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I don’t remember the reason why, but I recently looked up what it cost us to operate and maintain our house in 2016. Here are the results.

ExpenseCost
Cleaning Supplies$731.74
Electric$1,416.00
Gas$622.86
HOA$1,709.00
HVAC$186.92
Improvements$454.78
Insurance$610.08
Internet$870.75
Maintenance$137.53
Other$190.49
Phone$120.00
Repairs$28.77
Taxes$2,177.28
Water$559.87
Total$9,876.07

At $9,876.07, our housing costs amounted to 8.9% of our pretax income. Pretty neat. And that percentage would have been even less if Mrs. Groovy and I worked the whole year and didn’t retire in October.

Many financial experts advise people to keep their housing costs below 30% of their pretax incomes (see here, here, and here). And by housing costs, our financial experts aren’t including the things you need to properly operate and maintain a house (i.e., utilities, maintenance contracts, cleaning supplies, insurance, etc.). No, they’re just including the costs you need to make a bank or a landlord happy (i.e., mortgage or rent payments). But even with this very crude guideline for gauging housing affordability, many Americans are in over their heads. In fact, according to a 2014 study, over 21 million Americans are spending more than 30% of their pretax incomes on rent. Ouch!

So what’s our secret? Why are our housing costs so minuscule?

Simply put, our housing costs are low because we own our house outright. If we rented our house or had a mortgage on it, our housing costs would have been much higher (see table below).

StatusAnnual Base CostsAnnual Rent PaymentsAnnual Mortgage PaymentsTotal Annual CostsCost of Not Owning Your Home Outright
Owner$9,876.07$0.00$0.00$9,876.07NA
Renter$4,381.221$19,200.002$0.00$23,581.22$13,705.15
Borrower$9,876.07$0.00$13,656.003$23,532.07$13,656.00
1. A renter wouldn't be paying taxes, HOA, repairs, and other costs associated with ownership directly. Base costs have been reduced accordingly.
2. In my neighborhood, homes rent for $1,600/mo and up. Yearly rent amount is based on $1,600/mo rent.
3. Yearly mortgage amount is based on what a $180,000 mortgage would have cost me in 2007. The interest rate on a 30-year mortgage back then was 6.5%.

It’s Not Owning Vs. Renting, It’s Owning Vs. Renting or Borrowing

The interesting thing I found during this exercise is that the cost of housing was basically the same for our hypothetical renter and borrower. Granted, each would have required a different amount of up-front money to secure my house. The renter around $3,200 (security deposit plus first month rent) and the borrower around $50,000 (20% down payment plus closing costs). But once in, both would have needed roughly $23,500 to cover all the associated costs with living in my house for a year.

So when you get down to it, the real debate when it comes to housing shouldn’t be owning vs. renting. It should be owning vs. renting or borrowing. Owning a house outright is much cheaper than being a renter or a borrower. In my particular case, owning my house is 58% cheaper than renting it or borrowing for it.

Here’s a nice axiom to remember. Rid yourself of rent or mortgage payments and suddenly your cost of living isn’t so costly. Things that you couldn’t address because there was never enough money—such as establishing an emergency fund and saving for retirement—suddenly become easy to address.

Five Ways to Become an Owner

Once Mrs. Groovy and I owned our house outright, we were 10 years away from financial independence. In once sense, that’s remarkable. But in another sense, it isn’t. Because we no longer had a mortgage, we were able to save roughly 60% of our gross household income every year beginning in 2007. And as Mr. Money Mustache has taught us, the math behind early retirement is rather straightforward. Save 60% or your gross household income and you’ll accumulate 25 times your annual expenses in around 10 years.

Think about that for a moment. Own your house outright and you are theoretically 10 years away from financial independence. Own your house at 30, and you can tell your boss to lump it at 40. Own your house at 40, and you can begin your RV life at 50. If that doesn’t get your FI juices flowing, I don’t know what will.

“Okay, okay,” I hear you bursting. “I got it. Own your house outright and you’re in a great position to make financial independence a reality. So how do I own my house outright?”

I’m glad you asked. Here are five tried and true ways of owning your house outright.

1. The old-fashioned way. Get a 30-year mortgage and make monthly payments for 30 years. Slow. Boring. Effective. But if you go this route, you may not be financially independent until you’re in your 70s.

