How to be Mortgage Free Before Age 30?

Three life lessons I wished I knew in my twenties.

I studied the accounting program at University of Waterloo, one of the best in the country. The thing I love about this program is that it offers the opportunity for us to work in a real company and get real hands on experience through its co-op program.

I started working in an accounting firm back in 2003.

We had four co-op work terms.

Big Five accounting firms at the time came into the campus to do presentations to show us how great they were. They wanted their names to be out there.

Every single one of us, approximately 200 students from our year at the time, wanted to get into the Big Five accounting firms.

They may combine hire a total of 50 students from ALL FIVE years. Less than 5% of us would get in.

Regardless, we still somehow got a co-op job, one way or another.

For some of us who were lucky enough, we even had a full time job offer lined up after we finished our last work term.

I was one of them.

I worked for a medium sized firm called Mintz & Partners. (They were later merged into Deloitte, the largest accounting firm in the world)

After graduating from the Master of Accountancy program and finishing the Uniform Final Exam for admission of being a licensed Chartered Accountant, my offer salary got bumped up to be more competitive just before I returned for the full time position.

Life was AWESOME!

What more can you ask for when you graduated with a decent job offer and you even got a pay increase before you start your work?!

For accounting firms to keep their staff, its customary to have a double digit pay increase every year for the first few years.

We were spoiled. Every year, we got 15% to 20% pay increase.

I thought I owned the world.

I would even look down at people who worked in smaller towns because they made less money than me.

Generally speaking, accountants at the same level that work in smaller towns, such as Hamilton and Burlington, are paid 10% to 20% less.

Boy, was I wrong!

I made good money. I had some savings. I also spent a lot. I didn’t make a move to buy any real estate until 4 years later, in the heart of Toronto. I took on a mortgage of $400K at the age of 29.

Then I met Erwin, my husband, who told me he was mortgage free before 30.

He made 80% of what I earned at the time from his corporate job. And he’s mortgage free before 30!

Here are the tricks to do this –

1. Live in a less expensive city and buy a house there!The house he bought was about $250K in Burlington. It was a 2 bedrooms plus one in the basement. He shared this house with his former partner. Their mortgage at the time, even at 100% loan to value, was still only $250K.The house I got was over half a million. It was a brand new executive townhouse with 3 bedrooms and 3 bathrooms. I lived by myself in the entire house. My mortgage was $400K.My mortgage was 1.6 times that of his mortgage even at 100% loan to value. My mortgage could be twice to three times that of his mortgage realistically.I could have made 20% more from my job than him but the mortgage was at least 1.6 times more than his!

2. Be frugal and save! Spend when it is needed.Erwin drove a used two door Honda Accord. I drove a brand new Mercedes Benz GLK 350. He said that he specifically picked the Honda Accord over the Civic because insurance premium was actually lower on the Accord than the Civic. I picked the Mercedez Benz GLK 350 because I loved how it looked. It cost him $400 on gas and insurance a month. He bought his car used by using title for loans to streamline the process, so he paid it off pretty quickly. Speaking of cars, if you think you are paying more than you should do for your insurance, it may be in your best interest to find something as simple as ppi claim form download to complete. This way, if you are paying too much and have been mis-sold ppi, you could potentially get back the money that you thought you had lost. This can then go into your savings account and go towards your mortgage.It cost me $1,100 a month on lease payments, gas, insurance and maintenance.What could you do with the $700 savings on a monthly basis?! Paying down your home mortgage faster is one of the options!
   Furthermore, do try your best not to rack up any credit card debts. These can have a long term effect on your credit score so you should try not to overspend where possible.

3. Don’t stop learning and reading!When I was working for Deloitte, I was paid to go to Dale Carnegie’s course. It was a great program and it made me a much better presenter afterwards.I got some value out of it but not as much as I should have. That was the only self development program I took.For majority of people, we stopped reading books, any books, as soon as we left school. I was definitely one of them.This means that I stopped growing and stopped learning new things.When I met Erwin, I discovered that he had these Brian Tracy self-development audio programs on his iPod. For those of you who don’t know, Brian Tracy is a famous business coach.At the time I was on the road for 45 minutes each way to work. I borrowed his iPod and that’s how I started the world of listening. I couldn’t believe how much I was learning and growing from listening to the self-development program.

   Today, I am addicted to listening to audio books.

   I read the book Rich Dad Poor Dad at that time, despite owning it for years.

   I started my first real estate investment within months, outside of Toronto. I didn’t even realize it was possible to buy a house outside of Toronto until then.

If I were to start all over again, I would take a job in a smaller town like Burlington and Hamilton. I would have bought a house earlier. And I would have kept my Toyota Rav4 longer to save more and faster. And I would have used the savings to pay down my house faster.

I just wish I knew that in my twenties, so I could have been mortgage free before 30!

Until next time, happy real estate investing.

Cherry Chan, CPA, CA

Your Real Estate Accountant