Burn Your Mortgage
Most of us aspire to own our home. In doing so, we need to burn our mortgage at some point – hopefully before retirement. Some Canadians yearn for a bit more – they want to kill all debt including their mortgage as soon as they can – maybe in 10 or 15 years. They do so because no debt likely provides them with more options to earn an income but also spend any income earned. Further still, some Canadians want the mortgage dead far sooner than a couple of decades – they want it gone in a few years. This is largely out of reach for most millennials though. Enter however – Sean Cooper.
Sean’s mortgage story is extreme, motivational, and polarizing but very real. Sean Cooper killed a $255,000 mortgage in just over three years. How did he do it? What sacrifices did he make? What did Sean learn about mortgages and money during this time? Burn Your Mortgage tells that tale.
I got some time with Sean recently to ask him some questions about this book, his journey to a debt-free life and what he’s learned about himself through it all. Thanks to Sean I’ll be giving away one free copy of Burn Your Mortgage to one lucky reader. Check out my interview with Sean below.
Sean, welcome to the site. You wrote in the book:
Talk about the mortgage for a bit. Why do you feel it held you back? Was homeownership right for you in hindsight?
Life can be stressful, especially when it comes to our finances. If you have a massive mortgage, it can limit you from realizing your lifelong dreams, mainly financial freedom. It can stop you from accepting a less stressful job that you truly enjoy that pays less, travelling the world, or leaving the workforce altogether. The biggest fear of a homeowner is losing their job. You may not be particularly fond of your job, but you may stay there because you have a mortgage to pay. This can make you feel unhappy and trapped. If you’re laser focused and pay down your mortgage quickly, you can live life to its fullest and start crossing items off your bucket list, without the worry of your mortgage constantly at the back of your mind.
You have to pay money to live somewhere whether you rent or own. At least when you own a home, you’re building up equity. Your mortgage payments stop once you’ve paid it off. You’re left owning a valuable assets free and clear – the same can’t be said when you rent. Now that I’ve paid off my mortgage, with my newfound freed up cash flow, I’m able to work less and travel to all the places I’ve ever wanted to visit.
I thought your take on paying down your mortgage vs. investing was reasonable – it is a risk management approach. I have always felt the same. Did you ever feel compelled to invest while paying down your mortgage? Did you even keep an emergency fund? What’s your advice to millennials – should they focus on debt payments or saving for their financial future?
No, I didn’t feel compelled to invest. A lot of people like to argue it makes more sense to invest rather than pay down their mortgage – they can achieve a better rate of return by investing. While that may be true, there’s no guarantee. That’s why I prefer the risk-free guaranteed rate of return paying down your mortgage offers.
Yes, I kept an emergency fund of six months’ living expenses. I’m glad I did because I had to spend $25,000 one year on home renovations. If you’re buying a home, I’d encourage you not to put every spare penny toward your down payment. The last thing you want is to be caught in a cash crunch if your roof starts to leak or your furnace conks out and be forced to go into debt.
If you’re a millennial, I’d encourage you to focus on paying down any highest interest debt you may have, such as credit cards. If your student loan is on its last legs, focus on paying it off, but if you’re years away from paying it off, that’s when it can make sense to buy a home before you’re debt-free, especially in cities like Toronto where home prices are rising faster than wages.
You list “25 ways to save big” in your book. Name a few of the most important ways and why Sean.
I’d encourage you to keep an eye on recurring bills. Monthly recurring bills like those for your cell phone, gym membership and cable can take a bite out of your budget. $30 a month may not seem like a lot for a gym membership,but over 30 years that adds up to a whopping $10,800. Still think that’s pocket change?
Here are three of the “25 ways to save big” I discuss in my book:
Sean on saving big:
- Credit card interest: Follow the golden rule of using credit cards wisely and spend only what you can afford to pay off in full once your credit
card balance comes due, and you will never pay interest.
- Premium cable packages: Do you really need 500-plus channels? Consider downgrading to basic cable or cut the cord altogether.
- Gym memberships: I’m all for people going to the gym and getting in shape, as long as they show up. But two-thirds of people with gym memberships never step foot inside a gym. Try exercising with a buddy to keep each other motivated.
You wrote in your book “achieving financial freedom is all about trade-offs”. What was your biggest trade-offs? What regrets if any do you have about them?
My biggest trade-off was time. Between my full-time job and side hustle as a personal finance journalist and landlord, I typically worked 60 to 80 hours a week. What kept me going was that I knew it wasn’t forever. I saw it as short-time pain for long-term gain. By working hard for just three years, the payoff would be enjoying financial freedom for the rest of my life. Perhaps I could have paid off my mortgage in five or six years and had more fun along the way, but now that my home is paid off, I have the rest of my live to enjoy.
You’re now mortgage free. Now what? What new financial goals have you set for yourself: this year? 5-years out?
I’m a big fan of goal setting. When you have a specific goal, it motivates you to get out of bed each day and get one step closer to achieving it. As I mention in my book, the first step in achieving financial freedom is a paid off home. However, if all your money is in your home, you can find yourself, “house rich, cash poor”. That’s why my next goal is to maximize my RRSP and TFSA. I’m also going to make travel a bigger priority by planning one big trip a year. A long-term goal of mine is to be a millionaire by age 35.
Finally, what elevator pitch do you have for your book Sean? What makes your book unique for millennials or others?
Burning your mortgage is a liberating experience. It feels like the weight of the world is lifted off your shoulders. I may have paid off my mortgage in three years, but that’s probably not realistic for most people. In my book, I share simple yet effective lifestyle changes that anyone—from new buyers to experienced homeowners—can make to pay down their mortgage sooner. You don’t have to go on the “Kraft Dinner diet” to be mortgage-free. My book shows you how to pay off your mortgage at your own pace and live well while doing it on your path to independent home ownership.
My book speaks to the current challenges millennials face getting their foot in the door of the real estate market. As a millennial, if your parents aren’t in the financial position to help you, there are alternatives to the “bank of mom and dad,” such as buying with family and friends. My book shows that the dream of homeownership is alive and well. There is help to equip millennials with the tools they need to come out ahead in the real estate market.
Thanks and good luck in the future Sean. I appreciate you being a fan of this site.
What questions do you have for Sean? What do you make of his polarizing Burn Your Mortgage journey?
You can buy a copy of Burn Your Mortgage here. Want to win a copy instead? Thanks to Sean I have two (2) copies to giveaway to lucky readers. Please enter the draw below and I’ll select a couple of names at random later this month.