Here’s something you probably never thought you’d hear from me. I’m beginning to think that having debt may not necessarily be a bad thing. I know, I know, just bear with me for a minute…
Paying off your debt is a very rewarding experience, especially if you’ve overcome a lot of debt like my family and I have. Every time you pay off another debt you feel a tremendous amount of accomplishment that motivates you even more to pay off the next debt. As I’ve written before, once you’ve paid off all your debt this gratification is gone and it is very hard to replace. It’s almost as if you experience a debt hangover.
This was especially true when we paid off our mortgage a year ago last November. All of a sudden my wife and I were like “okay, now what?”
With a mortgage, you’re committed to pay a set amount each month. As each month passes you’re building more and more equity in your home as your mortgage balance declines and the value of your home increases [hopefully]. With a mortgage, you’re basically forced to save and there isn’t really a question about what we’re supposed to do with our money. This is one of the main reasons home ownership is the biggest predictor in for higher household wealth.
Once the mortgage payment is gone, and with it the “obligation” to build equity in something, I’ve found that our financial goals are less clear. I almost miss how grounded having a mortgage payment made us feel.
Lately I’ve been thinking that it might not be a bad thing to buy another property; maybe for a vacation home or rental property. Not only would we be able to enjoy the property (or increase our income by renting it out), we’d also have the focus and drive to quickly pay the property off again like we had done with our consumer debt and then the mortgage on our primary house.
It sounds crazy I know, but that’s the weird thing about personal finance. It’s not always about what’s best mathematically, it’s more about what is best for your “personal” financial situation. Has anyone else expected anything similar?
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