What happens when you finish paying off your house?

Kory Postma, Previously in debt and struggling, but now 100% debt free
Answered Sep 5

My wife and I paid off our house in late 2017 and this is what happened to us.

We called the bank and informed them of our intent to pay off the mortgage in full. They responded
that they needed $x by 5pm to have the mortgage paid off in full. We told them to look in the one
account we had at their bank and that we have already moved the money into that account. They
transferred the money from our account on to our mortgage account, hence paying it off.

We drove to the branch where we first got the mortgage 18 months prior and brought some
cupcakes and coffee. We treated the staff because we were celebrating having just paid off the
house and being 100% debt free.

Our loan officer was surprised and said, “I knew you guys wanted to pay off the mortgage early but
I never expected this early.” Our original plan was 4–7 years. Dave Ramsey (financial talk show
host) says most working his plan pay off their house in 7 years and most millionaires pay off their
house in 10 years. We were lucky to come upon an investment that took off that we were able to
sell it and pay off the house. This resulted in a huge nearly $70k tax bill (answer for a different
question).

Dave Ramsey says once you pay off your house to go outside and walk through the grass
barefoot because it will feel different. We didn’t take his advice because it was nearly winter time
and snow was on the ground. Instead, my wife and I continued our celebration by going to a local
fine dining restaurant to enjoy a nice meal. Emotionally, we didn’t feel different at all, it was like
nothing really happened.

The following month we noticed an extra $1,600 in the bank account that we moved off into a
separate account to save and invest for the future. That same month we received a letter from the
bank that our mortgage was paid and we received communication from the county that our deed to
our house was now clear.

It took three months from the time we paid off the house to have an emotional change. Perhaps
this is because it was now March 2018 and the snow had melted and we could actually go outside
and feel the grass under our bare feet. I’m not sure, but what happened is that my wife and I
realized that we don’t need to keep on going to the same job every day. We could choose to be a
baker at the Walmart Deli if we wanted to be. We could choose to be a photographer. We could
choose to be whatever we wanted to be. We were no longer beholden to our job that makes a
good salary so that we can afford the mortgage payment every month.

This realization gave us more flexibility with our life choices and our careers. We also realized that
we have been working so hard on financial goals to get out of student loan debt, save up for an
emergency fund, save up for a down payment, pay off the house, etc. that we didn’t have a future
goal anymore other than to save for retirement. This is when we realized that we needed another
short term goal and we both decided to buy more real estate in cash and we needed to start
saving up for it.

Then April came along and we needed to pay our first half payment of our property taxes. Then
May came along and we needed to pay the full year of our home insurance. Then October came
along and we paid the other half of our real estate taxes. By this time in October we found the real
estate area that we wanted to purchase in. By April of the following year we made another tax
payment and we flew to the area where we wanted to purchase our next real estate and we paid
cash for it in May. We also found more real estate in the same area and started saving up for that
as well. We are planning on going back next year and paying cash for more property. We plan to
continue doing this while we can.

So what happens when you finish paying off your house? You get the freedom to make choices in
your career that you might not have otherwise made and you get to invest in cash and grow your
wealth. I recommend everyone pay off their mortgage and get on the path to wealth building. It is
really the only way