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In the spirit of respecting opposing opinions and spot-lighting people who made it by buying real-estate, I’d like to present to you, fellow Torontonian and expert hustler, Sean Cooper.
Sean first caught the attention of the media, by paying off his $255,000 mortgage in just 3 years by working 3 jobs and living frugally.
Now he’s hard at work on his book “Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom”, coming to bookstore near you on March 1, 2017.
Take it away, Sean!
I rant non-stop about the unaffordability of housing in Toronto, but in your case, you managed to murder your mortgage in just 3 years and come out ahead! How has that experience been like for you?
I’m not going to lie. It wasn’t easy, but it was well worth it. The biggest worry of many people is how they’re going to pay their mortgage if they lose their job. That’s no longer a concern for me. It feels like the weight of the world has been lifted off of my shoulders.
I never planned to pay off my mortgage in 3 years. In fact, when I bought my house I signed up for a 5-year fixed rate mortgage. But when my career started to take off as a personal finance journalist, I decided to focus on paying off my biggest debt, my mortgage. Whenever I’d get a cheque, I’d make a lump sum payment on my mortgage. By doing this, I was able to pay off a 30 year mortgage in just 3 years.
Most people can’t pay off their mortgage off in 3 years like me, but there are simple things you can do to reach mortgage freedom sooner. You don’t have to give up the things you love like your iPhone and Starbucks. You just have to be smart on the big purchases like a home and car and make paying off your mortgage your top priority.
I use you all the time as the shiny example of someone, with an average salary, who managed to boost it to 100K/year with your insane hustling. Can you tell us a bit about what that was like?
It was a busy time to say the least. Besides holding down a full-time job as a senior pension analyst, I worked as a personal finance journalist and as a meat department clerk at a supermarket (and I’m a vegetarian, so that shows how determined I was to pay off my mortgage early). If that wasn’t enough, I was also a landlord. I typically worked upwards of 80 hours a week. What kept me going was that I knew I wasn’t going to do this forever. I saw it as short-term pain for long-term gain. By working super hard for 3 years, I could enjoy a lifetime of financial freedom.
What advice would you give to others trying to hustle and make more money?
Many people say that they’re too busy for side hustle. While that may be true for some, for many it’s simply not. It’s all about putting your free time to good use. Instead of binge-watching Game of Thrones on Netflix on weekends, why not earn some extra money on the side?
The sharing economy has made it easier than ever to make money. You can become an Uber driver, rent out your place on Airbnb, open a restaurant in your home, housesit, dog walk and the list goes on. Look a unique skill that you have and figure out how you can leverage it to make money. For example, if you’re a straight A’s student in university, earn some extra money by tutoring. If you’re a skilled photographer, take photos at special events like weddings.
A lot of people think side hustle is risky. I see it differently. Having one full-time job is risky. If you lose your job, 100% of your income is gone – poof! By earning streams of income, you’re better protected. If one of those streams dries up, you can always find others. Although it wasn’t glamorous, I held onto my part-time job at the supermarket for so many years because I knew I could always bump up my hours to help pay down my mortgage if I ever lost my full-time job. This helped me sleep a lot better at night.
Not since the Salem Witch Trials have three people (namely, you, me and Wanderer) been flamed so hard on CBC News. I’ve read so many comments/e-mails from haters that I can predict what they’re going to say now. Fun times. What was that like for you and how did you deal with all the haters?
Our views on homeownership may be different, but we all share a common goal: financial independence. I believe we got a lot of backlash since we aren’t the typical “lazy and entitled” millennials the media likes to portray. In fact, we got so much hate that CBC wrote two follow up articles on it.
I didn’t let the hater get to me. These are people posting anonymously online. I have yet to have anyone say anything mean to me in person. I find what worked best for me when dealing with negative commentary was to keep my original goal in mind – which was to inspire people and show them that homeownership is still possible.
The haters have said things like “he’s going to work himself into an early grave”, “he obviously has no friends because he works all the time”, “I could pay off my mortgage too, but I don’t want live in my basement and eat Kraft dinner all the time. That’s no way to live”.
What do you say to those comments? How do you manage to keep hustling like a boss and balance it with time off to enjoy life?
The media’s portrayal of me couldn’t be further from the truth. I may have been focused on paying off my mortgage, but I didn’t eat Kraft dinner at every meal and never go out with friends. I may have been busy, but I made time for the people and things that mattered most. I’m just like any other 20-something year old – I enjoyed drinks with friends on Friday night and went out to the movies – but in moderation (I wasn’t buying rounds of drinks for everyone). What set me apart was my determination and drive to own a home and pay it off quickly. My motto is, you only get one life to live, so make the most of it.
You did a lot of research and number crunching before you bought your house. What advice do you have for readers looking to purchase their first home?
The single biggest mistake I see first-time homebuyers make is buying “too much” home. Just because the bank approves you to spend $800K on a home, doesn’t mean that you should. Your banker or real estate agent aren’t going to tell you to spend less on a home – that’s up to you. You might be able to find a home with most of the things on your wish list and only end up spending $750K.
Many property virgins are surprised to discover buying a home comes with a lot more expenses than renting. Before making an offer, take the time to crunch the numbers. Prepare a budget for the home you want to own. Budget for all the expenses that come along with homeownership – mortgage payments, utilities, home insurance, property taxes, repairs and maintenance. Aim to spend 37% or below (42% or below in pricey cities like Toronto and Vancouver) of your gross monthly income on housing-related expenses and other debts.
