Build House Mortgage
I am in the middle of reading by Rob Roy and it is fantastic. It guides you step-by-step through what it takes to build a home and live thrive without a mortgage. I have to admit, the ideas in the book are definitely outside-the-box. As I read Roy's words, it slowly sinks in:
NO MORE RENT. NO MORE MORTGAGE.
What would I do with the money? The possibilities are endless.
Having recently signed another apartment lease for the next year, I began thinking about what my future housing options might be. According to Roy (and any other level-headed person), paying rent is just money down the drain, you're not building any equity. But then the prospect of signing my life away for a mortgage (which is, by the way, old French for "death pledge, " mort- death, gage- pledge) was not appealing. So here are eight reasons why I will be building my own home, mortgage-free:
1. No more working for rent/mortgage payments
Imagine having another $1000-$3000 left over each month because you didn't have a "payment." What could you do? Would you find a more enjoyable job? Start a business? Perhaps you would grow your guitar collection. We've been brainwashed that we must always have a rent payment or 30 years of mortgage payments.
2. Greater ability to diversify into more liquid investments
I remember learning about the phrase "house poor" from a friend with a gigantic mortgage payment. By the time she paid the taxes, HOA fees, principal, interest, and general upkeep, there wasn't a lot of wiggle room left at the end of the month. The thing is, we've been sold the idea that if we can hack it out for 30 years and get that "biggest investment we'll ever make" finally paid off, we'll be somehow set financially.
However even if you pay it off, unless you sell it and move, you can't access the equity (it's not liquid) and it definitely doesn't produce any cash flow for you. In my humble opinion, I can think of a host of more favorable investment options. That is why I believe we should be downsizing our housing investment and leaving cash to invest elsewhere.
If you build a modestly-sized home yourself, you can eliminate the mortgage payment to the bank altogether, pay yourself that mortgage payment, and invest in things like stocks, a new business, or any other investment that will actually generate income for you.
3. Ability to do different types of jobs/businesses
Let's face it: those mortgage payments force many of us into jobs we would otherwise run from. Commutes we despise. Workplaces that can be toxic to our health. Mortgage payments take significant resources to keep up, and when we earn more, we tend to just get a bigger house/payment.
What if that money was at your disposal (or you didn't have to earn it)? What if you could pursue that dream career or go back to school because you no longer owed the bank that large payment each month (or else)?
4. Retire earlier (or have the ability to do so)
Along with allowing you to pursue a wider range of vocations, an alternative home may actually allow you to retire earlier as well. I recently read an article about whether a couple should pay cash for a house if they have the money. The comments were a lively discussion of the merits of either course of action. This excerpt from a commenter named Bryan really stood out to me:
In my case I have absolutely no debt other than my mortgage. If my mortgage was paid off I would not go back to work next Monday. I would walk away and take an early retirement. Then I would go work somewhere a lot less stressful. With no other debt I am able to make huge principal payments to my mortgage. But it will still be at least 3 more years before I get the nerve to say “take this job and shove it.”
In Bryan's case, his home mortgage is dictating the job he has as well as when he can retire from it. As someone who is relatively young (I'm turning 30 in a few days), I'm really surprised at the number of people out there that seem to be living and working for their houses. Shouldn't it be the other way around? Shouldn't our home be the calm place in the storm?
But that seems to hardly be the case for most of us. "Get your ass out of bed!" the home seems to say, "my mortgage isn't going to pay itself!"
5. More time & money for travel & hobbies
As a result of your lack of mortgage or rent payments, an alternative home would also allow you a greater ability to delve into travel and hobbies. If money = time, then not having a big mortgage payment each month would not only give you more money to pursue hobbies and other interests, but it would quite possibly give you more time as well.
All of a sudden, ideas for that motorcycle trip, backpacking around Europe, or building that workshop you've always wanted don't seem so far-fetched.
6. Higher quality construction
In Rob Roy's book Mortgage Free!, he mentions working for a homebuilder where one day the crew does a shoddy foundation-watersealing job because the mortgage representative is coming to do an inspection (to approve another disbursement of funds).