Are you thinking of paying off your house? Or have you recently hit the major milestone of mortgage freedom? Maybe you're simply wondering about life after the mortgage is paid off.
Well, I’ll tell you from experience that this can be a life-changing decision.
A few years ago, our family paid off our $200,000 mortgage, and we now live mortgage-free and completely debt-free. No payments to the bank, fewer worries about job loss or income drops, and there’s just something about owning your home outright.
5 Ways Life After the Mortgage is Paid Off Looks Different
After we paid off our house, we had a big decision to make … What do we do with all of our extra money?
Since we were making extra principal payments, we had around $35,000 extra to allocate each year. This was A LOT of money for us!
Well, here’s what we’ve done to build our wealth further, have more fun, and embrace exciting opportunities today.
1. Vacation More
The year after we paid off our mortgage, we traveled more than we ever have as a family.
- We went on an all-inclusive family vacation to Cabo San Lucas in the spring.
- In the summer, we visited the Upper Pennisula of Michigan.
- Southern California was our couple’s getaway destination in the fall.
- And to round out the year, we even went to Disney World.
Some of these vacations were supplemented by travel rewards and airline miles (and in the case of Disney World it was generous grandparents), but they wouldn’t have been possible without our mortgage freedom and the extra cash we had available to us.
Since we love traveling so much, we now allocate 10% of our annual budget specifically to travel. We automatically deposit money directly into our high yield savings account with Ally each month so we ALWAYS have vacation money available when we want it.
This summer, Nicole and I are headed to Europe!
Goodbye mortgage, Bonjour Paris!
2. Invest More
With more cash available, we had thousands of more opportunities to invest our money. After all, the best way to create the future you want tomorrow is to invest your money today.
Here are some of the routes we took for our investments:
We continued to max out my employer-sponsored retirement plan because of the 15% match I received on all contributions. By the time I left my job in 2020, we had a balance of nearly $200,000!
For a few years, we maxed out our Roth IRAs as well. This tax advantaged vehicle allowed us to amass a sizeable nest egg for our retirement as well.
Health Savings Account (HSA)
We learned the power of the HSA after paying off our mortgage. This savings and investment option allows you to sock away money for future health care costs. With the cost of health care rising more and more each year, we’re happy we’re planning ahead. We partner with Lively for our HSA.
529 College Savings
The total cost of public in-state universities for our children in the 2030s will be around $200k each! That’s why we’re investing for their future with 529 college savings plans. Instead of throwing it in a savings account, we’re investing money while they are young so we’ll be able to help them graduate student debt-free.
Taxable Brokerage Account
Outside of retirement, health care, and the cost of college for our kids, we wanted to invest for other future events in our life. Like early retirement! With our taxable brokerage account, we’re hoping it will provide us a bridge to lead us into full retirement. Collectively, we have around $75,000 in taxable brokerage accounts and our goal is $1,000,000 by age 50.
If these goals seem lofty, know that they are. But that's one of the best ways life changes after the mortgage is paid off: we have the financial freedom to work on other big money goals.
3. Save More
Outside of long-term planning, we were both ready to enjoy some short-term upgrades. We did this by saving cash automatically each month in our Ally savings account.
Ally’s “Buckets” feature made this process easy and fun. We could visually see how much we had in each “Bucket” and get excited as we were approaching our milestone goal numbers.
Outside of the vacation bucket which I already spoke about, here are some of the Savings Buckets we’ve been able to enjoy already:
A New (to us) Car
After 14 years of driving the same sedan, our growing family was ready for a new (to us) SUV. With around $30k saved up in one of our buckets, we recently bought a gently used Acura MDX and we love it!
An Updated Kitchen
During the pandemic, we were sitting around our house a lot and our curious minds found ways to improve it. Luckily, we have enough money in our home improvement bucket to pay for an updated kitchen. We created a new bar top and an overall open air feel to our first floor. It’s been so worth it!
We also bought some pandemic pets as well! Two hypoallergenic Siberian kittens are our kids' new best friends.
There’s something about these digital buckets of money–it feels like you are getting permission to spend and enjoy your money. It’s been a game-changer for our family in this mortgage-free stage of our lives.
4. Give More
Around the time we paid off our mortgage, I realized that we were only giving 1% of our after tax income. Now, there’s nothing wrong with that, but I felt like we could do more.
