Paying Off the Mortgage: A Journey of Financial Freedom and Unexpected Realities
The Dream of Financial Freedom
Paying off our mortgage early wasn’t as financially freeing as I’d hoped. It’s a strange feeling to admit, especially after working so hard to achieve what many consider a milestone of financial independence. Our financial advisor had recommended keeping the mortgage and investing the extra money instead, but I was determined to eliminate the burden of a monthly payment. I remember the exact moment I paid off my house—I was sitting in a Costco parking lot, feeling an overwhelming sense of elation. With the extra $1,100 a month, my husband and I could splurge on fancy dinners, new clothes, and even a better car. We also planned to save more and start building wealth. At 30, I believed paying off the mortgage would drastically change our lives. Six years later, the reality has been less transformative than I imagined.
The Journey to Mortgage Freedom
We bought a foreclosed property in 2011, taking advantage of low house prices and interest rates following the housing crash. Our mortgage was $150,000, and we were determined to pay it off quickly. To achieve this, we took on side jobs, refinanced from a 30-year to a 15-year mortgage, and even knocked out more than 30% of the loan in just three years. When I received a settlement check from a bad accident, it felt like the final push we needed to pay off the remaining 80% of the mortgage. But as the opportunity drew near, we hesitated. We met with a financial advisor who advised us to invest the settlement money instead of paying off the mortgage, arguing that the 3.25% interest rate on our mortgage was relatively low and that investments could yield higher returns. I didn’t like his advice, but he turned out to be right.
Compromising on the Path to Financial Freedom
The advice from our financial advisor twisted my stomach. I wanted the peace of mind that came with owning our home outright, the “financial freedom” that personal finance experts like Dave Ramsey often talk about. But we eventually compromised. We used part of the settlement money to max out our Roth IRAs for the year and set aside three to six months of expenses in a savings account, as our advisor recommended. The rest went toward the mortgage. Within the next three years, we had it fully paid off. Initially, I was thrilled to have an extra $1,100 each month. I even budgeted it all using the EveryDollar app and opened investment accounts on Robinhood and Betterment, determined to maximize our savings. Early retirement, exciting vacations, and a new car felt within reach—until reality set in.
The Harsh Realities of Life Without a Mortgage
Paying off the mortgage didn’t feel as financially freeing as I’d hoped. Life has a way of throwing unexpected expenses your way, and just because we no longer had a mortgage didn’t mean our financial obligations disappeared. A new water heater for the house, a catalytic converter for the car, and insurance deductibles for my family were just a few of the costs that piled up. These ordinary expenses didn’t vanish just because we’d paid off the mortgage. I’m not complaining—it’s just that I hadn’t realized how quickly the money we saved would get absorbed by other bills. Additionally, our financial advisor’s advice proved correct. The money we invested in our Roth IRAs grew at an 8% rate, and if we had kept the mortgage and invested the settlement money, the returns would likely have been even greater.
The Hidden Costs of Homeownership
While we no longer had a mortgage, we still had to pay ever-increasing property taxes and homeowners insurance. These bills add up to the equivalent of a few months of our previous mortgage payments every year. It’s not that I’m ungrateful; I just hadn’t fully considered how the savings from eliminating our mortgage would often be redirected toward other expenses. However, one undeniable benefit of paying off the mortgage is the peace of mind it brings. When my husband was laid off in 2024, we were able to survive on a tight budget, cutting unnecessary spending and living off our savings. We managed to stay out of debt during that difficult time, and for that, I’m incredibly grateful.
Reflections on the Decision
Looking back, I wish we had listened to our financial advisor more. The settlement money could have been invested to generate higher returns, and the 3.25% interest rate on our mortgage was relatively low. However, paying off the mortgage also gave us peace of mind, especially during uncertain times like my husband’s layoff. It’s a trade-off that’s hard to quantify. While our financial advisor was right about the math, the emotional value of owning our home outright can’t be ignored. In the end, the decision to pay off the mortgage early was a compromise between logic and emotion, one that taught us valuable lessons about money, freedom, and the unpredictable nature of life.
