In June of 2019, I had the privilege to experience a monumental moment: I made the final payment on my home mortgage.
Prior to making this payment, I managed to pay off all of my other debt: credit cards, car note, student loans, EVERYTHING. After paying off all my debt, I thought things would be super easy and although eliminating the “stress” of having debt feels good, I came to realize that being debt free wasn’t all that I thought it would be. Here are a few things I’ve learned since June:
- I didn’t “really” pay off my mortgage. Although I no longer owe the bank, I am still obligated to pay taxes and home owner’s insurance. Even though I’ve been doing this all along, these payments were calculated into my mortgage and handled by my bank. When re-calculating my budget after paying off my home, I didn’t free up the full $2170 mortgage payment I was making, just the $1400 that was actually going towards interest/principle. There’s no doubt that paying $770 per month for a nice place to stay is way better than $2170 per month. However, I was so caught up in the moment of paying off my debt that I didn’t fully realize that I’d be making “payments” (via escrow) on my home forever (or at least until I decide to sell the home).
- I’m behind on achieving goals required for a secure financial future. Although I have made the max 401k contributions over the past two years, I am still behind on how much I “should” have saved at my current age (41). To make up for it, I’ve been putting the money I previously designated for my mortgage payments into a separate real estate investment account. I also had to get serious about a college savings plan for my kids, designating funds for their 529 Saving Plans.
- It is challenging to stay OUT of debt. When I was living on a budget, I had to prioritize bills which required me to sometimes “overlook” other things that needed to be done (but weren’t as urgent). From bathroom repairs to pricey dental work, I found myself still having to spend a significant amount of money on expenses that I put on the back burner. Although handling these expenses has been manageable, I still have to keep a hawk’s eye on my spending to make sure I don’t fall back in debt again.
Being debt free is a BLESSING but still comes with great responsibility and the mindset to not fall back into the habits that got you in debt in the first place. I’m excited about what the future holds and am committed to making the choices that are aligned with manifesting the best financial future for me and my family.