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The 8 Insights you may Realize when you try paying off a $255000 Mortgage Debt in 3 years

Sean Cooper is a weird guy who did something weird.

While normal folks like us buy a house, we make a smaller down payment and take years to pay off our mortgage. For some people they will drag it out to 25-30 years for as long as possible.

For Sean, who lives in Canada, he bought a $425,000 house and took on a mortgage debt of $255,000.

He set himself a target to pay off the mortgage as soon as possible.

All it took him was 3 years to do that.

However, this involves a fair bit of sacrifice:

  1. He works as a $75,000/yr  full time analyst in a pension firm
  2. Concurrently, he works on weekends and evenings as a free lance financial writer
  3. Concurrently, he works as a $13/hr clerk in a meat department in a grocery store (note that he is a vegetarian)
  4. His home consist of 3 bed room and a basement. So he decides to stay in his basement and rent out his 3 bed rooms
  5. In total his income is $100,000/yr
  6. He bikes to work
  7. He brown bag lunch to work
  8. He made dinner at home
  9. Before all this, he saves the $170,000 down payment on his own
  10. While living with his mom, he used to pay her $600/mth for rent

Not surprisingly, when his article first came out, a lot of people was rather ANGRY about his situation.

  1. They pointed out how big his down payment was indicating he must have gotten the money from somewhere
  2. They say he has a cushy job that pays well
  3. They say he took three jobs, while other people are struggling to get one job
  4. They say he is not going to find a girlfriend with his frugal lifestyle
  5. They say that he isn’t satisfying the “other aspects of his life” and he does not have the time for it

I thought its ridiculous to not support him. Here is why.

1. He has established where his Poverty Baseline is

What is the poverty baseline? It is the level of lifestyle that he requires to ensure he has enough to keep life going, not suffer a mental break down because life is too terrible and how much he spent in doing that.

By finding out that baseline, Sean knows that next time if he has a crisis, or that he needs to take increase risk with his lifestyle, where can he go back to so that he cuts away a lot of the things to focus on what he most values in.

Note that this is not just money, but the lifestyle that he does not go insane. A person would likely not last over 3 weeks if the quality of life is so bad that he goes crazy.

2. He has a vastly unencumbered life now

If you look at why people needs to have a job, why people are stress about not losing their job, why people are stress about earning more, it is to pay off all sorts of debt.

One of the biggest is the mortgage on your home.

Another stress in life is not having a roof over your head and always needing to shift around.

He manage to settle this in 3 years.

This means that if he loses his job, together with knowing his poverty baseline, he is in a much less stressful position then a person who still has a big mortgage to service, and failure which, would get his home repossessed.

3. He spent only 3 years out of a normal 40 year working life doing this!

This is also a concept that many failed to grasp.

One of the biggest push backs to not trying a certain change in nutrition to improve a person’s wellness is that they cannot get over that they can’t eat certain food for the rest of their life.

In the first place, they do not even know if things will work in the first place without trying!

For a lot of things, this “life experiment” is just for a short duration and if you see life as various short controlled experiments, the cost of failure or change is very low.

If we look at it another way, if you could spend 3-5 years out of 40 years correcting a problem and never be bother by it again, would you do it?

For Sean, after a 3 year effort, he still has possibly 37 to 57 years to do all the things the people criticize him about.

4. Would a man with a fully paid house, lets you stay at home and have 3 different ways to earn money be appealing to woman?

One of the arguments was that Sean wasn’t socializing enough to satisfy the traditional role of a normal guy. Woman will also be put off by his lifestyle.

That may not be a factor now that he has paid off his mortgage.

Most woman with a sense of materialism would have see it as a big factor that, they do not have to o-fund a mortgage, which will mean money for other stuff.

It would also be easier to bridge the idea as a stay at home mom to Sean given this unique situation, since Sean will not have much excuses!

The fact that he made some rather sound decision to have a much unencumbered life also makes him able to channel the cash flow from income that was originally meant for mortgage to paying for more expensive dinners and holidays (even though I wonder if that would attract the right kind of lady for himself)

5. In the worst case, you can always scale back

When you were asked whether you can do this, most of the time you fear that you have to do this for a long time and eventually you end up like a failure.