2. The brute force way. Side-hustle your ass off to afford a 15-year mortgage or pay your 30-year mortgage off early. I had a co-worker do this when I was back on Long Island. He started a side-hustle landscaping business so he could afford a 15-year mortgage. Once the mortgage was paid off, he sold the landscaping business.

3. The geoarbitrage way. In 2006, Mrs. Groovy and I had a choice. We could stay on Long Island and purchase a decent house in a decent neighborhood for around $550K. Or we could move to Charlotte, North Carolina, and purchase a decent house in a decent neighborhood for around $225K. We chose the latter. And since we made $250K on our condo sale, moving to Charlotte made us instant owners. Had we chosen to remain on Long Island, we would have remained borrowers.

Geoarbitrage is a great way to turbocharge your quest for ownership. If you live in a costly metropolitan area (New York, San Francisco, Los Angeles, Boston, D.C., etc.), and you already have some home equity or a pretty sizable down payment, consider moving to a less costly metropolitan area (Dallas, Nashville, Charlotte, Omaha, Boise, etc.). Good housing is easily half the price, and property taxes are easily two-thirds less.

Side note: Our good friends Jim and Theresa just took advantage of geoarbitrage. They had over $100K saved up for a down payment. If they bought a house on Long Island, they would have had a mortgage of over $300K and property taxes in excess of $12K. Instead, they relocated to Wake Forest, North Carolina, and put 50% down on a beautiful home in a great neighborhood. They got a 15-year mortgage, which they’re already making extra payments on, and their property taxes are less than $3k.  

4. The downsizing way. Just because the lenders, builders, and realtors say you need 1,000 sq ft for every member of your household doesn’t mean you do. When Mrs. Groovy and I first got married, we lived in a 600 sq ft condo and we were very happy. So if you want to own your house outright, and you can mentally handle a lack of space, consider going small. It’s a heck of a lot easier paying off a 600 sq ft condo than a 4,000 sq ft McMansion.

Side note: Two of our favorite bloggers, Claudia and Garrett, from Two Cup House, went the downsizing route. A couple of years ago they sold their 1,500 sq ft house and bought a 536 sq ft house. And largely because of this one ballsy move, they’re now completely debt free. And they’re in their early 30s! And they’ll be financially independent sometime in 2019! Yes, downsizing has its merits.

5. The screw conventionality way. Brother Groovy moved down to North Carolina a few years ago and did something he never would have considered in New York. He bought a trailer. The trailer cost him $20K and his housing costs—including lot fees, maintenance, utilities, and every other cost associated with operating and maintaining a trailer—are now less than $400 a month. Yes, living in a trailer doesn’t have nearly the cachet of living in a three-bedroom house with a white picket fence. But Brother Groovy’s trailer park is well maintained and his fellow trailerites are very nice. Moreover, because Brother Groovy’s housing costs are so small, he has more than enough money to fully fund his 401(k) and his Roth IRA.

Screwing conventionality is a great way to achieve home ownership rapidly. People with comfortable middle-class incomes, for instance, don’t normally dwell in trailers. But what if you’re starting all over and you’re in your early 50s? And what if you don’t want to work until you’re 75 years old? In situations like this, trailers are a godsend.

Side note. For our downsize challenge, Mrs. Groovy and I intend to get very unconventional. Rather than build a normal house, we want to build a Quonset hut. We can afford to build a normal house. But we think we can build a Quonset hut that is every bit as functional as a normal house for around $100K—including the price of land. And we would rather have another $100K to travel the world and really enjoy our retirement.

Final Thoughts

Okay, groovy freedomists, that’s all I got. What say you? Is owning your house outright the linchpin of financial independence? Or is this notion of mine for the birds? And if it is indeed the linchpin, should people consider doing something bold or weird to make it happen? Let me know what you think when you get a chance. I’d love to hear your thoughts. Peace.

65 thoughts on “It’s Amazing How Much Money You Can Save When You Own Your House Outright

  1. It’s good to know that you were able to have 60% more savings by not having a mortgage. My husband and I have a notable amount in the bank but I’m not sure if it will be enough for the entire process including title settlement. It would be more ideal to check current house prices first and see if we can afford to cover everything.

  2. Very informative article! Usually the argument is owning the house vs renting but you are right it should be ideally owning vs renting or borrowing. Every new home owner must read this and get rid of the mortgage as quickly as possible. A side hustle just for this purpose is a good idea.

