April 27, 2017

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Personal Finance

Living the three-year mortgage plan

Millennial's new book on owning a home -- outright and ASAP -- is a fun, frugal guide to financial freedom for Canadians… of all ages

Sean Cooper held a mortgage-burning party and it was national news.

Paying off a mortgage in Toronto is no small achievement, even if it takes 25 years. But you still might be wondering why this was newsworthy.

Well, here’s the thing: Cooper garnered the attention of CBC’s The National because he paid off his mortgage in about three years.

In part that’s because he was able to put about 70 to 80 per cent of his six-figure annual income down against the $255,000 mortgage on his $425,000 bungalow.

Yet the business graduate from Ryerson University wasn’t working a high-salaried job in Toronto’s financial sector. Rather, he cobbled together a healthy income working full time earning about $50,000 a year while also freelancing as a personal finance writer and renting out the first floor of his home.

More notably, Cooper is 31 years old. He graduated school in his early 20s with no debt, while saving up about $170,000 for the down payment on his home.

The Toronto native has penned a book (available in March) on his experience.

Burn Your Mortgage: the simple, powerful path to financial freedom for Canadians is not just a how-to guide to pay off your mortgage ASAP.

It’s also a meditation on living simply with fewer expenses so you can make the most of your income to save more and truly gain financial freedom.

"My book walks you through the step from thinking you want to own a house to putting the plan into action where you can save for a down payment, through to being a landlord and other ways to earn extra income through the shared economy (ahem — Uber)," says Cooper in a recent chat with the Free Press.

"Basically, it explains how you can still do the things you want, but do them on a less expensive basis so you have more money to save."

Curiously (or maybe not at all) Cooper’s story touches a nerve for a lot of Canadians. What was supposed to be a positive story of a young adult being fiscally prudent and getting ahead as a result drummed up a lot of negativity.

"There was definitely a lot of pushback," the soft-spoken Cooper says. "People either love my story or they hate it."

Perhaps it was parents pointing to his story as inspiration for their adult children. Or maybe it was the sense that Cooper’s adherence to living lean — and seemingly doing it so gracefully — rubbed a lot of other millennials, often saddled with student debt and uncertain career prospects, the wrong way.

Maybe some felt they were being preached to about money.

"I think there were people who felt I was forcing my views upon people," he says. "That’s the main reason I wrote the book: to clear that up."

Indeed, Cooper cites his own experiences as examples to follow. But his path isn’t for everyone, he is quick to add. He lived car-free. That alone frees up a ton of cash every month: no car loan payment, gasoline, insurance and maintenance costs.

"But that might be tough for families with kids" to get to hockey practice and other activities, he adds.

He’s also a vegetarian, which helps cut food costs. (Beans and grains are cheap.)

"And I only bought fresh produce when it was in season," he says, adding he spends about $100 a month on groceries.

That’s right: $100… so again, not for everyone.

But his tips do come in handy for people looking to save a few bucks here and there — a little short-term pain that adds up to big gains down the road.

"I price-matched, which basically means I would take a flyer into a supermarket and it would match the sale price."

He also bought in bulk when rice, oatmeal and other staples went on sale.

More than anything, his story offers inspiration of how to uncover opportunities to make money in ways we may not have thought of previously — such as renting the main floor, which he did for $1,600 a month.

Even with the mortgage paid in full, Cooper still rents it out, using the cash to maximize his RRSP and TFSA.

"I’ll definitely consider moving upstairs if I get married and have a family, but till that happens, I’m perfectly content living in the basement, saving the rent money and building up a nice-sized portfolio."

His goal remains financial freedom — the ability to work because he wants to rather than because he has to — even with the mortgage gone.

But his experiences in childhood figure largely in all his financial decisions, particularly when it came to having a mortgage.

"My inspiration is my mother," Cooper says. "Growing up, she was a single mother raising my sister and me."

His mom lost her job twice, first during the dot-com bubble and again in the 2008 financial crisis.

"I remember her being out of work for like six months and almost losing the house."

So the idea of carrying around a $250,000 debt for the next 25 years wasn’t appetizing.

"Precarious employment is the new norm," he says. "You can’t really expect to have a job for life anymore." In this light, getting debt off your back as quickly as possible makes a pile of dollars and sense. Cooper urges others to at least give it a shot. You might surprise yourself just like he did.

Originally, he sought to pay off his mortgage in five years, but it took him only about 37 months.

"I’m not telling people they should live in the basement of their house," he says.

But he does hope the book’s conversational style and pop culture references will resonate on some level.

"If perhaps they follow 25 per cent of the stuff that I did, then maybe they could own a house and pay off their mortgage that much sooner."

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