Living Debt Free No Mortgage. Those are the five words we now live by. Our goal in starting this blog was to inspire other documents by sharing our debt story.
Whether you’re about to retire or are still in school, one of the keys to a successful retirement is to concentrate on paying off your debt.
Regarding personal finance, there are differing perspectives on debt repayment and home ownership. While some argue that having debt can help you qualify for tax deductions, others advise paying it off as soon as possible. Here’s my thoughts on becoming free of debt (house included)….
The Benefits of Being Debt-Free
There are many benefits to being debt-free. The most obvious advantage is probably that you won’t have to pay creditors on a monthly basis. This can free up a sizable sum of money every month, which you can use to invest in the future, save for retirement, or just to have fun.
Another benefit of being debt-free is that you will be less stressed about your finances. When you are in debt it can be difficult to sleep at night knowing that you have bills to pay. Being debt-free can give you peace of mind and allow you to focus on other things in your life.
Finally, being debt-free can improve your credit score. When you have a lot of debt it can lower your credit score. This can make it difficult to qualify for loans in the future, such as a mortgage or car loan. By paying off your debt you can improve your credit score and make it easier to qualify for loans in the future.
The Benefits of Having a Mortgage
There are also some benefits to having a mortgage. For example, a mortgage can help you build equity in your home. Equity is the difference between the value of your home and the amount you still owe on your mortgage. As you pay down your mortgage, your equity will increase. This can be a valuable asset, as you can use your equity to borrow money against your home in the future.
Another benefit of having a mortgage is that it can give you tax breaks. The interest you pay on your mortgage is tax-deductible, which can save you a significant amount of money on your taxes each year.
Finally, a mortgage can force you to save money. When you have a mortgage, you are required to make monthly payments. You can save money by doing this because you won’t be as likely to spend it on other items.
Which Option Is Right for You?
So, which option is right for you? If you are looking to save money and improve your credit score, then being debt-free is the best option for you. However, if you are looking to build equity in your home and get tax breaks, then having a mortgage is the best option for you.
Ultimately, the best option for you will depend on your individual circumstances. Before choosing a choice, take into account your personal preferences, risk tolerance, and financial goals.
Additional Considerations
Here are a few additional considerations to keep in mind when deciding whether to be debt-free or have a mortgage:
- Your income: If you have a high income, you may be able to afford to pay off your debt more quickly. This will allow you to become debt-free sooner and enjoy the benefits of being debt-free.
- Your expenses: If you have high expenses, it may be more difficult to pay off your debt. In this case, you may want to consider keeping your mortgage and using the extra money to pay down your other debts.
- Your risk tolerance: If you are risk-averse, you may want to avoid taking on any debt. This will help you to sleep at night knowing that you are not in debt. However, if you are comfortable with taking on some risk, you may want to consider taking out a mortgage to build equity in your home.
- Your personal preferences: Ultimately, the best option for you will depend on your personal preferences. If you value the peace of mind that comes with being debt-free, then you may want to focus on paying off your debt. However, if you value the tax breaks and equity that come with having a mortgage, then you may want to keep your mortgage.
The decision of whether to be debt-free or have a mortgage is a personal one. There is no right or wrong answer, as the best option for you will depend on your individual circumstances. By carefully considering the pros and cons of each option, you can make an informed decision that is right for you.
Frequently Asked Questions
- How can I become debt-free?
There are many ways to become debt-free. One option is to create a budget and track your spending. This will help you to identify areas where you can cut back on your expenses and free up money to pay down your debt. You can also try to increase your income by taking on a side hustle or getting a raise at your current job.
- How can I get a mortgage?
To get a mortgage, you will need to have a good credit score and a steady income. You will also need to make a down payment on the home you are buying. The amount of the down payment will vary depending on the lender and the type of mortgage you are getting.
- What are the risks of having a mortgage?
The primary danger of having a mortgage is the possibility of losing your house in the event that you are unable to make your payments. For this reason, before taking out a mortgage, make sure you can afford the monthly payments.
Additional Resources
My Wake Up Call
Before graduating, we had a good job offer fall through, accrued hundreds of thousands of dollars in student loan debt, and purchased our first home with an interest-only loan (until we could afford a down payment).
Having a two-month-old at home and a heaping debt The days of daydreaming about a large home, an ostentatious hunting club, and international travel were over. It was time to take charge of my situation and escape the mess I had made of myself.
Other School Of Thought
“Cash is king, debt is stupid, and the paid-off house mortgage has replaced the BMW as the preferred status symbol.” ” – Dave Ramsey.
For me, paying off our home early was more psychological than anything else. There is another school of thought about this that believes it could cause harm to your overall portfolio.
They claim that harm comes from the extra money you put toward your mortgage. You are not investing that additional money if you choose to pay down your mortgage’s principal.