The reality is that, most often, you learn about what you value the most and what you value the least.

You also in the end realize you cannot be THAT frugal but you can still be just as frugal and pay off the mortgage earlier but not as early as Sean.

You don’t finish the race at record time, but you still finish the race pretty fast and you learn something about yourself.

6. Have a blast for the next 2 years spending the “mortgage payment”

With a 25 year mortgage at 2.1% (this is hypothetical), paying off early would mean Sean saves on a monthly payment of $1070/mth in cash flow from his working income.

Given the kind of tight frugal life he lives, he has the license to spend within controlled parameters in a lavish manner.

By that it could be taking $500/mth out of every month for 2 years and go crazy with it.

This ensures that this lifestyle is not forever, and further asks the questions does spending lavishly on experience value adds to him as a person.

In fact Sean has stated he would like to do a fair bit of travelling.

7. Saving $70,000 in interest

Hypothetically, when you pay off your mortgage fast, and you do not grow your wealth, the interest saving is a form of “interest earned”.

Compared to the folks that drag out their mortgage, the potential savings is a large chunk of $70,000 in interest.

Over time this cash flow can be better deployed to wealth building for his financial independence

8 He learns that he is likely Financially Secure

With the mortgage paid off, it means that if he is retrenched, he is not encumbered with a large mortgage debt that requires a cash flow.

With his rental cash flow from the 3 bed rooms and frugal lifestyle, he is likely financially secured, that is the cash flow from his wealth machines are able to meet his subsistence living expenses.

And that is a very powerful realization, when it comes to how you could potentially live the rest of your life.

Could you attempt something like what Sean did?

I think there is a fear whenever we are put in this position where someone asks us to change how we do things, especially when it is different from the herd.

People take these things too seriously. They see this as a matter of life and death.

Sometimes it is not so extreme.

Where you eventually end up is probably in between.

We should all attempt more controlled life experiments.

We might find out more about ourselves through these means instead of doing what is comfortable to us.

Sean did not write this but he should be rather in tuned with what it takes to be wealthy and financially independent.

I firmly believe if you attempt to find your poverty baseline, you may eventually shift how you live your life.

You can read more about Sean’s story here and here.

Have you tried speeding up your mortgage clearance or did something so extreme? How did it turned out?
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Tuesday 8th of December 2015

This is an inspiring article for new homeowners. He could be a model that some may want to follow. However, note that some of his circumstances are important determining factors that make his ability to repay the loan in three years possible e.g. being single, no dependents, having multiple jobs, personal traits like high self-control and ability to delay gratification. These traits and circumstances in one unique package enables him to commit to his goal of paying housing loans for three years. He is probably one in a thousand, or one in a million.


Wednesday 9th of December 2015

hi Jomel,

this person is definitely an outlier but then again alot of us especially my readers at investment moats are outliers as well!


Sunday 6th of December 2015

Great article. It is always about delayed gratification.

But i also agree on positive debt, if you can get a higher returns than your loan interest....

I hope we have more examples from Singapore so we can relate closer to :)


Monday 7th of December 2015

hi, we can have but they have to wait until 5 years is up sill its an uncomfortable actioin to rent out that not many willing to take


Sunday 6th of December 2015

I think Sean has done very well to clear his housing loan asap.

Once his house is fully paid, he can rent out some of his rooms and the rental collected will be his income.


Sunday 6th of December 2015

Hi Jasmin, he has already rented out all his places!


Sunday 6th of December 2015

Not saying going debt free is wrong obviously but here is an alternative point of view: leverage is the best way to increase returns on your investments. And a housing mortgage is the cheapest, easiest loan an individual can get in his lifetime. Hence it could be more profitable to borrow as much and repay as slowly as possible on a cheap house loan and use the excess savings on higher returns investments. Not saying this is a strategy for everyone but this is something to consider. Debt isn't always bad.


Sunday 6th of December 2015

Hi Pierre,

I think that my analysis leans much towards clearing debt is always right. I written in the past that if you drag it out, when you know how to build wealth, it is actually better! Having said that, you have to agree that some people have a greater aversion to debt then most other people. No matter how we show them the rationale of leverage, they will still be uncomfortable.

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