Why I Paid Off My $400K Mortgage

this video is going to be divisive controversial and you're going to find that you're gonna fall into maybe one of three camps here as we go through this video in which we talk about and answer the why question regarding why did I pay off my four hundred thousand dollar mortgage at the age of 36 let's get into it alright so first off let's talk about the divisive and controversial piece so just briefly I came to a fork in the road right two decisions to make one fork was to pay off my mortgage which I did we'll get into the math behind that in a moment the second fork in the road was to utilize those dollars in instead of pay off my mortgage do something different with it maybe to generate more revenue or make that pile of money a much bigger pile of money and and again we'll take a look at the math behind that now either right now or certainly at the end of this video you'll fall into one of those three buckets I was talking about and so the first bucket is where you have intelligent feedback in the comments you agree with me right maybe you paid off your mortgage you're financially free maybe you're looking to do it maybe it's just a thought in your mind right now the second bucket okay is folks that don't agree with me but there's still intelligent feedback there's a lot of great conversation that I've seen down there in the comments and you know some some math and I wrestled with a lot of the things that you guys are pointing out down there in the comments I can and we'll get into that and then the third bucket the you got help all of you these people you know I I'm fairly due to the whole YouTube thing but god help you in bed you guys need to you know find another hobby or something with some of those comments you know just bleep you you bleep an idiot and all this anyways god bless you I wish you the best and I you do make me laugh out there when I see all these outrageous comments but we'll stick to the first few buckets so let's get into the two Forks in the road let's get into some of the math behind the two Forks in the road and then I'm gonna explain you know how I came to the decision that I came to let's get into it all right guys so let's take a look at option 1 option 1 is where we actually pay off our mortgage like I did that was my choice let's then take a look at option two and we'll get into that where you use these dollars that you'd pay off a mortgage and do something different with it maybe make more money or perceivably a smarter financial decision and then we'll finally look at an in-depth discussion about how I came to the decision I came to which was to pay off my mortgage so top left here okay mortgage details you can see $400,000 mortgage 20% down payment loan amount $320,000 three point eighty eight percent interest rate across 30 years right 30-year fixed mortgage the property taxes seventy eight hundred bucks I think that's high that's what I pay but I think that's high but where I live I have an ache in our acre and a half a land and the property taxes are again in my opinion high I don't know if you think that's high or low I think it's high PMI zero percent because I put down 20% on the loan and then my homeowner's insurance about $2,000 there so scrolling down is where you get into some of the the interesting numbers here okay so this right here is important okay monthly payment two thousand three hundred twenty one dollars that's what I was paying to keep my house for the next 30 years okay that heavily weighed on my decision to pay off my mortgage and we'll get into that but remember this is just this is principal interest taxes and homeowners insurance right this doesn't include my cell phone my home my car insurance you want to go out to dinner or something right home heating oil you know whatever so my monthly layout just to keep my house for the next thirty years twenty three hundred bucks my actual outlay on a monthly basis was more than that okay who was you know into the three thousand dollar range okay with everything else we have going on so that's that's a pretty heavy weight hanging over your head down payment account amount there you can see $80,000 right PMI not required I can see the 20% down payment you can also see this as an interesting number right obviously you know the dates here kind of shifted around a little bit because I paid this off in under five years you know about five years ago five plus years ago now and so this date was really it says 2049 you know it was probably something like two thousand forty four or something right so I was gonna be I don't know in my early - I guess mid what mid-60s right still trying to come up with you know at least twenty three hundred bucks a month to pay off my house so I'm gonna be you know sixty-six retired and still paying a mortgage and then you can see all the other numbers here right annual payment amount you know I need to come up with twenty seven twenty eight grand a year just to pay the minimum and drag this thing out thirty years and then this is an interesting number right my four hundred thousand dollar house cost me eight hundred thirty five thousand dollars so you know I more than doubled the cost of my initial home loan there at the end of the term of the 360 mortgage payments right I almost have a million dollar home if you think of it I bought a four hundred thousand dollar house and I'm basically living in a million dollar home let's get on to option number two and take a look at that math alright guys so option two is where instead of you paying off your mortgage and this is where people either disagreed with me paying off my mortgage remember that bucket which was the second bucket of people or thought processes out there or the third bucket where people were just belligerent and calling me a bleep an idiot right and maybe you'll see this math and I you know maybe you'll call me an idiot too but this is something I wrestled with long and hard