Why This Self-Made Millionaire Is Mortgage-Free

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  • For Andy Hill and his wife, there's no such thing as good debt and bad debt -- they don't want any of it.
  • During the Great Recession, Hill says, "It was as if my home owned me instead of the other way around."
  • The Hills spent over a decade building wealth and are now millionaires.

At one point, this millionaire owed more on his home than it was worth. He was determined not to repeat the experience.

We recently interviewed self-made millionaire and finance expert Andy Hill about various aspects of wealth building. One part that jumped out was that he and his wife had paid down the mortgage on their dream home in just five years because they wanted to be mortgage free. Find out more about Hill's views on mortgages and how his family paid theirs down so quickly.

Why the Hills paid off their mortgage early

The Hills made a decision more than a decade ago that there was no such thing as good or bad debt. To them, it was all debt, and they wanted to be rid of it. For the next 10 years, they focused on paying off their debts as well as saving and investing enough to achieve financial independence. Hill is now a family finance coach at Marriage Kids and Money, a blog that aims to help other people follow in their footsteps.

"My motivation for paying off our mortgage early was definitely emotional," says Hill. "My first experience with homeownership was rough. I bought a house I couldn't afford and the mortgage payments felt overwhelming."

Hill's story is not an uncommon one. During the Great Recession, millions of Americans found themselves underwater on their mortgages. Being underwater is when a homeowner owes more than the home is worth. According to Reuters, at one point, almost a quarter of Americans were in this situation. Hill was one of them.

"There was a point in time during the Great Recession that I owed more on my house than it was worth," he said. "It was as if my home owned me instead of the other way around. Having lived through that, I vowed to never do it again."

As a result, he and his wife made a deal: They'd buy her dream house, but pay it off in less than five years. Here are some of the ways they made that happen:

  • Taking a 15-year mortgage: There are pros and cons to both 15 and 30-year mortgages, but the Hills were committed to making higher monthly payments in order to become mortgage free quicker.
  • Making additional payments: The couple focused on reducing their costs and increasing their income so that they could turn their 15-year mortgage into a 5-year one. They put that extra cash toward paying their mortgage early.
  • Budgeting parties: Managing your finances can be a drag, but it is easier to stick to if you make it fun. A monthly budgeting party helped the Hills to stay on track.
  • Dreaming big: Another trick we can learn from the Hills is to keep focused on the bigger picture. They wanted to be able to take vacations and not have to work unless they wanted to, and those end goals made it easier to tighten their belts in the short term.

Their strategy worked. Not only did they pay off their mortgage early, they also became millionaires in a decade, achieving financial freedom. "Today, we live mortgage free and since we have lower annual expenses, we have the ability to work part-time doing work we enjoy instead of work we have to do," says Hill.

Pros and cons of becoming mortgage free

There are different schools of thought when it comes to paying down your mortgage. A lot comes down to your financial situation, stage in life, and attitude toward debt. If you're nearing retirement, your priorities may be very different from someone in their twenties.

Some argue that there's an opportunity cost to using extra cash to make extra mortgage payments. The thinking is that mortgages often charge relatively low rates of interest, so your money could work harder for you if you put it toward other financial goals. For example, if you qualified for a mortgage while mortgage rates were low in 2020 and 2021, you might be able to earn better returns by investing any extra cash on the stock market. Plus, committing to higher monthly payments on a 15-year mortgage also comes with a risk that you might fall behind. In a worst-case scenario, this could result in foreclosure.

On the other side, as Hill pointed out, there's considerable peace of mind to be found in becoming mortgage free. You'll pay less interest over the life of the loan, and it's reassuring to know that you will have a roof over your head no matter what. Mortgage payments can take up a significant portion of people's monthly budgets. If you don't have that drag on your finances, there's more money available for other things.

Bottom line

The Hills have worked hard to achieve financial freedom, and being mortgage free is part of that picture. Not only does it give them security, it also reduces their monthly costs. They've built up investments that generate income, live relatively frugally, and as a result, don't need to worry about money.

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