## Thursday, October 9, 2014

### Why We Paid Off Our Mortgage

My husband and I paid off our house in six years of marriage. We owed \$160,000 on our mortgage at the time. I also owed about \$6,000 for school loans that we paid off within the first year of marriage. Scott (my husband) had some school loans but they would be paid off through a grant program as he taught at a low income school district in Ca. That was all our debt. We didn't, and still don't, do credit cards and we pay cash for vehicles.

Early on we wrestled with the idea of paying our house off because of the tax deduction we got for having a mortgage. Dave Ramsey helped us out with that decision though:

"If you have the opportunity to pay off your home and you don’t pay off your home in order to keep the tax deduction, that would be an indication that you are poor at mathematics. Let me help you with the mathematics on this. Let’s say you have a \$200,000 mortgage at 5% interest. If you have a \$200,000 mortgage at 5%, that would be \$10,000. We have a \$10,000 tax write-off because we have a \$200,000 mortgage at 5%. That’s a tax deduction, meaning if that couple makes \$75,000 a year and they take a \$10,000 tax deduction, they don’t pay taxes on \$75,000. They instead pay taxes on \$65,000. If you do this weird Dave Ramsey thing, though, and you pay off the house, you no longer pay taxes on \$65,000 because you would not have a tax deduction. You’d have to pay taxes on \$75,000. You’re in a 25% tax bracket if you make \$75,000 a year. That \$10,000 a year that we’re talking about is taxed at 25%. By paying off your home, 25% of that \$10,000 that you’re going to have to pay extra taxes on is \$2,500. In essence, you lost a \$2,500 savings on your tax bill, but you gained \$10,000 by not having to pay it to the bank. A \$10,000 tax deduction is the same thing as saying, 'I would rather give Countrywide \$10,000 than give the government \$2,500.'"

In other words you would be saving \$2,500 to spend \$10,000... that don't make no sense!

Even aside from Dave Ramsey's advice, it sickened Scott and I to see how much we would actually pay the bank at the end of our 30 year mortgage. Our paperwork showed that we would end up paying them back OVER \$300,000!! Crazy! We would lose about \$150,000! Imagine what our family... any family... could do with \$150,000! We'll keep that for ourselves thank you.

The next thing that was appealing was just the THOUGHT of being DEBT FREE!!! Oh what a joy that would be to owe no man anything! Now that we are living that debt free life I can tell you there is so much freedom on the other side of owing people money.

The final thing for me that made me want to pay off our mortgage and be officially debt free were these seven simple words from Proverbs 22:7: "the borrower is slave to the lender."

I don't want to be a slave to anyone but Christ.

I will be posting again some time next week on some tips/how we did it practically on one income!

Here is the link to HOW we paid it off!

1. We really want to do this but it's going to take longer than one year, 10 is our goal...how did you pay off \$166000 in one year?

2. Sorry! You said six years that make more sense! I thought you might be robbing banks :)

1. ha! yeah! I would have to rob a bank to do that in a year :)

3. Proud of you both! :-) We are working on getting Debit Free too! Listening to Dave Ramsey over the years, we have been able to pay cash for two vehicles, and our tent trailer! I look forward to the day we can say we are debit free!

We were able to see Dave Ramsey in Portland, Oregon a few years back. We had two extra tickets...but, no one wanted to go. Few people said, “You will never be in debit free”. Well maybe they won’t, but we plan on being debit free! We both learned so much more that evening. Just think how much less stress you will be under, too! I agree with you Katie, I only want to be in debit…to Christ!

1. that's exciting Kandie! you got this :)

4. If you paid off your mortgage because you didn't "want to be a slave to anyone but Christ," does that mean that people with mortgages are slaves? What about renters? Are real estate agents and bankers causing people to be enslaved?

1. This comment has been removed by the author.

2. The verse says: "the borrower is slave to the lender." So if someone lends you money, according to this verse, I would say you are a slave to that lender. If you are borrowing from the bank then they are lending to you and according to this verse, you are a slave to them. In a rental situation you are not borrowing money, therefore no one is lending you money, therefore according to this verse you are not slave. People become enslaved to whatever they are in-debt to because they owe whoever they borrowed from. I am enjoying the freedom of not being a enslaved to the bank anymore.

As Christians Christ paid a debt we could not and we are enslaved to Him for that payment but what better Master can we serve than Him? :)

Thanks for stopping by!

5. Being debt-free is something that everyone aspires to; and if they are, they'd want to keep it that way. It's not only to be financially free, but to be free to do everything they please. And paying off the mortgage at a timely manner is one step to achieving it. It’s not easy. But if one has a good plan and a reliable person to advise them on such matters, they might be able to clear their debts that much faster. Anyway, these are great tips. Thanks for sharing!

Chad Nelson @ Iron Point Mortgage

6. It's truly a great feeling when we have paid all of our debts. Though, it's not that simple particularly when we have to budget our money to the different needs that we have. What's important is that we pay the mortgage on time. You and your husband sure did a great job in managing your finances well. I hope that you'll stay debt free from then on. Thanks for sharing, Katie! All the best to your whole family!

Tasha Reeves @ WCMTG