I was intrigued to learn that my college roommate Chris and another friend Marta both paid off their mortgage in their thirties. This is quite an accomplishment. First, they both defied the idiotic, asinine conventional wisdom that you want a mortgage for the tax deduction. I won’t even respond to that misguided anti-logic. Second, they bucked some members of their own families who thought paying off the mortgage was nuts. Third, they did this twenty years earlier than most people who pay off the mortgage in their fifties or sixties. I asked each of them the same questions with their responses below.
Why did you pay off the mortgage early?
Chris: Intuitively, it just felt right. For a few years there, we were a bit flush with cash, with two of us working and zero to one kids. Looking forward, I knew eventually the economics would dictate that one of us should stay home. I like to keep things relaxing, and counting on the market to grow our wealth while carrying debt was calculus that made me uneasy. Maybe you can boil it down to a low degree of confidence in corporate America, which I knew pretty well.
Marta: The plan originally was to pay off the mortgage while we still had two incomes, before our first child was born. That way I could quit and be a stay at home mom and with the loss of income we would also have less debt. Yes, I grew up with Depression era parents who always encouraged saving, and I’ve never liked any kind of debt hanging over my head.
How long did it take from the time you decided to do it and when it was paid off?
Chris: It’s a bit hard to remember, but I’d guess about the 5 year mark, we started to see that we could do it if we really wanted to. I think we had it paid off by the 8 or 9 year mark.
Marta: I bought our first house in 1992, on just my income, even though we knew we were getting married soon. We didn’t want to have too much of a house to pay off. We got married in 1993, and every month put extra on the principal. Also around that time my mom gave me a sum of money from my late father’s estate that I put on the principal and we refinanced to a 15 yr mortgage. We continued to pay a good amount on the principal every month and in January 1998 we paid that mortgage off. John (Marta’s first child) was born in April 1998 and I quit my job.
Did any friends or family members think you were nuts?
Chris: There were probably people who thought we were nuts. But if they knew me well, they knew I was nuts already. I think after the fact when people found out (and we didn’t really advertise the fact) they’d say ‘man, wouldn’t that be nice.’
Marta: My brother-in-law especially thought we were nuts. He thought we should invest the money we got from the other house. But then we would still have had a house payment. And also he doesn’t have any kids and I tried to explain how my situation was different from theirs, and that the peace of mind from no mortgage was priceless when you want to stay at home with your three kids. I also told him that if, for some reason, Nick (Marta’s husband) lost his job, it wouldn’t be so devastating financially. Ultimately he didn’t understand my point of view. My mother was very supportive, she thinks it’s what everyone should strive for, since they never had a mortgage!
Would you do it again?
Chris: In my mind, life without debt is a better life. So yes, we’re always going to be working to lessen or eliminate our debt load.
Marta: I would definitely do it again. It made it easier for me to stay at home. And we were able to save for the kids college and retirement and just in general, because we didn’t have a house payment. I’m very glad for my parents influence.
Themes From Their Answers
Chris and Marta touched on so many themes with their responses. I think they’ve covered all the major topics on this blog just in one interview with me! Debt, paying cash for things, savings, living below your means and more. Some highlights from Chris and Marta:
“I like to keep things relaxing” – I interpret this to mean that Chris does not like unexpected, financial disasters. Neither do I. By being mortage-free, few emergencies in life could really “rock the boat” too much.
“low degree of confidence in corporate America” – I interpret this to mean that Chris or his wife could be out of a job at any random point in today’s economy. By having no house debt, he didn’t have to worry about dragging himself into a job he disliked just to pay the mortgage. Ultimately, Chris did quit his job to be at home with the kids, but that’s a whole separate story.
“grew up with Depression era parents” – Marta implies that she knows the importance of living life with no debt, paying cash for purchases and other habits we learned from her parent’s generation. Today’s youth could learn more from Marta’s parents (and Marta!) than any personal finance book anywhere.
“John was born … and I quit my job” – well how many of you out there *wish* you could do that? Quit your job to be at home with your kids. It’s a positive step for nearly all families that do it. Sadly, most couples think they need two incomes to get by today. My wife and I took a 50% pay cut for her to stay home with the kids and we never looked back. Smartest thing we’ve ever done.
“My mother …. never had a mortgage” – this is totally incredible that Marta’s mother never had a mortgage. Do you hear what I’m saying!!??? Her parents paid cash for every home they owned. That is truly remarkable. And although it may have occurred more in the 1930s, 40s and 50s it’s still an impressive feat. I would not say it was a common thing to pay cash for your home then or now.
“Life without debt is a better life” - Chris could not have said it any better.
“I would definitely do it again” – Marta knows where she stands in this hyper-materialistic society in which we live and she still would do it again. But, Marta, what about you driving nicer, newer cars or taking more exotic vacations? I already know her answer: this plan works for her – her family and financial future.
Thanks, Chris and Marta, for letting me profile you on MattHutter.com!