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Blue House on Grass

I think you’ll agree with me that making a house payment each month sucks.

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. Here is an example of how one could actually make this a reality.

How a couple can buy 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)
  • Taxes: $7,440 (Marginal Tax rate of 15% with average of 10.6%)
  • Total: $40,000
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If you think that couples story is crazy, check out people that are living on evenless:

Why should you pay cash for a home?

It may seem crazy to save up cash to buy a home without a mortgage. However, have you ever thought about the total interest that you would pay if you took out a 30 year mortgage? Well, if you borrowed $250,000 at 4% interest on a 30 year note, you would pay $179, 673 in interest! That is $10,000 per year for roughly 18 years in interest. I dont know about you, but I would rather backpack Europe every year for 18 years than pay a bank that much interest.

Well, that is great but I already have a mortgage. What should I do?

Don’t worry, I have you covered. Check out my other article called 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?


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