  3. It’s always been my dream to own a house outright and as of a year ago, I achieved it. There’s a whole lot of information out there about owning versus getting a loan on a house. Most Financial experts say never pay cash, always borrow. In my mind, one thing they don’t talk about is just how much you value your freedom. Now…, some people will continue working the same job whether they borrow or own outright but, I’m a freelance musician and I only want to work the jobs that I want to work. This makes me very happy! I’m pretty much stress-free and I feel free! I can finally do anything I want when I want.
    So, I believe there is a personal freedom factor that is not considered in the owning versus borrowing scenario. I don’t care if I can make more money or have a better tax advantage by borrowing.
    Every individual has a different amount of importance they put on their freedom. For me, it’s huge! I’m a person that has a propensity for anxiety and now, I don’t have any! You cannot put a price on that!

  4. US houses are HUGE compared to houses in Europe. Most apartments here in the UK are between 400-800sq ft and a 1200 sq ft home for a family of 4 is considered a palace.

  5. Ok I made a lot of mastakes iny life. We lost our home after the 2008 crash. So we downsized to a 720 sq.ft. home. We remodeled an old home and everything is new now. We did it ourselves. In 4 months we will be debt free. I am 51 and hope to catch up on retirement savings. I have 90k saved but know we need much more. We currently take home 6k a month. We want to be able to travel and retire by 62 or do something part time in the side. Your right you would spend too much money if you can’t stay busy.

  6. It really depends on interest rates. If you have a low enough rate (under 4%) and a good enough return (over 7% after taxes) then it makes sense to keep a mortgage rather than using your savings to pay it off.

    1. Excellent point, Edwin. I just discussed that in my reply to fiberguyr1. Mathematically, you’re right. Psychologically, it depends on your risk tolerance. I prefer less risk so I killed the mortgage as soon as I could. It was an amazing feeling knowing that my wife and I could cover our monthly expenses by both getting $10/hr jobs.

  7. As I sit here in this loud, drafty, telecom lab waiting for something to reboot, I have read this post and 90% of the comments on it. You guys are getting me closer and closer to having the conversation with my wife about just paying off the last of our mortgage. I have recently started reading through a lot of different FIRE sites, and the fire has hit me to retire early and get out of places like this lab.

    We have about 134k left on the mortgage and the slow way on a 15 year note will be paid off in 9.5 years. Or I can take most of our savings and pay it off right now, which would free up a little over 16k a year for investing. The more I think about it, the more of a no-brainer it is.

    1. I hear ya, my friend. There’s always the argument that when interest rates are low, it pays to borrow and use more of your disposable income for investing. But debt always comes with added risk. What happens, for instance, if you lose your job? Suddenly, that mortgage nut is no longer an annoyance, it’s a crisis. Mrs. G went mortgage free as soon as we could and we have no regrets for doing so. The peace of mind far has far outweighed the slightly better investment returns we may have gotten. Best of luck with whatever you decide to do, my friend.

  8. You’re definitely right that most of us make the wrong comparison. We opted out of borrowing, switching to renting to fund our mini retirement, but ultimately we are still paying a ton (20%) for our housing. We are still targeting either outright ownership or full coverage of our rental costs from passive investments someday.

    Those Quonset huts look pretty amazing! I hadn’t heard of those – we’ll have to check out the options for building here!

    1. Hey, Chris. Sorry for the late reply. Twenty percent is still pretty damn low. Most Americans see way more of their household incomes being consumed by housing. The main thing is you have a plan. You downsized and rented because it fits your overall strategic plan. And I have no doubt that your housing costs will be 10% or lower in the not too distant future.

  9. My mom decided to use her inheritance from my grandfather’s passing to pay off the house, which allowed her to ramp up her investing / saving. Property taxes in NJ were (still are) high, so she decided to use #3 &4 and moved to Florida to a smaller square foot house. Because her money was tied up in the NJ house, and other places, her debt to income (retired, not collecting pension yet) ratio made her ineligible for a mortgage so I cosigned. The one bank person said, well when you sell the house you’d be eligible, and her response was ‘when I sell the house I won’t need a mortgage’. It was a matter of timing.
    My aunt, uncle and cousin live in the same town, so while she’s further from my siblings and I, they have a great Thanksgiving. She also has a summer place in the Poconos, which is a paid off family cabin. It puts her driving distance away, and means she doesn’t worry about high Florida summer AC bills.
    I aspire to live tiny/small, on wheels or not. Part of that is being able to pay it off, use less for utilities , hopefully use greener building materials. I have a long way to go on downsizing. Ideally I’ll live somewhere with a better COL than here. Land is quickly becoming developments, so the idea of getting my own sliver, is not likely tight now because prices are high. My plan is to gain experience now, to craft a future role with more remote work, so I can move further away from the metro area, without subjecting myself to a ridiculous commute. My plan for FI is being able to negotiate for the schedule I want because if they say no, I will have ‘enough’ to take my offer elsewhere. 🙂

