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February 5, 2018

Is Debt Freedom Impossible in a High Cost of Living Area?


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This week’s question comes from Michelle in response to an article I wrote about paying off our mortgage early:


Hi Andy,

I find myself in a unique position.  I understand the steps you've outlined in your mortgage pay off article. I've read a few books on that process by Dave Ramsey.  

What advice would you give to someone who lives in a very high cost area?  

Both my husband and I make decent salaries that would be considered upper middle class in most areas but where we are they are just average middle class. Housing costs are very high in my area and property taxes/insurances are around 15K/year. I've read so many articles on the subject but they always quote mortgages for homes around 200K. Where I live you couldn't even get a 1 bedroom apartment for that cost.  

I want to sell my current starter house (that I paid 378K for over 10 years ago) and upgrade for my growing family but a 15-year mortgage (with 20% down) with taxes will put us around $4600+ in payments, with nothing extra to principal, and limiting our potential to save.  

It seems impossible to get ahead and keep my children in a nice neighborhood near family.  Please don't misunderstand “nice” does not mean luxury, this price is about average.  

Is Debt Freedom Impossible in a High Cost of Living Area?
  • We don't live lavishly, have any car payments, or take big vacations, I have about $500/month in student loans.  
  • We have a 30-year mortgage now that I pay bi-weekly and pay about $500 month extra toward principle, my total payment is about $3700/month for a basic 3 BR ranch house that we've put a lot of work into ourselves.  
  • I'm also currently paying about $1100 for school tuition for my children (5 and 3) because the schools where I live now are not so great.  

I would really like to live debt free but feel like it's impossible.

I appreciate any advice you have.




My kids are 5 and 3 too. I’m right there with you, Michelle!

If your major motivator is to live debt free, have more options in your life (vacations, family fun) and be less stressed about money, I have a 5 thoughts …

1. Consider Moving to a Lower Cost of Living Area of the US

When the family size grows and the desires for the future do as well, a lot of families move to a place where the taxes are lower and you can “get more house for your money”.

It sounds like the part of the country you live in will make that difficult for you right now and in the future. There are lower cost of living areas in the US that have excellent schools (no more school tuition when they hit Kindergarten), beautiful “reasonably” priced homes and your taxes could be 1/3 or less of your current cost.

2. Make More Money

If moving is completely out of the question (family, specific job skill set, etc), you need to find a way to bring in more money to keep pace with your lifestyle.

Ask yourself some questions:

  • Am I due for a raise at work? If so, ask for it. Make sure you lead with your accomplishments and your contributions to the company instead of your personal need.
  • Do I have upward mobility in my career? Do you see a path for you to continue making more money in your current career path? If not, I’d consider seeking out another position to increase your income.
  • What can I do on the side to make money? Do you have a hobby that you love that you could pursue during nights and weekends that would help you pay down your student loans? A side hustle is a great way to pay down debt, have some fun and create some freedom in your life.

3. Reduce Your Expenses

You may feel like you’re not living lavishly, but it couldn’t hurt to do an analysis of your overall spending to see where you might be able to reduce, trim and save. If you're not already budgeting, I'd recommend using a tool like Mint or Tiller to get you started.

Look at all of the line items in your budget and prioritize what is most important to you. Consider eliminating or reducing some costs to give you some breathing room.

Nicole and I changed our grocery spending last year and saved $3,500. We cut cable and saved over $1,000. Little things like this could help you at least pay down your student loan debt.

4. Analyze Your Current Debt Pay Off Strategy

It looks like you’re paying extra on your mortgage right now.

Is your interest rate higher on the student loans than the mortgage?

If so, I’d recommend paying down the student loans first before paying extra on your mortgage.

5. Consider Refinancing the Loans

Depending on your interest rate for both the mortgage and the student loans, it may be time to consider refinancing to a lower interest rate.

You could save thousands of dollars per year with some simple button clicks.

It may seem off for me to say this given that we’ve just paid off our mortgage, but there’s nothing wrong with having a mortgage. You don’t need to pay it off especially if you have a low-interest rate. Millions of Americans have mortgages for over 30 years and still have happy and healthy lives.

We chose to pay off our mortgage, but that doesn’t mean that you have to. There are many other ways to build wealth for your family and experience financial freedom.

