5 Surprising Things I Learned After Paying Off My House 3 Years Ago

This past July marked the 3-year anniversary of me paying off my house and becoming completely debt-free.  Ever since I purchased my first home back in 2005 this was a dream of mine.  I absolutely despise debt and from Day 1 I was laser focused on paying off my home. 

First of all let me say, this was the last debt that I paid off.  If you have high interest debt like credit cards or payday loans you should pay those off first.  Also make sure you are funding your retirement through 401k and/or IRA.  I started paying off my house only after I had paid off credit cards, student loans, and my vehicles.  As the guy at the Honda dealer told me when I drove up to get my 2002 Honda Accord serviced “Wow buddy…you drive them from can to can’t”!

Also I focused on buying a house that I could easily afford.  I can’t stress how important this step is in the home buying process.  It is easy to fall into the trap so many others do by buying a house based on the amount you get approved for by the bank.  In my mind I envisioned the mortgage as a chain that was connecting me to my desk at work.  The larger the mortgage, the larger the chain!  I knew that with a paid off house I would be one step closer to my dream of being financially independent and working because I want to not because I have to.

Here are some things I have learned after paying off my house 3 years ago.

Your Net Worth Will Sky Rocket (if you’re smart)

After paying off my mortgage 3 years ago my net worth has increased steadily.  It is now up almost 90%!  It’s amazing what can happen when you don’t have a mortgage hanging over your head.  I funneled money that I used to pay on the loan into the stock market and 529 plans for my kids.  I also continued to invest in rental properties.  I will talk about that later in another post but I now have 5 single family rental properties that I also own free and clear i.e. no mortgage.  You can see my progress in the graph below.

Perspective on Work Changes

Don’t get me wrong I still work for the man and I desperately want to get out.  But I’m not quite there yet.  I have found though that after paying off my house stuff that used to bother me at work doesn’t bother me as much.  I’ve also become much more comfortable taking risks on the job which oddly enough has led me to getting promoted. 

Before I paid off my house I may not have spoken up in a meeting with a dissenting opinion or perspective.I am so much closer to working because I want to not because I have to.  I’ve been working for the man since the 90’s and I’m ready to move on to something bigger and better.  Not having to worry about a house payment puts me one step closer to my dream.

I’m also more willing to take more risk because the worst they can do is fire me and I know I won’t end up on the street tomorrow if that happens!

You Will Still Have Expenses Related to Your House

Don’t forget that without a mortgage you will still have expenses related to your house.  These include property taxes (which are a bear in my part of the country), insurance, and maintenance.  However if you can build up other sources of revenue that can cover these costs you are one step closer to financial freedom.

A side benefit has also been that my perspective on money and more specifically assets and liabilities has fundamentally changed after this process.  I would see people at my job buying expensive new cars like Teslas, Audi’s, Mercedes, etc.  Granted I don’t know their financial situation but I would find myself thinking, “Wow they just bought a $70K+ car.  Imagine if they used that money to pay off their house or get a rental property.”

It is Easy to Become Complacent

When I was focused on paying off my house I was like a man possessed.  Every extra dollar I had was going to the mortgage. If me or my wife got a bonus I was immediately applying it against our loan.  Once I paid it off I must say it was actually a little anti-climatic.  It wasn’t like after I made the final payment at the credit union that streamers and confetti came down from the ceiling.  Nope.  They just accepted my payment like normal and I walked out.  Albeit feeling like a huge weight had been lifted from my shoulders.

It actually took me a few months to figure out where I wanted to focus my energy next.  I had that feeling of “OK now what” for some time which I guess is normal.

You Will Sleep Easier at Night

In my opinion this is the best benefit of paying off my house.  I can sleep like a baby knowing that I own my house and that even if me and my wife lose our jobs we will have a roof over our heads for our family.  I know that many “financial pundits” say that instead of paying off your house you should put those dollars to work for you by investing in the stock market.  These don’t have to be mutually exclusive.  Even when I was feverishly paying down my mortgage I would still put some dollars to work in an S&P 500 account and continued to fully fund my retirement.

From my perspective I like the guaranteed return I got from paying off the house and not wasting all that money on interest. Also I haven’t missed the tax break from mortgage payments one bit.  I believe that is one of the weakest arguments for holding on to a mortgage.

I realize that this is a personal decision that every one has to make but I will tell you that I have never for a second regretted paying off my house.  Over these past 3 years I have invested much more aggressively in the stock market and acquired rental properties. 

Whatever you decide to do good luck!  Agree or disagree?  Please comment below.