About 6 years ago, I didn’t even think it would be possible to buy a house without a mortgage. I thought the only way I will ever own home is to borrow money. Man, was I mistaken. Looking back at all of the interest I have paid to banks makes me sick. I knew there had to be another way and there is.
How this couple bought a home without a mortgage
John and Kristy get married at 22 years old. John has a job paying $40,000 and Kristy is a teacher making $30,000. This is a combined income of $70,000 per year. They decide to live as cheap as they can until they can afford to buy a house with cash. They rent an apartment for $600 per month and decide to take very inexpensive vacations over the next 5 years. They are able to live on $40,000 per year which allows them to put about $30,000 into savings each year.
So in 5 years, they are able to save up $150,000 and pay for a house with cash! This means that at age 27, they will have a paid-for house and be completely debt-free. But wait how can I live on $40,000 per year with taxes, rent and everything else I have to pay??? Glad you asked, here is a breakdown of what that would look like:
Rent: $7,200/year ($600 per month)
Food: $3,000/year ($250 per month)
Utilities: $1,800/year ($150 per month)
Vehicles: $4,800/year ($400 per month)
Entertainment: $1,200/year ($100 per month)
Misc: $3,480/year ($290 per month)
Giving: $7,000/year ($583.33 per month)
If you think that is crazy, check out people that are living on less:
Jason and Danielle live on $14,000 per year. Find out how at their website Blissful and Domestic.
Jacob lives on $7,000 per year. Check out how at his site Early Retirement Extreme.
Well, that is great but I already have a mortgage. What should I do? You should check out How to Pay Your Mortgage Off Early.
Would you like to have a paid-for home someday? Would you consider buying a house without getting a mortgage?