they’re only paper losses.  Owning a home is a long-term investment – unless you need to sell your home right now, you can wait out the storm.

By living in my home’s basement instead of upstairs, it gives me a lot of financial flexibility.  I could stop working tomorrow and the rent from my tenants would be more than cover my mortgage and household expenses.

Even if the housing market crashes, I’ll be fine, as I’ll still have the rent coming in from my tenants to weather the storm.

Investing vs. paying off my mortgage

With mortgage rates at a record low, why am I in any hurry to pay off my mortgage?  If the financial crisis of 2008 has taught us anything, it’s that investment returns are far from guaranteed.  Paying down my mortgage provides me with a guaranteed rate of return.

When interest rates eventually rise, I’ll have the peace of mind knowing my mortgage is paid off.

That’s not to say I’m not investing – I contribute the maximum amount to my RRSP each year.  I still recognize the importance of compound interest – with time on my side I would be foolish not to invest.

From the income I earn as a financial journalist, I’m able to make extra mortgage payments and contribute to my RRSP each year.

Putting off marriage and starting a family

With the divorce rate close to 50%, I’m not in any hurry to tie the knot.  That’s not to say I won’t get married one day, but I’ll do it when the time is right.  My friend Melissa gave me some excellent advice on marriage. She said that the most important factors to a happy marriage is that you know what you want in life and what your ideal partner would be like.

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Some marriages fail today because of marrying young, finances and poor decisions, lack of honesty and respect for significant others, and laziness.  With age and money on my side, my chances of a successful marriage are a lot better.  You don’t have to get married to enjoy life – you can still be happy with family, friends and the feeling of success in life.

When do you plan to pay off your mortgage?  Would you be willing to make sacrifices to pay it off sooner?

Sean Cooper is a financial journalist.  He is a first-time homebuyer and landlord who aspires to be mortgage-free by age 31.  He was inspired by Income Property’s Scott McGillivray to live in the basement and rent out the upstairs of his house.  He is on Twitter @SeanCooperWrite and blogs on his personal website.

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