Get Out of Debt to Be Financially Free

August 30th, 2007 | Stacey | Debt Management, Financial Freedom, Financial Independence

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To be financially free, you have to get out of debt first – and that also means mortgage debt. While taking home equity loans can be beneficial in certain circumstances, mortgaging your home to the max puts off paying off the largest debt you carry. Your ultimate get out of debt plan should include getting rid of your monthly mortgage.

Years ago people would have parties to burn their mortgage and celebrate the day they were free of their largest debt. By getting rid of such a large debt, people could live comfortably through retirement even if they did not have a lot of savings. Today people carry such large debts that financial freedom seems increasingly elusive.

Further, in a generation where people need to have what they want right away to keep up with the Joneses, debts grow larger and mortgages are taken several times over on homes. This can even cause people to lose their homes, as evidenced by the increasing number of foreclosures.

Another contributing factor to recent foreclosures are adjustable rate mortgages that cause monthly payments to grow beyond a person’s ability to pay them. As interest rates get higher and principal on the mortgage becomes due, monthly payments soar and people find they were only able to pay the minimal payments offered at the alluring beginning of the adjustable rate mortgage. As a result, people lose their homes and even wind up owing more on their home than its actual worth.

To become financially free, get of of debt and pay off your mortgage. Imagine how much financial independence you could have without your monthly mortgage payment!