I want you to be 100% debt-free

Anyone who has read this blog knows clearly that I want you to be debt-free – including the mortgage!

Think about that for a minute …  Debt-free INCLUDING the house.  How much money goes out to pay debt and the house every month?  For the average family it is somewhere between $1,000 and $3,000 every month!  What would you do with that money if it did not have to go to service that debt? 

A www.JosephSangl.com Financial Hero, David Bach, recently wrote an article on Yahoo! Finance about "How to save big on your mortgage".

In the article, David makes a fantastic statement.  David writes …

I'm often asked if it makes more sense to prepay a mortgage or invest the money in stocks and bonds. Rather than ponder which asset will get you a higher return, I think the better question is which investment decision will free you financially and allow you to retire earlier.

In my 9 years of experience as a financial advisor for Morgan Stanley, the clients who paid their debts off early — specifically their mortgages — retired 5 to 10 years before those who didn't.

I ran the calculations for a $150,000 30-year mortgage with 6.0% interest: 

I just love the idea of all of us reading this blog being debt-free including the house!

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  1. Julie on August 2, 2007 at 7:51 am

    We will be 100% debt free by Nov. 1!!! I cannot tell you how excited I am. I am 34 – my husband is 35 – and to be 100% debt free is beyond anything I can imagine. We are changing our family tree! It has been 6 years since we started working Dave’s plan and it has changed our lives.

  2. Julie Brown on August 2, 2007 at 2:06 pm

    This is the conversation that took place in the back seat of the car this morning on the way to daycare (A is 8 and J is 5)
    J – “I wish we had a hot tub”
    A – “We will when we have our deck”
    J – “We have to stop going out to eat unless mommy and daddy say it’s OK so we can save money for the deck.”
    A – “Yeah. Mommy and daddy want us to save our money instead of spending it foolishly.”
    J – “Yeah. I have a few quarters now but if I save them for a hundred days I’ll have more!”

    Music to my ears! Guess we’ll have to start that deck fund with the drawing so they can color it in as we save!

  3. JW Thornhill on August 5, 2007 at 1:49 pm

    Great post and great blog! I’m glad I found it. I’m subscribing immediately.

  4. Kellee on January 27, 2009 at 3:05 pm

    Joe, I love what you’re doing to inspire people to become financially free. And I even get to meet you tomorrow at the seminar at my church. Should be an awesome time!

    I’m struggling with the statement that David makes about which investment will make you financially free. If instead of overpaying, you could put the extra money into a liquid tax free environment with 5-7% guaranteed rates of return, it seems like that would actually be better.

    It allows a side fund to build up safely (away from market risk) that is accessible if needed. Say you get disabled and you’ve paid off your house early. All that extra money that went to build equity in your home is now off limits. If you don’t have an income, you’re not going to be considered for a loan or line of credit. Same applies if you get laid off.

    If you had a 30 year mortgage at 5.5% interest rate for $150,000, your monthly payment would be $852. To pay it off in 15 years would take an extra $373/mo. If you instead sent that to a safe side account to grow, in 15 years you’d have $16,000 ABOVE what it’d take to pay off the entire mortgage! All the while maintaining control over financial institutions.

    Just a thought.

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