Hey guys, what's going on? This is Seth and I wanted to make this video just to give you a little personal update on my life because we just did something
pretty exciting this morning. My wife and I sat down at the computer and
we officially paid off our home mortgage. So that thing is done. Completely gone from our lives. It was always my goal to at some point in time
own my house free and clear just to kind of know, hey, this is mine. A bank can never take this
no matter what happens. As long as I'm paying my property taxes,
this thing will be the roof over my family's head and I don't have to worry about that
changing for any reason. Like in the event of a disability or
significant loss of income or something like, oh, I don't know,
the coronavirus. I mean life is full of uncertainty. We never know when some crazy thing is
going to come out of left field and totally change our financial picture. And I just wanted to know that this was taken care of. And a part of what I wanted to process with you here was just really the decision of why I did this at all because to me, it always seemed like
kind of a no brainer thing like get rid of any and all
personal debt as soon as possible. Like this is just kind of the golden rule that all of the personal finance people in my life
have always told me. But then the last year I had a couple of conversations with my friend Keith Weinhold And a number of other people in the real estate world who kind of helped me see this
from a different perspective. And especially if you're somebody who is an investor and cares about making your money work for you and making it generate more money
by investing in things, paying off your house on paper, like just mathematically speaking is actually a like not a great idea if you hope to use your money to invest it
and make more money from that. And I'm going to link to both podcast episodes
that we had with Keith so you can listen to that and hear
more reasoning behind it. It actually does make sense. Like if you just think it through. And I think for a lot of people
who aren't real estate investors, they don't really care about all this stuff. They just want to work their 09:00 to 05:00 job. Like it's probably not as big of a deal. But if you're a serious real estate investor
and if you take a lot of cash and just dump it into your home and
just keep it in the form of home equity, that's a massive opportunity cost. That's a lot of money you could be using
to buy other income producing properties so you can make even more money. I mean really the idea is you want to borrow
as much money as you can and get as much good debt as you can because good debt is debt that pays for itself
and makes you money on top of it. So, I mean, why would you not want to
leverage yourself infinitely if you could, as long as the debt was always going to pay for itself and pay you more for every dollar that you're borrowing. So I fully understand like just financially speaking, looking at the numbers like it all checks out and makes sense that
if you have better investment opportunities that will pay you more than the debt is going to cost. I mean, if you want to make money,
it's always going to make more sense to do that instead of paying off your house. But here's the thing, I paid off my house anyway. Why would I do this? Like, seriously, why would somebody who knows better choose to pay off their house anyway? I eventually came to the conclusion after talking with
a number of very important people in my life that not all decisions in life are financial decisions. There are some really important things
we have to do that have nothing to do with money. And some of these decisions may actually
negatively impact our financial situation, but that doesn't make it the wrong decision. I think it's about understanding
what does success look like to a person? What kind of things really matter to you? What kind of things do you stand for? What kind of things are ultimately going to
make you happier in the long run? Even if it doesn't mean you have more money
but you have more peace of mind. And for me, it's one of those things
where I just decided that having a paid off house is
one of the things I care about. And yes, I know even with a paid off house, you still have to pay property taxes
and maintenance and repairs. So, it's not like I ever completely escape
ongoing costs and payments, but those ongoing costs and payments
have gone down a lot and no matter what happens, a bank can never swoop in and take my house from me even in the worst-case scenario. I mean, granted the government could,
if I stopped paying my taxes, but my tax bill pales in comparison to
what the monthly mortgage payment was. And I just frankly decided that,
that was more important to me. I want that paid off house
and then I'll start doing stuff from there. But I don't really want to mortgage
where my family lives all in the name of being able to
grow and grow and grow. I mean, I just kind of wanted
to be able to stop the bleeding in terms of personal debt and that's what I did. And really, when you think about it, these are actually a lot of things that very wealthy financially literate people do that are kind of similar to this where like,
it's not really the financially smart decision, but they've decided that they valued that and so they spend their money on that anyway. For example, people who send their kids
to expensive private schools when a public school would arguably
get them just as educated about all the basics. A lot of people who have money choose to spend it
on that kind of private education anyway, even though it's not required. Even though there's other things they could do with that money that may be financially smarter, they've decided that's what's important for them
and you know what? More power to them. Or for that matter, people who choose
to go on expensive trips or eat at expensive restaurants or buy expensive cars that just depreciate like crazy, but they do it anyway because they've decided
that's what they care about. Maybe that's what makes them happy. I think whatever you want to do is cool, but all this to say it's like you can always make that argument. There's always going to be something,
some kind of unnecessary thing that somebody is putting their money into
that they could very easily divert and be smarter and put into a cash flowing investment. So, this is just one of those things that
I chose to do and I'm pretty happy with it. Honestly, I don't know if this is going to last,
but it's a really cool feeling. Like it just feels like this
little weight off my shoulders. It's not like my life is that substantially different. But there's like this tiny little burden
that's not on my back anymore. And of course, I mean,
if the situation ever came up where I just really had to
get the cash from my property to buy just some unreal investment opportunity luckily, there are things called home equity lines of credit that could step in and do that job for me. Granted, it's more paperwork and it's more hassle than just having the cash in my bank account but still, it's not like I can never touch this money. There's just an obstacle standing
in the way of getting that. So, I don't know. That's kind of where I'm at. In terms of whether you think
it's the smartest or dumbest decision, I mean, that's up to you, to each their own, but I wanted to share sort of my thought
process and how I got there. Hopefully you got a little bit of insight out of it
and talk to you later.
