Why I don’t want to burn my mortgage
When I bought my first home in 2011, I had a very Independent Woman attitude about it all, and wanted to pay down my mortgage as fast as possible. Because I was self-reliant, and didn’t need a man to become debt-free and reach all my goals! Right? Well. 28-year-old-Krystal had a lot to learn about financial priorities. I eventually realized that putting every extra penny towards my mortgage wasn’t making me happy, and it wasn’t getting me any closer to my number one financial goal of early retirement. So by the time I sold that home in 2015, the only extras I was putting towards my mortgage was keeping to an accelerated bi-weekly schedule.
Since RD and I are taking possession of our home in a few weeks, we’ve been discussing how we plan to pay down our mortgage. Based on our budget I showed you earlier this month, we’ll definitely be going with an accelerated bi-weekly payment plan, but aside from that? We have vague goals of putting down some sort of lump sum payment every year. Accelerated payments and small lump sums will be enough for us to reach our goal of eliminating our mortgage before we retire. But as a PF blogger, I just had to run the numbers to see how long it would take us to “burn” our mortgage, Sean Cooper style. :)
We’ve calculated that our joint expenses will be $3,600/month – which includes our base mortgage payment, strata, and property taxes, along with our fixed bills, groceries, household expenses, and a monthly buffer of $365 set aside for household repairs and emergencies. If we decided to trim down those expenses a little bit and put the rest of our income towards the mortgage (which means we’d live on a very strict budget), we could eliminate our mortgage in less than 5 years.
So yeah, it would be pretty damn cool to be mortgage-free before I’m 40 (especially in the Vancouver area!), but the lifestyle and sacrifice required to achieve that goal is not appealing. And at this point in our lives, it’s just not going to happen. 5 years is a really long time! Maybe our mindset will change in the future, but here’s why it’s not going to happen right now:
We have other (more important) financial goals
Traveling multiple times a year is something we both agree is really important to us, and we want to do for as long as we are physically able to travel. It’s one thing to potentially lose our big trip each year (that seems manageable), but not be able to afford flights to visit our families, go to Tofino, or plan weekend getaways to the Sunshine Coast or Squamish? That sounds horrible. Living that kind of life for the next 5 years (which happen to be prime adventure travel/hiking years) to pay off our mortgage sooner? No thanks.
As for early retirement, saving for that goal has always been my top financial priority. And now that RD has figured out when he can retire from the government, it means my retirement age will be 54. :) Losing 5 key years of retirement savings stresses me out because if I keep saving at the rate that I’m saving right now, I will reach my goal easily.
No interest in working harder
Work more than my 9-5 job, and the small amount of freelance work I do on the side? Sorry, again, not interested. Maybe that’s a horrible attitude to have, but this is the reason why we chose to take on a small mortgage – so that we will never feel like we need to work harder than we already are, just to keep a roof over our heads.
Related: Why I don’t want to be self-employed
Don’t get me wrong, I think it’s really important to work hard to achieve your goals. I worked three jobs to pay down my debt, and continued to hustle in order to save for my first down payment – often working 70-75 hours/week. But that lifestyle isn’t sustainable, and I burned out after 18 months. I’m glad I worked hard to put myself in the financial situation I am now, but I made a promise to myself after I moved back from Germany that I was never going back to working crazy hours again – even if it meant taking a pay cut. Living a balanced lifestyle is just so much more important to me now.
I want a little YOLO attitude in my life
We love our lifestyle right now. We’re frugal and we often say no to things when they come up, but we also don’t want to miss out on what we feel is important. I love being able to say ‘yes’ to a girls weekend in Seattle or Vegas, treating my sister to a spa day for her birthday, and buying that sorta pricey climbing gym membership with zero regrets. I want to continue being able to do all of these things without stressing or feeling guilty that I should be putting those dollars towards the mortgage instead.
You really do only live once, and the whole point of buying the condo that we bought was because we could afford to continue living exactly how we’re living now. I’ve worked so hard for the past 10 years to become as financially stable as I am right now, and the idea of having to sacrifice for 5 more years sounds exhausting. And, honestly, it seems joyless.
Our mortgage will be paid off before we retire
We both agree that we don’t want a mortgage in retirement, and that goal is easily attainable by making accelerated bi-weekly mortgage payments, and small lump sum payments every year. Interest rates may change in the future, but for the next 5 years, we’re looking at a 2.59% rate. And I know we can get a better return for our money by investing it instead. Since we already have a sizeable down payment, the thought of putting more of our net worth into real estate isn’t something we are super comfortable with.
As I said at the beginning of this post, this is our thinking right now, but it doesn’t mean we won’t change our minds in the future. Maybe we’ll come up with a happy middle ground where we are paying extra towards our mortgage to eliminate it in 10 or 12 years instead of aggressively going for 5 years. Or maybe we’ll just be happy with the 20 year plan that we have going for us.
Are you planning on aggressively paying down your mortgage?
Author: Krystal Yee
I’m a personal finance blogger and marketing professional based in Vancouver. I’m a former Toronto Star (Moneyville) columnist, author of The Beginner’s Guide to Saving and Investing, and co-founder of the Canadian Personal Finance Conference. When I’m not working, you can usually find me running, climbing, playing field hockey, or plotting my next adventure.