    1. Very nice, Jacq. It sounds like your mom is expertly managing her retirement. I love Florida, but it’s rough down there in the summer. I’d much prefer the Poconos as well. And I love your plan to downsize. I’d be happy with a home in the 700-900 sq ft range. Mrs. G wants something in the 1400-1600 sq ft range. And since she’s the boss, our future home will be in the 1400-1600 sq ft range. But that’s a good 600 sq ft less than our current home. I really think most Americans have way more square footage than they really need. I’d rather spend my retirement money on travel rather than a glorious box with oodles of square footage.

  10. Love the video of the Quonset Hut homes! That may be a good option for us someday. Love the simplicity and low cost. I’ll bet that if you and Mrs. G. go that route your annual housing cost will be in the $5-6k range. (Wow!)

    Our strategy is most closely aligned with #5, #4, and long-term #3.
    1) Sold the house and downsized in 2015 (gains on proceed investments have more than offset our housing expense as renters).

    2) When we pull the plug in 18 months or less we will be slow traveling full time and our home will be wherever we are. We’ll have enough cash to live for at least 2 years, so those home sale investment proceeds will still be at work while we’re roaming around.

    3) When we’re ready to settle down again, whatever home we buy or build will be something affordable – hopefully $150k or less. And we will own our home outright.

    Maybe there will be a development called The Groovy Quonset Hut Village that we can look into?

    Great post, Mr. G. Thank you for sharing your wisdom.

    Mrs. Grumby

    1. When done right, the Quonset Hut is a wonderful home. Mrs. G and I love the industrial chic look, so a Quonset Hut is right up our ally. And I love your approach to retirement. You guys are going to have a blast. Can’t wait to read about it.

  11. Love this post!!! I wanna do the geoarbitrage way but I’m tempted by screwing conventionality. Unfortunately Jared is not into either of those. He likes #1 slow and steady or #2 hustling it out. We met in the middle and did homesharing hehehe.

    1. I love it, Lily. The great part of about screwing conventionality is that it not only helps with your march toward FI but it also gives you plenty of fodder for your blog posts. We’ll have to work on Jared.

  12. Holy buckets you guys spend a lot on cleaning supplies! Maybe my house just isn’t as clean as yours? 🙂

    You are SO right though – that is the difference. Thank you for pointing this out. Too many times home ownership gets a bad rap.

    1. Haha! That number is skewed. It includes every cleaning related purchase from napkins and dish washing detergent to toilet paper and shampoo. My guess is that half of that $731.74 pertained to cleaning our bodies rather than our house.

  13. Great list of suggestions. For most people, housing is their largest expense. The taxes in the Tri-State area are so expensive. I live in the Pocono Mountains. All of the new homes being built are for people who are moving here from NYC and NJ. The cost of a new house and taxes are much more affordable.

    1. Thank you, Dave. When I was in high school and college, my parents had a cabin in Mt. Pocono. We loved it there. In fact, every year I would have a Super Bowl party at Chateau Groovy. But eventually my parents tired of having two homes and sold it. But I definitely see the appeal of that part of PA. The area is nice, with plenty of recreational activities, and by NYC and NJ standards it’s very affordable.

  14. Great post, I really enjoyed that. I’m on track to have my modest apartment in Ireland paid off by this time next year. I’m sinking about 80% of my paycheck into paying off the outstanding amount as all the money I earn into the future will be (more or less) my own once I’m in the clear. The unexpected costs of home ownership vs renting can be a real eye-opener too.

    Great site and Info, and thanks for sharing!

    1. That’s awesome, James. Congratulations. One year away from owning your place outright. Let me know when the day arrives. I will gladly raise a pint (or two) of Guinness in your honor.

