When money is cheap and temptation lurks on every street and website, it takes serious determination to pay down debt.
A 30-year-old Toronto man named Sean Cooper recently paid off his $255,000 mortgage in three years and two months – on an annual salary of $75,000. He was impressively frugal, living in the basement and renting out the main part of his house, eating Kraft dinner many nights, working three jobs, and only traveling once to Wisconsin on a bus trip during the entire period of time.
Driven by his goal not to turn a mortgage into a “life sentence,” Cooper was able to accomplish in three years what most house owners prolong for decades. "It feels like the weight of the world has been lifted off my shoulders," he says in a CBC video clip of his mortgage burning celebration.
Cooper’s success has been met with surprising criticism. An article appeared in Slate with the following subtitles: “Sean Cooper paid off his mortgage in three years by saving. Ignore his story.” and “Stop idolizing penny-pinchers.” Writer Helaine Olen is clearly fed up with the fact that every conversation about money is based on the same premise – one she views as flawed – that our financial woes are our own fault. She asks:
“How much can we pin the ugly financial situations of individuals to their own behavior – and how much should we blame the great economic environment around us?”
I read Olen’s article in amazement because it made so little sense to me. Who else is there to blame except ourselves? The so-called “greater economic environment” onto which Olen would love to pin our financial hardships and record levels of consumer debt has always presented challenges to every generation throughout history, be it war, depression, poverty, or plague, but it is predominantly driven by consumer choices.
Living beyond one’s means is at the crux of this whole issue. Money is cheap, tantalizing, irresistible. Unfortunately my generation fails to take advantage of low interest rates to pay down debt and views them instead as the ticket to buying new toys. When consumers choose to accumulate purchases – such as houses with 95 percent financing – that they could never afford if interest rates were at a more normal level, then you’ve got a financial disaster in the making. It drives the house prices up for everyone, even those who have the money.
The biggest change is the attitude of entitlement, and the mistaken beliefs of young people (I’m talking about my own generation in their 20s and 30s) that we are somehow supposed to establish and maintain a standard of living on par with that of our parents, who have been working for decades and are perhaps already retired. We buy humungous starter houses (why ‘starter’? why not long-term investment?), shop compulsively in stores and online, update our ‘look’ and homes as per the latest issue of House & Home magazine, travel to the Caribbean for week-long vacations every winter, cook decadently with pricey imported ingredients, drive large new vehicles, and eat out at restaurants several times a week.
Popular frugality blogger Mr. Money Mustache puts it poetically:
“If you’re not getting rich in your twenties, then you’re doing it wrong. [It’s the] very, very best time in your life to work your butt off and create an exponential snowball of money, skills, and friendships. Your brain will never be more sponge-like and inexhaustible. You will never feel more motivated and less cynical than you do now… You need to be that lone workhorse, getting stuff done while everyone else is out late and living off credit cards and parental subsidies. This is where money comes from.”
Rather than mocking Sean Cooper for his non-existent social life and monotonous diet, why not praise him for having the foresight and determination to do what so many are not willing to do because we'd rather go out and have fun? Nobody’s saying you should live as extremely frugally as he did, but implementing much of his example into our own lives could mean paying off a mortgage in five or ten years, which is still impressive.
Cooper is planning a celebratory trip to Disney World; he says he will "loosen up" and enjoy some of the things of which he's been deprived. From now on, he will be packing away the savings while the rest of us struggle to make our monthly mortgage payments for the next thirty years. And when interest rates start to climb – as is inevitable – who will be laughing then?