option one and option two so option two is where we take the $320,000 right I still buy the house I put the $80,000 down but I pay my bill like a good little mortgage paying person for the next 30 years and I take the balance of what I would pay my mortgage off with $320,000 right that $320,000 check I wrote to the bank and instead what I do is I invested right so what I did here is I said well what would that look like for 30 years right I don't pay off the mortgage but I invest this money say in in this example it's it's somewhat basic but I take the $320,000 I invested you know we say for 30 years into say an S&P 500 ETF exchange-traded fund or something right making the nine point eight percent or 10 percent return year over year like the stock market average right and I also said that I wouldn't contribute us another single dollar I just invest this one time instead of paying off my mortgage and just let it grow for the next 30 years now this is where people start using expletives and calling me an idiot and in a way I don't agree to disagree with you because I wrestled with this in my head you know in a nutshell after 30 years you're gonna have if I can highlight that five point five million dollars right my three hundred twenty thousand dollar investment today equals five point five million after the end of thirty years that's significant that's huge you can see no additional contributions and you can see the amount of you know interest plus the principal 320 you know that the the all-in number is five point five million dollars okay down here you can see kind of the amortization or schedule down here just the time value of money is what you're looking at here right starting principal three hundred twenty thousand dollars and you can see you know just year one alone you're up to three hundred fifty two thousand dollars if all goes well if we scroll down to you know the end of the thirty years you know this is your initial principal still but here's you know the interest or the money you're making on this and then here's that five point five million number right so this is why people call me an absolute idiot in some cases because you know mathematically you look at option one you know my $400,000 house is an eight hundred thousand nine hundred thousand dollar house or you look at this option to my three hundred twenty thousand dollars after thirty years turns into five and a half million so let's get into why I made the decision I made alright guys so we just took a look at the two options we had available here and obviously I chose the option to pay off my mortgage so why did I do it well there's a bunch of reasons probably first and foremost have boiled down to financial freedom what is that like you know do I want to get a taste of that financial freedom thing when I'm 66 67 years old and I didn't want to do it we looked at the other option the investment vehicle option and you might say well you know II kind of left you know five and a half million dollars on the table there smart guy right and you're right one of the things I say in these videos is that the essentially success is the ability to delay instant gratification and in this case I'll be honest I'd kind of failed but I I was looking at things in a bunch of different ways making a million different decisions and finally I made my final decision to pay off the mortgage I did all the math just like you guys just looked at and walked through with me and the more important thing to me and my family right now and in the medium term was to in quite frankly the long term was to be financially free what's that like and the thing I balanced that against was in 30 years sitting here with a pile of five and a half million dollars if all the assumptions I built into those calculations come true and they probably will but I you know I won't have those dollars so financial freedom was basically the the most important driver there I can go and do basically what I want to do now the other thing is that you know I'm not at zero I didn't go right to zero basically I had a retirement account that I've been building up for years and I also the way I look at it is every paycheck since I paid off my mortgage there over a year ago is I take every single penny - my utility or you know expenses if you will cellphone and going out to eat here and there and stuff right and I take every single other dime and I put it into my Vanguard brokerage account and I invested via other means and so I'm constantly growing that and I'm I'm the the amount of saving that I've been able to accelerate has been phenomenal because I've always had you know at the end of a month you know upwards of a $3,000 plus you know all-in bill with all my expenses and now I don't it's I have a fraction of that so long story short some of you were gonna agree with me some of you were not going to agree with me and then there's gonna be the third bucket out there that's you know you come out from your bridge and you go oh this guy is that absolute idiot Blee Blee Blee you know God bless y'all hopefully this video helped you and if you're trying to make some type of decision similar to this out there hopefully it helps you leave some comments down below I like talking with you guys and if you have any questions or want to see some other videos let me know but appreciate you hearing me out and told the next video thanks

Channel: The Comeback Kid

Views: 182,992

Keywords: Why I Paid Off My $400K Mortgage, finance, mortgage, debt free, freedom, Top 5 Tips How To Pay Off Mortgage Early, dave ramsey, tips, why, no mortgage, cramer, mad money, how to, save money, time value of money, vanguard, 30 year fixed, how to pay off a mortgage quickly, strategy, How to pay off a 30 year home mortgage in 5-7 years, mortgage free, financial freedom, pay off mortgage early, blue collar, mortgage burn, paying off mortgage early

Id: 7auKqlZxXM8

Length: 12min 26sec (746 seconds)

Published: Tue Jun 04 2019