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.
Interview Q&A
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?
Giveaway
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.
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've surpassed my goal and now investing beyond the 7-figure portfolio to start semi-retirement with. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
I love the idea of having your own place, free and clear.
Only thing that have held me back for some time is that, if we’re putting so much of our money in one asset (and an illiquid one), it has to be perfect for our needs over the long term.
Close enough for transportation to any job we might take, large enough for the family size we expect to have, but not too large with unused rooms… so many things change during our 20s that I would have been affraid to miss an opportunity by buying too soon.
I also think you could buy for a few hundred grand worth of REITs, and pay the rent from the monthly distributions until you know where you really want to live.
But at some point, and this might be a different time and place for everyone, you’ll be glad to find one place to call home for a long time, where you’ll enjoy living no matter what happens next.
re: REITs. This is what we prefer to do now…own REITs vs. being a landlord.
https://www.myownadvisor.ca/looking-income-dont-want-landlord-try-reits-101/
Awesome interview, Mark.
Sean demonstrated that a little sweat, hard work, hustle and some old-fashioned stick-to-it-iveness combined with a frugal lifestyle and laser-sharp-focus on goals can help ANYONE overcome financial obstacles. My own mortgage started in 2015 and I enjoy reading real stories about Canadians dealing with their mortgages.
Thanks Joel. Sean’s goal-focused approach is a good life lesson (I think) even though I wouldn’t necessarily follow the same path (and have not to date).
Cheers!
Twetted facebooked and emailed enter me in whoot whoot
Many innovative ways to tackle the challenge of home mortgages.
There are! Thanks for writing.
A 255k mortgage is pretty easy to do in three years when your income is over 200k/year. I don’t understand how anyone would find this surprising.
Well, true, if he hustles and all the money/every cent is directed to his mortgage, then yes, he’s definitely on a fast-track to mortgage burning. Thanks for reading Rob.
There was a great article in the NP on the same thing, single guy buys house in TO, average income, sub 100 grand, anyways he mangd to get rid of his mortgage in about 4 years, and everyone, writer and commenters could only focus on how he re-used ziplock bags and not a single person noticed he disn’t have a car, one of the many reasons he was anle to pay off his mortgage so fast.
Rob to answer your question, not so simple earn more spend more. From Financial Samarai Scraping by on 500,000 US a year.
http://www.financialsamurai.com/scraping-by-on-500000-a-year-high-income-earners-struggling/
Read the comments as well!
Oh the book gets rave reviews!
Some people definitely struggled with Sean’s decisions but I do commend him for setting a goal and working very hard to meet it.
I remember reading that article. A great read and thanks for sharing Rob.
To the FIRST Rob – Please do not diminish Mr. Cooper’s accomplishment. Paying off a $255,000-mortgage in three years IS an achievement because he did it while earning an average income and living within his means. He did not receive an inheritance or win a lottery and he does not work in the oil patch.
Sean Cooper sacrificed three years of his life to pay down a $255,000-mortgage on a $425,000 Toronto home he bought in 2012. In 2012, his fellow millennials complained about how difficult it was to buy a home in Toronto. For these reasons Sean deserves our full respect for his accomplishments and he is an inspiration to ALL Canadians (not only millennials) whose aspirations include home ownership and wealth accumulation.
Agreed Joel, I think it’s a great accomplishment even though I wouldn’t do it his way. I do respect Sean for having a goal and working very hard to accomplish it. Good dedication, even though it’s not a path I would follow nor really recommend.
At the end of the day though – there is nothing wrong with renting. Far from it.
Great story and I would love to hear more on how Sean did it. Similar position being a millennial, but we try and implement the ‘myownadvisor’ approach of Investing, while tackling debt.
Thanks George. Curious about what questions you have for Sean, and myself actually. Do share.
I’m a big fan of doing a couple things really well (e.g., max out TFSA(s), make mortgage prepayments) vs. trying to do it all. Start small, build from there. What are you working on in particular?
That’s awesome Sean! We did the same thing with our $265k mortgage but spread over 5 years along with investing. I’m only 40 so I’m all caught up on my RRSP and topping up my TFSA in the next couple of weeks about $50,000 so then we can focus on other investing strategies. Best decision we ever made. Now we can enjoy the rest of our life without worrying unless of course we buy another home but we hope to save up cash first.
You are another example that has paid off his mortgage before investing. Well done. I know of others who have done so as well.
I’m not a fan of this philosophy. Sure, paying off the mortgage is a great goal but there has to be balance and flexibility to any plan. There may be occasions where a contribution to an RESP or RRSP might be preferential.
FWIW, we’re investing and paying down debt at the same time. I figure while being mortgage free is very good I also feel time invested in the market is your friend. Your never get back those years of compounding power.
Exactly. Sometimes the market may be down and an investment could be a better plan. If the market is crazy high, maybe look at accelerated mortgage payments first. Or if a guy has a windfall year due to overtime or backpay that might encroach on the 26+% federal tax bracket, an RRSP contribution might be a better plan for that year. Balance and flexibility. Sure it doesn’t get the hyper-media attention or sell books, but it gets the job done in a more realistic manner for most people.
Yup. I don’t think the focus always has to be on the mortgage debt but to each their own. I do commend Sean for having a goal and working hard to achieve it. Nothing wrong with that. If he is happy now, that is all that matters.