  15. I wrote a post that showed how low our housing costs could go in retirement – if we didn’t snowbird and just lived in our Florida condo. It was less than $600/month or $7200/yr. for everything (and that includes utilities and even cable TV which we don’t have in our house now!) But that is all because it is paid off. We wanted to have that secured before I left my job and retired early. My aunt lives near you in a trailer that she bought outright when she moved to NC 20 years ago. It is in a nice park and she’s really enjoyed her neighbors. It allowed her to retire and not worry about working again – and that was good because she has health issues. I love your point about geographic arbitrage. I’m just not sure why more people don’t do it. I can see if family is close by – but I’m not sure why it isn’t a stronger consideration for others.

    1. Mr. G’s family WAS close by and I never in a million years thought he’d leave NY. I didn’t even suggest it, though I wanted to — he did. Now, most of his family is in NC too.

      You need to visit, whether it’s for the Spartan Race in Concord, or when you visit your aunt, or if you drive through to FL.

    2. Nailed it, Vicki. For Mrs. Groovy and me, geoarbitrage really made sense. We lived near one of the most cosmopolitan cities in the world, but we rarely took advantage of that. Mrs. Groovy and I are stay-at-home types who love the simple things in life. A walk in the park, a night of cards with friends, a bag of Doritos and an episode of The Walking Dead on Netflix–that’s all we need to be happy. And I don’t need to do these things in high-cost New York. I can do these things just as easily in low-cost North Carolina. You and your aunt are doing it right. You don’t have to slam yourself with high housing costs just to enjoy life. Hopefully, more people will come to this realization and stop putting undo pressure on their finances. Thanks for stopping by, Vicki. Your comment really helped prove the point of my post.

  16. I would love to be mortgage free but, like everything, it’s a balancing act. We could likely move to a cheaper area but at this point both have good jobs, are close to family, and really love the city we’ve settled in. I’m ok with having to work and have a mortgage for longer to keep these things as they are.
    I’m still as aggressive as possible with paying down the mortgage and if all goes to plan will have it paid off years before retirement which will free up a lot for additional savings.

    1. Agreed, Sarah. Balance is everything. Life is still good with a mortgage. Every month the principal balance goes down and every year your equity stake goes up. And is having the absolute least costly housing really worth leaving the family, jobs, and city you love? You’re playing it right, Sarah. Balance!

  17. We are currently in the midst of a 30 yr mortgage that we are paying extra on every month.

    With that being said, the future seems to have great options for us. We bought a foreclosure well under market value, and have been slowly renovating it. We have a great amount of equity built up, and when the house is owned outright, we have the ability to rent it out, or move to a cheaper place.

    Luckily in Arkansas we have very low cost of living, and our home only cost us $140,000 for 2200 sq ft. This flexibility and future options are what sold us on purchasing and borrowing.

    1. I love it, Cameron. You guys are playing it great. Oh, and by the way, Mrs. Groovy and I were in Arkansas last fall. We visited Little Rock and Hot Springs. Very nice. In fact, while Mrs. Groovy and I were walking in Hot Springs National Park, she turned to me and said, “I could live here.” Thanks for stopping by, my friend. It’s always great hearing from you.

  18. There’s no doubt in my mind that owning your house outright is one of the keys on the FIRE journey. We’re having challenges with our downsizing move from Good To Great, and currently own TWO homes. Regardless, it’s part of a very intentional move on our journey to FIRE, and a huge component of the plan is to own the downsized “Great” cabin outright. One less Black Swan circling overheard…..even if it hurts in the short term.

    1. Agreed, Fritz. Own your house and you’re not too far from owning your time–if you aren’t owning your time already. And it’s a shame a some minor roofing damage in your “Good” cabin momentarily derailed your journey to downsizing nirvana. But, hey, you know about the damage and by next week it will be fixed. Isn’t home ownership wonderful? Thank you for stopping by, my friend. And thank you once again for the “Great Retirement” t-shirt. Best gift I’ve gotten all year.

  19. You’re absolutely right to add borrowing into the old rent versus own debate. Unfortunately, I’m in the unenviable position of having a mortgage in my retirement. Even though we kept ourselves to a reasonable 1100 SF and bought in a less expensive neighborhood, New Jersey is high cost. My wife is attached to it for multiple reasons while I, in turn, am pretty attached to my wife. So we are making extra principal payments each month and hoping one day to own our place outright.