It’s better to find out your mortgage payments would be too onerous before you buy a home than after. If your mortgage payments would squeeze you financially and leave you little leftover at the end of the month to save toward retirement, let alone have fun, consider buying a smaller home or moving slightly further out. You don’t have to go out and buy a house right away; consider buying something more affordable like a condo.
You also rented out the top floor of your house and lived in the basement to pay off your mortgage faster. Can you tell us about your experience being a landlord? And would you recommend it as a way to pay off the mortgage faster?
Renting out the top floor and living in the basement was a no-brainer for me. I did the math and it just made sense. By renting out the upstairs instead of the basement, I could earn double the rent. If I had rented out the basement, I’d only earn $800 per month, but if I rented out the upstairs I could earn about $1,600 per month. Besides, I’m just one person living in a 3-bedroom house. I wouldn’t know what to do with all that space.
While this living arrangement worked for me, it’s doesn’t make sense for everyone. For example if you’re a family with kids, it probably doesn’t make sense to live in the basement. You’re better off living upstairs and renting out the basement. That way you can still earn some extra income to pay down your mortgage sooner.
A lot of first-time homebuyers can’t afford houses right away and there’s nothing wrong with that. If you buy a condo, you can still be a landlord, but you just have to be a little more creative. Instead of renting out your basement, you can rent out a bedroom to a roommate.
Airbnb is another way to money from the space you live in. Just make sure you’re fine with the added responsibility. Being an Airbnb host is a lot like running a hotel. Cities and condo boards aren’t the biggest fan of Airbnb, so this can complicated matters, as well.
Since the price of houses has gone way beyond their price range, Millennials are now considering condos as a way to get into the market. What are your thoughts about condos?
In big cities like Toronto and Vancouver, buying a house just isn’t realistic for most first-time homebuyers. I think condos are a good way to get your foot into the real estate market and start building equity, when done right. If you’ve grown in house all your life, it can take some time to adjust to the condo lifestyle. Living in a condo doesn’t have as much freedom as living in a house. There are pros and cons for condos. You don’t have to worry major repairs since your condo fees cover those (most of the time), but your condo fees can skyrocket if the condo board is incompetent.
Don’t make the mistake of assuming living in a condo is the same as a house. Some people are suited for the condo lifestyle, others aren’t. Really do your homework, especially when buying pre-construction. You want your condo to be a good long-term investment, not be hard to sell in a slow real estate market.
Sean, you have a book coming out. I knew you were famous but not “I-have-a-book-coming-out” famous! Tell us about that.
After my story went viral, so many people reached out to me for home-buying advice that I decided to write a book. There quite a few books on real estate, but most of them are written in financial jargon and read like a textbook. I wanted to write a book that’s not only educational, but enjoyable to read. My book isn’t the typical personal finance book. You won’t find any financial jargon, but what you will find is plenty of celebrity references and pop culture.
Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom will be released globally on March 1, 2017, and it will be available for sale in bookstores and other retail outlets across Canada. Inspired by my real-life experience paying off my mortgage on a Toronto home in 3 years, my book offers a practical, realistic approach to becoming a debt-free homeowner at a challenging time when real estate prices are making headlines across Canada. Anyone who wants to own a home – young or old – or is already a homeowner and wants to pay it off sooner will enjoy it.
What are your plans for the future? Will you continue renting out the top floor?
It’s hard to tell what the future has in store. I’ll see what opportunities present themselves once my book is released. I’d like to get married one day and start a family, but I’m still looking for Ms. Right. I plan to keep writing as a personal finance journalist. I’m also planning to speak at colleges and universities and share my story to show how homeownership is still possible for the younger generation. A lot of people have reached out to me, asking for advice on homeownership. Instead of being a money coach, I’ve decided to focus on home-buying and mortgages and call myself a mortgage-burning expert. I plan to help others pay off their mortgage sooner by offering one-on-one coaching. I also plan to offer online courses in the coming months.
Yes, I will keep living in the basement and renting out the top floor for the time being. Until it makes sense to move upstairs, I’m perfectly content living in the basement. I have amazing tenants, so I have no good reason to move upstairs.
If you could jump into a DeLorean, would you do anything differently?
Your 20’s is the best time of your life. Even if you’re single, you can still have a good time. Cherish and make the most of this time, but don’t lose sight of your financial priorities, such as paying off student debt, buying a home or starting a own business. Wouldn’t you rather be living in a paid off home in your 30’s than living in your parent’s basement?
My biggest regret is not doing a better job of achieving a work-life balance. Instead of paying off my mortgage in 3 years, I could have had more fun and still managed to pay it off in only 5 or 6 years. But as the saying goes, hindsight is 20/20. Now that my mortgage is paid off and I’ve achieved financial freedom, I’ve got the rest of my life to enjoy. I’m not stuck sitting in a cubicle for the next 35 years taking orders from the man (or woman – it’s 2016, I want to be politically correct). I can do everything I’ve always wanted to – travel, volunteer and go swimming with the sharks – all because I paid off my mortgage sooner. Don’t you think that’s worth the short-term sacrifice? I do.
Sean Cooper is the author of the upcoming book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Financial Journalist and Personal Finance and Mortgage-Burning Expert, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post, Tangerine: Forward Thinking blog and MoneySense. You can follow him on Twitter @SeanCooperWrite.
Wow, what an inspiration. I can honestly say, Sean is probably the hardest working man in Toronto. What do you think? Has he inspired you to murder your mortgage?