I PAID OFF MY HOUSE. Am I Smart or Stupid? 🏡🤦🏻‍♂️ - YouTube

Hey guys, what's going on?

This is Seth and I wanted to make this video

just to give you a little personal update on my life

because we just did something pretty exciting this morning.

My wife and I sat down at the computer and we officially paid off our home mortgage.

So that thing is done. Completely gone from our lives.

It was always my goal to at some point in time own my house free and clear

just to kind of know, hey, this is mine.

A bank can never take this no matter what happens.

As long as I'm paying my property taxes, this thing will be the roof over my family's head

and I don't have to worry about that changing for any reason.

Like in the event of a disability or significant loss of income

or something like, oh, I don't know, the coronavirus.

I mean life is full of uncertainty.

We never know when some crazy thing is going to come out of left field

and totally change our financial picture.

And I just wanted to know that this was taken care of.

And a part of what I wanted to process with you here

was just really the decision of why I did this at all

because to me, it always seemed like kind of a no brainer thing

like get rid of any and all personal debt as soon as possible.

Like this is just kind of the golden rule

that all of the personal finance people in my life have always told me.

But then the last year I had a couple of conversations with my friend Keith Weinhold

And a number of other people in the real estate world

who kind of helped me see this from a different perspective.

And especially if you're somebody who is an investor and cares about making your money work for you

and making it generate more money by investing in things,

paying off your house on paper, like just mathematically speaking is actually a like not a great idea

if you hope to use your money to invest it and make more money from that.

And I'm going to link to both podcast episodes that we had with Keith

so you can listen to that and hear more reasoning behind it.

It actually does make sense.

Like if you just think it through.

And I think for a lot of people who aren't real estate investors,

they don't really care about all this stuff.

They just want to work their 09:00 to 05:00 job.

Like it's probably not as big of a deal.

But if you're a serious real estate investor and if you take a lot of cash

and just dump it into your home and just keep it in the form of home equity,

that's a massive opportunity cost.

That's a lot of money you could be using to buy other income producing properties

so you can make even more money.

I mean really the idea is you want to borrow as much money as you can

and get as much good debt as you can

because good debt is debt that pays for itself and makes you money on top of it.

So, I mean, why would you not want to leverage yourself infinitely if you could,

as long as the debt was always going to pay for itself

and pay you more for every dollar that you're borrowing.

So I fully understand like just financially speaking, looking at the numbers

like it all checks out and makes sense that if you have better investment opportunities

that will pay you more than the debt is going to cost.

I mean, if you want to make money, it's always going to make more sense

to do that instead of paying off your house.

But here's the thing, I paid off my house anyway.

Why would I do this?

Like, seriously, why would somebody who knows better choose to pay off their house anyway?

I eventually came to the conclusion after talking with a number of very important people in my life

that not all decisions in life are financial decisions.

There are some really important things we have to do that have nothing to do with money.

And some of these decisions may actually negatively impact our financial situation,

but that doesn't make it the wrong decision.

I think it's about understanding what does success look like to a person?

What kind of things really matter to you?

What kind of things do you stand for?

What kind of things are ultimately going to make you happier in the long run?

Even if it doesn't mean you have more money but you have more peace of mind.

And for me, it's one of those things where I just decided that

having a paid off house is one of the things I care about.

And yes, I know even with a paid off house,

you still have to pay property taxes and maintenance and repairs.

So, it's not like I ever completely escape ongoing costs and payments,

but those ongoing costs and payments have gone down a lot

and no matter what happens, a bank can never swoop in and take my house from me

even in the worst-case scenario.

I mean, granted the government could, if I stopped paying my taxes,

but my tax bill pales in comparison to what the monthly mortgage payment was.

And I just frankly decided that, that was more important to me.

I want that paid off house and then I'll start doing stuff from there.

But I don't really want to mortgage where my family lives

all in the name of being able to grow and grow and grow.

I mean, I just kind of wanted to be able to stop the bleeding

in terms of personal debt and that's what I did.

And really, when you think about it,

these are actually a lot of things that very wealthy financially literate people do

that are kind of similar to this where like, it's not really the financially smart decision,

but they've decided that they valued that

and so they spend their money on that anyway.

For example, people who send their kids to expensive private schools

when a public school would arguably get them just as educated about all the basics.

A lot of people who have money choose to spend it on that kind of private education anyway,

even though it's not required.

Even though there's other things they could do with that money that may be financially smarter,

they've decided that's what's important for them and you know what?

More power to them.

Or for that matter, people who choose to go on expensive trips

or eat at expensive restaurants or buy expensive cars that just depreciate like crazy,

but they do it anyway because they've decided that's what they care about.

Maybe that's what makes them happy.

I think whatever you want to do is cool, but all this to say it's like you can always make that argument.

There's always going to be something, some kind of unnecessary thing

that somebody is putting their money into that they could very easily divert

and be smarter and put into a cash flowing investment.

So, this is just one of those things that I chose to do and I'm pretty happy with it.

Honestly, I don't know if this is going to last, but it's a really cool feeling.

Like it just feels like this little weight off my shoulders.

It's not like my life is that substantially different.

But there's like this tiny little burden that's not on my back anymore.

And of course, I mean, if the situation ever came up

where I just really had to get the cash from my property

to buy just some unreal investment opportunity

luckily, there are things called home equity lines of credit that could step in and do that job for me.

Granted, it's more paperwork and it's more hassle than just having the cash in my bank account

but still, it's not like I can never touch this money.

There's just an obstacle standing in the way of getting that.

So, I don't know. That's kind of where I'm at.

In terms of whether you think it's the smartest or dumbest decision,

I mean, that's up to you, to each their own,

but I wanted to share sort of my thought process and how I got there.

Hopefully you got a little bit of insight out of it and talk to you later.