    1. Haha! Better to have a mortgage and a wife than no wife and no mortgage. What I love most of about you, Gary, is that you know life is all about balance. Go 100% all in on finances and you destroy or blemish relationships with family and friends. Mrs. SST’s wants and aspirations count too. And if that means having a mortgage a little longer than you would like–oh, well.

      Quick aside. When I was growing up we commonly referred to New Jersey as the armpit of America. But by the time the aughts rolled around, I began to see Jersey in a different light. I had friends who moved to Hoboken and Jersey City. And Mrs. Groovy and I vacationed a couple of times in Cape May. So New Jersey isn’t just about monster highways and chemical plants. It actually has a lot to offer.

  20. When i moved from Washington DC to Grand Rapids, MI, I would have enjoyed a bit of geoarbitrage except I didn’t own in DC. Instead, I bought a fourplex and lived in an apartment thereof. Debt service was covered by my tenants and I lived there for free.

    I later moved to a single-family detached house in the suburbs, I financed it with a 30year mortgage, but paid it off in < 7years through debt snowballing. Starting with three mortgages on two rental properties and my principal residence, I leaned into paying off the first, then snowballed its mortgage payment into the other two. Things went REAL fast when I had two mortgages paid off. Landlording has been a good side hustle for me.

    1. Nice, Steve. Thank you for sharing. I really admire people who master landlording. It’s not an easy job. Not only do you have to manage a property, but you also have to manage people. Mrs. G and I tried it when we first moved down to North Carolina and quickly discovered that we weren’t cut out for it. So I salute you, my friend. When done right, landlording is a great path to wealth and financial independence. You, sir, have done it right.

  21. Oh this is awesome…. extra motivation to pay off our house 🙂 I’m pretty amazed by the low cost when you own a house outright. I think I always thought of post-mortgage simply as more cash flow, but I looking at post-mortgage by calculating cost of living in an “owned home”. Thank you for sharing!

    1. It truly is amazing how inexpensive an owned home is. Right now, Mrs. G and I are paying $823/month to live in our home. And that amount includes everything from taxes and utilities to insurance and cleaning supplies. And if all goes as planned over the next year or so, and we shed our HOA and water expenses, our monthly housing cost will go down to $633. Your mind is in the right place, Mrs. AR. Payoff your mortgage and life gets as close as it can get to sunshine and lollipops.

  22. Do you have a design for your Quonset hut yet? Two stories? Geoarbitrage is our plan when we leave NY. We just have to decide on where we want to go. I certainly think we want to own outright.

    1. No design on the Quonset hut yet. We got to get our land first and then make sure zoning will even allow us to build the thing. But if we do build one, we’re thinking of something in the 1,200-1,500 sq ft range with a nice loft. We’re going for that industrial chic look. And as far as geoarbitrage goes, you can’t go too wrong with North Carolina. You get four seasons. You’re only a few hours from either the beach or the mountains. The cost of housing and living is very reasonable compared to New York. And there are enough restaurant, entertainment, and cultural options to satisfy most people. If you ever want to check it out, just let me know. We’ll have the sleeping sofa in our Quonset hut loft ready for you. Cheers, my friend.

  23. I am sitting here in expensive Long Island as I read this. Yes, geoarbitrage sounds pretty awesome. But like Linda from Brooklyn Bread…we’re kind of attached to the NYC metro area. The crazy thing is that we were thinking of moving to Long Island from Queens because the housing was slightly more “affordable” LOL

    1. Here’s one for you. I spoke to my former supervisor a couple of years ago. He lives in Woodbury, one of the more fashionable communities in Nassau County. When he told me what his property taxes were, I nearly collapsed. $36K a year! That’s $3K a month. And he doesn’t live in a mansion. He has a nice ranch (about 2,600 sq ft) sitting on about an acre of land. So it’s no surprise his property taxes are high. But $36K a year?

    1. You’re not wrong, Linda. New York, in general, and Brooklyn, in particular, are pretty remarkable places. And that’s why it’s so damn expensive. The world’s rich all want a piece of it. I would love to see you move down to Charlotte, but mainly for the laughs. I think the laid back Southern style–coupled with the lack of horn-honking, bagels, and all-night diners–would drive you nuts.

