This is a picture of two people who ate many more meals at home than in restaurants; who gave up big vacations; who created their own entertainment in backyards instead of theme parks; who gave up riding lessons; who consistently lived on less than they earned for 20 months and through 11 interest rate hikes. All that to be able to say that we own our panhandle property free and clear.
This is the third—and hopefully the final—time we have screamed, “We’re debt-free!”
It was humbling when I wrote in May 2022 that we had financed the purchase of our retirement property.
I loved being debt-free prior to that. My husband, Michael, and I were eager to recapture that feeling. We returned to Dave Ramsey’s Baby Step 2 and did the work.
I spend a fair amount of time in meetings encouraging clients and prospective clients to eliminate debt. I have heard many arguments against it. One of the most frequently given is some variation of this: “Why should I pay off my house if my interest rate is only X percent? I could put my extra $50,000 into the stock market and earn Y percent.”
Although I understand the thought process, it’s worth noting there’s a fair amount of uncertainty to that logic.
Let’s say you took this approach in January 2022 by investing in an S&P 500 Index Fund while your mortgage interest rate was 3 percent. The S&P 500 lost about 18 percent of its value in 2022. That means you paid 3 percent interest all year long, and lost about 18 percent of your investment value that year. As of this writing, the S&P 500 is up about 16.5 percent year-to-date. You have paid 3 percent interest on your mortgage all year, and your investments are still trying to recover last year’s 18 percent loss – let alone make additional gains beyond that.
I’ve been in debt and I’ve been out of debt, and I can say with confidence that debt-free feels better.
Here’s something awesome we learned as we look back on this season of working toward debt freedom.
Our life was great. We never felt like we were doing without, or like we were suffering. We enjoyed time with friends and family members. We combined work weekends on the property with inexpensive entertainment opportunities. We were reminded once again that happiness and contentment come from the inside and not from income. We did the hard work for a season, and it served a purpose. We look back with gratitude that we were able to accomplish this.
I want that lesson and sense of accomplishment for you, too. Let me know if I can help you on your journey toward debt freedom.
December 2023