Jumping all the way to 5% or 10% sounded like the right move in theory, but in practice, it was a lot more difficult.
So we decided to ladder up our giving over the next few years:
- In year one, we made the goal of giving 3%.
- In year two, we went for 5% giving.
Each of these progressive goals, made the process more fun and we discovered some causes and charities that really moved our hearts.
Today, we do 10% giving, but with our own spin on it.
- 5% to charitable organizations and causes
- 4% to giving to family and friends (through gifts, cash and contributions to start their investment journey)
- 1% is given out randomly to our neighbors (through big tips or random acts of kindness)
In the beginning, giving away this much of our money felt very difficult. Now, it’s one of our favorite things to do with our money. It's definitely been a very positive way that life changes after the mortgage is paid off.
5. Take More Risks
Last year, I took the plunge into full-time entrepreneurship. I left my cushy corporate career to pursue my small business full time.
I could not have felt confident enough to do this if we didn’t pay off our mortgage early. Even if I completely screw up this whole digital entrepreneur thing, I know that we’ll never lose our house.
We own it outright and that peace of mind helps me rest easy at night.
I left a nice career with excellent benefits that paid me, oh, more than double what I’m making now as a digital entrepreneur.
But I’ll tell you, every minute that I’m able to produce my podcast, write an article, speak at a conference, coach couples on their finances and make videos … I’m happier than I’ve ever been working.
I never knew “working” could feel like this.
And now I’m determined to make it work. Just like our mortgage freedom goal, I’m going to dedicate myself to making the same amount of money I used to make in my corporate career.
It may take me 15 years (just like previous career), but I’ll be smiling during the entire journey.
What would life after the mortgage is paid off look like for you?
Please let me know in the comments below.
Im having a hard time going for it… I have the money ready in my brokerage account, I just need to pull the trigger and sell some of my investments to pay off the $180k I still owe.
I have been a big Ramsey follower but like I mentioned above, I think and think and think and just dont have the guts to do it.
I keep saying “once I make enough on my brokerage account to pay my house just from the gains, then I will do it…”
Hope that pretty soon I just go for it.
I totally understand your thinking here!
In my opinion, if you have enough put away for an emergency and for retirement, use your money to create more security and more happiness today.
Your version of happiness is more than likely different than mine. That’s what makes personal finance so fun — it’s personal!
I paid my mortgage off 2 years ago. I am 34 today. Had to sell a rental and used the proceeds to pay it off. Although I have not left my job. They provide me great health insurance and pension along with yearly raises and the job is pretty easy and sometimes challenging. I literally live off $12,000 a year with my expenses and that gets halved to $6k because I have a partner who also works. we save about 50k a year. I have solar , an electric car with no payments. We have 0 debts and I am constantly looking for ways to cut costs. Purchased Nebia shower to cut the cost of water bill and use more efficient washers, dryers, Ac unit and dishwasher. Don’t leave lights on unnecessarily. So even though I am financially free in this sense. My habit of cutting cost has not changed .
It’s amazing how much you can save when you’re intentional! Congratulations on this incredible success in your 30’s Adrian!
Thank you. Like yourself we have traveled a lot as well. Even before paying off the mortgage. But life has changed in a way that is amazing. I don’t have a fear or losing my job and can work part time if I want. Since the last post I have gotten substantial raises. Now we save around 60k a year. Life is amazing. Will never go into debt again. Thanks for sharing your story with us.
That’s incredible Adrian!
After doing what you’ve done, there’s no going back to the old ways right?!
This is awesome… Definitely giving would be a massive priority and a lot more holidays With the family (wife, two young kids) around our own country (New Zealand) and other parts of the world when things open up. I enjoyed this post… Very motivating. We are about two and a half years away from being mortgage-free so getting there!
I love that you are thinking about those big goals! That’ll keep you motivated over the next 2 and a half years.
Come back and share with us your progress. I’m excited for you!
Love your giving strategy!! Esp how you worked it up so high gradually.
Thanks J Money! We are having a lot of fun with it. Our favorite is giving random big tips during the holidays.
Great post! Looking forward to the day when I can say I am mortgage free. I am definitely finding myself more risk adverse after taking on a mortgage, have to make sure the mortgage is paid after all!
I hear ya! After too many first-time homebuyer blunders, I wanted to do the process differently.
I feel much more relaxed with my home now.
Good luck with your mortgage-free journey!