  24. I can’t quite recapture the feeling I had marching into the local credit union branch and telling a young, well-groomed assistant that I, not nearly so well coiffed, was there to pay off my mortgage… 26 years early. It was certainly obvious by the expression on her flawless face that such a request isn’t often delivered upon… We had originally expected to pay it off in 5 years, but we got antsy-pantsy and decided to (with thoughtful consideration) throw our emergency fund at it to knock off the last year or so (no, really, we thought it through!). So while our liquidity dropped to about $6,000 until we got the next paycheck (“no, honey, please don’t go rock climbing this weekend.. I can’t afford the deductible if you brake yourself”). without mortgage payments we were able to rebuild the 1 year fund in about five months. And now, year and a half later we’ve got cash going all over the place thanks to a 65% savings rate: watching our 401k and a previously non-existent taxable account each climb into six digit numbers.. maxing out IRAs… and a savings account for a new downpayment is beginning to fill with funds too. For months leading up to the Big Pay Off, I had to endure the compounding interest folks squatting in the markets, bellyaching about all the extra money I could have made if I had instead joined Team Investment. But honestly, as time passes, I’m only even more solidified that getting out of mortgage debt was the most sensible choice for us. And yes, I’ll give it to them that a lot of it was for psychological reasons… but that doesn’t mean they aren’t valid… The sense of pride and confidence is very gratifying… and the worry-free flexibility (like deciding to blow $4000 this week entertaining my visiting in-laws) is quite tangible. I’m with you 100% Mr. G and I believe our experience supports your theory… paying off our mortgage made 2016 the “brake out” year on our journey towards financial freedom.

    1. “For months leading up to the Big Pay Off, I had to endure the compounding interest folks squatting in the markets, bellyaching about all the extra money I could have made if I had instead joined Team Investment. But honestly, as time passes, I’m only even more solidified that getting out of mortgage debt was the most sensible choice for us.”

      I hate those bastards! A pox on all “compounding interest folks.”

      Haha. But all kidding aside, I knew there was a reason why I liked you. In one comment, you dramatically and convincingly explained what I tried to do in an entire post: owning your home outright is an incredible boon to your wallet and–most importantly–your mind. Thank you, SJ. You made my freakin’ day.

  25. Mr. G. We refinanced to a 15-year last year and are making extra payments to eliminate it as soon as we can. Alternatively, we may relocate to something or somewhere less expensive. Whichever, we won’t be retiring until there is no more mortgage.

    Nicely done by you and Mrs. G!

    1. When you eliminate your mortgage, you eliminate one big worry. I know you and John will be there soon enough. You may even be our neighbors in Concord one day. Thanks for stopping by, Amy. It’s always a pleasure hearing what’s going through that fantastic mind of yours. Cheers.

    1. Haha! Same here. My HOA is the second most costliest item in my housing budget, and it annoys me as well. But the $142 does pay for landscaping, garbage pick up, a community pool, and a fitness center. A guess in the scheme of things, that isn’t such a bad trade-off. Thanks for stopping by, Brad. I really appreciate it.

  26. Ahh! Housing….Our house is our biggest expense right now and a constant internal struggle for me. We know it is bigger than we need/want but it has a pretty sweet view.

    As for downsizing, it will happen in the next few years. I suspect once we are sure we will not have child #2.

    Geographic arbitrage is a good call. I am from Nashville and house prices have since gone way up (not so cheap anymore) but if you move to the suburbs you can still get a nice home for $200k. Plus no income tax.

    My property taxes right now are $17K. Yup that is $17K. Thank you to the high tax state of California.

    1. Haha! I hear ya, my friend. I was in Nashville recently, and I was amazed at the amount of building activity. It’s no longer a sleepy Southern town. And I hear ya about property taxes. $17K? Yikes. What the heck happened to Proposition 13? If it’s any consolation, I spoke to an old friend a few months ago. He lives on Long Island in a town called Bayville. Bayville is basically a middle-class town, though it does have a number of uber-rich folk with estates overlooking the Long Island Sound. His property taxes last year were just over $20K. Meh. I don’t know any of my friends who plan to stay on Long Island when they retire.

  27. I like your idea of comparing owning outright to renting and borrowing. We’re still borrowing, though, because while the expenses are higher, so are the returns on other investments.

