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KEEPING LOW-INTEREST DEBT
For years, I argued that paying off a sub-3% mortgage was mathematically irrational. But after asking nearly 4 million people on Twitter whether they regretted paying off cheap debt, almost no one said yes.
HOW DEBT BECAME A TOOL
Growing up, I was taught that all debt was bad. I avoided credit cards, car payments, and loans entirely. That philosophy changed at 21 when I tried to finance real estate and was denied because I had no credit history. I realized debt wasn’t inherently bad; it was a financial tool. If I could borrow at 5% and invest at 12%, the 7% spread represented profit on money I never originally had. That realization became the foundation of my real estate strategy.
HOW LEVERAGE BUILT MY WEALTH
Over the following decade, I used excellent credit and cheap fixed-rate mortgages to buy real estate instead of paying cash. Properties could generate rental returns above the mortgage rate while appreciation multiplied returns on my original down payment. With mortgages around 3–3.6%, inflation also reduced the real cost of the debt over time. This strategy helped create millions of dollars in equity, which is why I spent years telling people not to pay off cheap mortgages early.
THE MENTAL COST OF DEBT
What I failed to account for was the psychological burden attached to every loan. Even an affordable mortgage creates an ongoing obligation: payments continue if income falls, tenants leave, markets crash, or you want to stop working. When millions of dollars of debt disappeared from my accounts, I realized those obligations had occupied mental space even though I was never worried about making the payments.
WHY DEBT FREEDOM FEELS DIFFERENT
Research suggests that eliminating debt can reduce anxiety and improve decision-making and cognitive performance. Interestingly, the number of debts eliminated may matter more psychologically than the dollar amount eliminated. Closing several separate obligations can therefore provide a larger mental benefit than simply reducing one large balance. That helps explain why debt freedom can feel disproportionately valuable even when it isn’t mathematically optimal.
PAYING OFF A 3% MORTGAGE IS EMOTIONAL, NOT FINANCIAL
Paying the mortgage off means voluntarily giving up expected returns. But the calculation ignores peace of mind. Financial well-being and how secure people feel about their money can materially affect happiness, meaning the value of simplicity and lower stress deserves to be included even if it cannot easily be modeled in a spreadsheet.
DON’T SACRIFICE YOUR LIQUIDITY
Debt freedom can also be taken too far. Using every available dollar to pay off a mortgage converts highly liquid cash into illiquid home equity. If an emergency happens, you cannot simply ask the mortgage company to return your money. Research also found that some households accelerated mortgage payments while neglecting more valuable tax-advantaged retirement opportunities, leaving themselves financially worse off.
THE PRACTICAL ORDER OF OPERATIONS
The priority should still be an emergency fund first. After that, take advantage of an employer 401(k) match and aggressively eliminate high-interest debt, roughly anything above 7–8%. Only after those priorities are handled should paying off extremely cheap debt become a serious consideration. At that point, the decision depends less on maximizing every percentage point and more on how much you personally value simplicity, flexibility, and peace of mind.
SIMPLICITY HAS VALUE
As I’ve gotten older, squeezing every possible dollar out of leverage matters less to me than having fewer obligations, fewer accounts, and fewer things to think about. The purpose of building wealth eventually becomes having more freedom—not simply maximizing the spreadsheet forever.
TIMESTAMPS:
00:00:00 – Dave Ramsey vs Investing
00:01:21 – The Downsides Of ZERO Debt
00:03:33 – Why I Borrowed Millions Of Dollars
00:06:22 – Getting Peace Of Mind
00:08:06 – Paying Off My Mortgages
00:10:50 – The Benefits Of No Debt
00:13:39 – Paying Debt vs Investing
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