How to pay your mortgage in three years

The good news: it's possible to pay off a $255,000 mortgage in three years. In 2015, Ryerson alumnus Sean Cooper (Business Management '09) made headlines when he burned through his debts by working three jobs, renting the main floor of his house, and living like a pauper. The bad news: you have to work three jobs, rent the main floor of your house, and live like a pauper.

Not willing to make that kind of sacrifice? Sean Cooper has good news: even in a city like Toronto, the dream of home ownership is still within reach. In his new book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians (external link, opens in new window) , he offers readers simple, practical advice for financial responsibility. And don't worry: you won't have to have three jobs to do it.

On the eve of the book's March 1 publication, we spoke to Cooper about his remarkable story, and how students can prepare for a healthy financial life.
 

First, the obvious question: how did you pay your mortgage in three years?

I set myself the goal of paying off my mortgage as soon as possible. I bought my house when I was 27 years old, in August 2012 in Ward 25 in East Toronto, and I had a sizeable down payment of $178,000. That left me with a mortgage of $255,000. I knew that I didn't want my mortgage to be a life sentence—I didn't want to have it for the next 25 years to life, so I aimed to pay it down as soon as possible.

I didn't plan to pay it off in three years' time—I actually got a five-year fixed-rate mortgage—but I ended up actually paying it off in three years because I went beyond my full-time job as a pension analyst. I was also working as a personal finance journalist, and part-time at a supermarket. Some people would live upstairs in their house and rent out the basement, but I actually did the opposite: lived in a basement and rented out the upstairs just to bring in even more money, because I could earn double the rent that way.

Beyond that, I also lived super frugally. I was essentially able to save about 80, 85 per cent of my paycheque, and that was how I was able to pay it off.

What made you want to write the book?

The main reason I wrote the book is so that people don't give up on owning a home. If you make mistakes on buying a home, it's the single biggest financial transaction of your lifetime, so those mistakes can be quite costly. I go through my experience as a first-time homebuyer, and also discuss mortgages, because again, they don't teach you that in high school. You're taking on this big amount of debt, so it's important to understand how that works.

The book is about more than housing and mortgages: I go over goal-setting. A lot of people say, 'Oh, I should be saving more,' but there's really no endgame in mind. I ask people to set a goal for themselves, whether it's buying a house or paying off their mortgage. Financial freedom is different things for different people—it could mean taking a less stressful job, or even retiring early, or volunteering or travelling—but once you have that endgame in your mind, it keeps you motivated every day to get up and work hard and be one step closer to achieving financial freedom.

I think a lot of people are going to say, "Okay, he paid his mortgage in three years, but he probably didn't have much of a life." How approachable and realistic is the book?

My case is an extreme case—I go through examples to make it more relatable to other people. For me, two of the biggest expenses are transportation and groceries after mortgage or rent, so I talk about how important it is to look for ways to save on that. If you can save maybe 15, 20 per cent on both of them, you can come up with an extra $100, $150, $200 a month.

For example, I'm single myself, but I realize there are a lot of couples, as well as couples with children. I didn't own a car—I cycled and took transit and other means of transportation—but that's probably not practical if you're a couple with children.

In my book, I suggest instead of owning two cars, you could maybe own just one vehicle.

If you do purchase that one vehicle, instead of buying brand-new, you could buy a two- to three-year-old used vehicle from a registered car dealer. It's basically looking at the big picture of your finances and looking for ways to save without necessarily sacrificing parts of your lifestyle.

I don't expect everyone to follow every single tip in my book, but if they were to perhaps follow 25 per cent of my advice, or figure out ways to save in their own life, they could pay off their mortgage a lot sooner than the 25 years.

What are some ways that undergraduate students can start on the right financial path?

I guess it depends on how heavy your course load is, but it definitely helps to be able to work if you're able to. If you're an engineering student and your workload is very heavy and your grades might be sacrificed by working, it might not be a good idea. But for me, it definitely helped to work during the school year and during summertime. A lot of people say, 'It's important to travel, and enjoy your younger age.' I certainly don't disagree with that, but during summer I would work, and just by working four months I could pay tuition for the entire year, and I was able to start saving for my down payment.

Be careful with credit cards as well, because I know a lot of students get in trouble. They basically get into a cycle of just paying the minimum payment. The thing is, when you go to get preapproved for a mortgage, the debt ratios actually take into account the credit card debt. You might not be able to spend as much on a house, or your mortgage application may be denied.

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Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians is available via Indigo (external link, opens in new window) .