    One of the most effective ideas I’ve seen for shedding the mortgage is to buy a duplex, live in half and rent the other. I’m not sure it’s all that unconventional. That way a lot of your expenses can be written off as deductible, and you have more cash to pay down the mortgage, and you can always decide to make the whole thing a rental down the road.

    Of course, finding the duplex is the hard part, at least here. It may be a common suggestion, but it can be kind of hard to pull off.

    1. Good catch!. I forgot all about the duplex route or the AirBnB route. Those are two excellent routes toward home ownership. Thank you for pointing out this omission. I love the way your mind works, Emily.

  28. Yesssss! We also plan to significantly pay down our mortgage. I know some people are more in favor of investing over paying off your mortgage–I personally don’t believe in “good debt” and I want it gone. All of it. And that includes the ol’ mortgage. It just gives you more security during early retirement–or hell, more security while you still have to work. It would also give us something to pass on to family or rent out to earn passive income.

    1. It’s a tough call. Do I pay off a mortgage that is costing me 3-6 percent? Or is it better to invest that extra money in the stock market where I’m likely to get a 7-9 percent return. I couldn’t fault anyone who decides to let his or her mortgage die a natural death. But the security of owning your home outright does have value too. Mrs. Groovy and I have lived both sides. We had the big mortgage nut, and we have lived mortgage free for 11 years now. And truth be told, we much prefer the mortgage free life. To keep our house, all we really have to do is pay our property taxes and our HOA. That amounts to $323/month. And that’s nothing. We could easily handle that with one minimum-wage job. So, yeah, going to bed every night with hardly a worry in the world is pretty amazing. I’m with you, Mrs. Picky. Pay off that mortgage as soon as you can. And if your really regret it, you can also take out a home equity loan.

  29. Yup, even in retirement our mortgage is our biggest burden. Your numbers are about spot on for our costs. Our annual budget of 65k could be dialed down to 43k if we paid off the house.

    Sometimes I wonder I I should go back to work for 5 years to pay it off.

    1. I’ve heard of the one more year syndrome, but the five more years syndrome? All kidding aside, though, you raise an interesting proposition. Not having a mortgage, and all attendant worries that come with that monthly burden, may be worth the sacrifice of being chained five years to a cubicle. Hmmm. Very interesting, my friend.

  30. I wish that was the case for me but unfortunately I live in expensive LA and that’s where my job is. Granted it pays well, but I might not have the same opportunities living in a lower COL area. I have thought at times about living with a roommate, but even in this area you don’t save as much, and I’m in my 40s so the thought of a roommate that isn’t my boyfriend/husband….I know it’s all about choices in life and I’m choosing this and no one is holding a gun to my head, but I do feel frustrated sometimes that it’s so expensive.

    1. This is my biggest complaint with high-cost cities. There’s practically no margin for error. Get the “wrong” bachelor’s degree, experience one costly healthcare episode, start your career in a dying industry, or fail to find your soul mate by a certain age and it becomes very difficult to break into the housing market. North Carolina, for all its faults, gives just about everyone a second, third, and fourth chance of becoming a homeowner. My brother is a perfect example of this. He had to start all over again in his early 50s, but right now he owns his home outright (albeit a trailer), and when he retires in the next 6 or 7 years, he’ll have enough money to buy a couple of acres in the country and build a modest ranch or cottage. I feel for ya, Tonya. With all you got going for yourself (looks, talent, and ambition), housing should be the least of your worries. Sigh.

  31. Man…dropping housing costs like that would be great. At this point our only real option would be geoarbitrage. It is certainly tempting and may be something we do at some point in the future, but we’re just not ready to make that move at this point in our lives.

    I keep watching our area for a house that we could buy that would be no more expensive than the rent we’re paying and coming up with nothing. This would put us on the slow, old-fashioned track, but it would be something.

    A house just went up for sale in our neighborhood that is 900 square feet, which is slightly larger than our one-bedroom apartment. I also can’t stand up straight on the entire second floor because the ceilings are too low. Asking price is $720,000.

    So…we’re going to keep renting until either a housing market correction or we are ready for geoarbitrage.

    1. Hey, Matt. I’m a man of humble means, so I can’t even fathom the housing prices in our most expensive cities. If I remained in New York, I would be working to basically pay the mortgage. You’re in a tough position, but you got the right attitude. I would seriously consider geoarbitrage, however. You’re very bright, so you wouldn’t have any problem finding your niche in a low-cost city. Good luck, my friend.

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