In Investing, Money

Why I paid $300,000 cash for my home. (Just my half)

So a lot of people have asked if I regretted or wished I had taken a cheap under 4% mortgage on the apartment instead of cutting a cheque for $300,000 (this is just my half, our place is worth $600K) with 0% return so to speak.

I had to sell a few investments to get this cash and it did feel very painful and exciting to hand over all that money on a piece of paper, but I mostly did it for these two main reasons:

Peace of mind

I don’t like owing people money. I’m not into debt, ever since I conquered $60,000 of student loans, it has given me a lot of respect for what it means to owe money and to me, it is stressful.

I have to come up with the payment, I have to be on time.. all this stuff, plus paying interest when I don’t need to, sort of irks me.

Uncertainty of income

Let’s say I took the mortgage.

I didn’t actually know if I would or when I would get a contract again, and I would have to keep slowly dipping into my investments to keep making those payments.

Sure, I had the $300,000 invested, let’s say… without a steady income coming in, I would not be able to plan how much I would keep in cash to keep those payments going, and how much I would keep invested.

Without a mortgage, I only handle condo fees and taxes which are around $500 a month, instead of $500 + $1500 for the mortgage which is $2000 a month, along with actual living expenses.

All of this means, I’d have to keep a good $100,000 in cash to cover the next 3-ish years, and watch my spending SUPER carefully so I don’t run out before getting a contract.


In short, yes, I gave up let’s say $15,000 a year (5% return) for 5 years which is about $75,000, but in return, I gained certainty, stability and peace of mind.

I wouldn’t be able to predict when I would work again, for how much… and for how long. All of this is very stressful when you have a debt to pay off at the back of your mind.

I can just cut back on expenses and know that I will be fine if I can just pay my basic living ($3500 a month, includes things like dental care, and Little Bun daycare fees).

If I had a mortgage on top of that, I would need $5000 a month. Sure, I’d have a heftier safety net set aside to compensate but even so…. the thought of cutting it so close, bothers me.

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Sherry of Save. Spend. Splurge.

Am my own Sugar Daddy. Am a millionaire at 36 after getting out of $60K of student debt in 18 months, a little over a decade earlier, using TheBudgetingTool.com. I have worked 50% of my career (taking 1-2 year breaks), and quadrupled my income within 2 years of graduating, going from $65K to $260K with an average lifetime savings rate of 50%. I have 11 side incomes that are on track in 2020 to make me $50K - $75K. I could retire today if I wanted, but love my work-life balance as a freelancing consultant in STEM (Science, Technology, Engineering, Math). I am all about balance - between time and money, and also enjoying my money. I also post daily on Instagram @saverspender.

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2 Comments

  1. Jodie

    I did the same recently when buying my new home. We had a mortgage in our previous house but paid it off at the same time we were selling. That rate was only 2.625%. As you know, interest rates are climbing and so it would have been harder to find stable investments that could beat what I would be paying in interest. I am also self employed and like you I wanted to minimize my debt. I have invested the extra funds I had left over from the sale of my previous home which will pay dividends and hopefully grow. Not having a mortgage brings peace of mind and you can’t put a price on that.

    Reply

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