I hope these ideas help you and your family Michelle!

Money Master of the Week

Liz from Connecticut

Congratulations to Liz from Connecticut for increasing her net worth more than her income in 2017!

On her call, she mentioned three net worth-boosting strategies:

  1. Paying down the mortgage
  2. Living on 50% of her income
  3. Investing in the stock market during this major bull run

Apparently Liz is a big fan of low-cost index funds. These are excellent ways to keep the fees low, diversify your holdings and keep investing simple.

Liz from Connecticut is our Money Master of the Week!

You can learn more about Liz and her breadwinning, mortgage crushing ways at Chief Mom Officer.

If you have a financial victory you want to share on this show, please leave me a voicemail (or email) and include the following: name, location, your big win, how you did it and your plans for the future.

Your story will inspire others to save more, make more and plan for their family’s future.

MKM Challenge

This month’s challenge is inspired by an article I read by Tom Sylvester.

In his article, Tom talks about the importance of physically scheduling time on your calendar for learning.

This could be learning a new skill, learning how to handle your money better, learning how to grow your relationship with your spouse and your kids. If we’re not learning, we’re not growing.

It’s not enough to just learn. We also need to allow time to implement what we’ve learned.

I’m a huge violator of this. I absorb books, podcasts and articles, but quite often I don’t allow myself time to carry out what I’ve learned. Knowledge without action is … useless.

What area of your life do you want to improve?

  • Are you an entrepreneur that wants to grow your small business?
  • Are you looking for ways to grow your net worth?

Once you decide what your focus area is for the month, find a resource that supports that growth. To help you, here are some resources I recommend:

5 Books to Inspire the Entrepreneur Inside You

These 5 Books Will Skyrocket Your Net Worth

It doesn’t have to be just about wealth building. Your learning opportunity could be health-centric, marriage focused or improving your relationship with your kids. Anything you want to improve on this month.

For me, I’m going to read “How to Talk So Kids Will Listen & Listen So Kids Will Talk” by Adele Faber & Elaine Mazlish. I want to become a better father.

I've Got My Book. Now What?

After we find our resource, it’s time to block off time on our calendar to learn.

When is the best time for you?

Are you a night owl? A morning person?

Physically block off the time on your calendar so you’re making the commitment. If you share a calendar with your spouse, include it there so they’re supporting your desire to improve yourself.

Block off time for implementation as well. Let’s not just read the book, put it down and say “Well, I did that!”

Make some time to implement the ideas that resonated with you. Put that knowledge into action.

You’ll be healthier, wealthier, happier and smarter because of it.

The challenge has been laid down my friends … Who is in?

Support this Show

If you enjoyed this podcast episode, here are some excellent ways to support the show:

I truly appreciate the support everyone!


I’d love to hear from you!

If you’d like your question featured on the show, reach out and let me know. It would be my honor to support you in your journey toward financial freedom.

Leave me a voicemail or connect with me on TwitterFacebook or shoot me an email.

Carpe Diem Quote

“Don’t let your learning lead to knowledge. Let your learning lead to action”

-Jim Rohn

Do you live in a high cost of living area?

Andy Hill

Andy Hill, AFC® is the award-winning family finance coach behind Marriage Kids and Money - a platform dedicated to helping families build wealth and happiness. With millions of podcast downloads and video views, Andy’s message of family financial empowerment has resonated with listeners, readers and viewers across the world. When he's not "talking money", Andy enjoys being a Soccer Dad, singing karaoke with his wife and relaxing on his hammock.


    • Yes! The cost of living there makes it difficult to get ahead, but Northern California sure is a beautiful part of this country. I understand the appeal.

  • This podcast is really timely for me. I live in a HCOL area (Los Angeles), and it’s all too easy to throw up one’s hands and conclude that one can never become debt-free (especially mortgage-free). Thanks for the inspiration to take a hard look at our lifestyle inflation-type expenses instead of feeling helpless.

    • I’m glad it resonated with you Frieda! We’re in control of our situation, our money and our future, right?!


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The Marriage Kids and Money Podcast is dedicated to helping young families build wealth and happiness.

With over 400 episodes and counting, we share interviews with wealthy families, award-winning authors, and personal finance experts to help you find your version of family financial independence.

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