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Becoming Debt Free

Becoming Debt Free

True financial freedom starts with becoming debt free. With all the speculation and excessive risk taking, we’ve decided to play it safe. We’re paying down debt to become completely debt free.

But first, my disclaimer: this post contains affiliate links from my most popular financial wealth building tools where the blog may receive a small commission on any sales from Silver Gold Bull, EQ Bank, Questrade and Tangerine.

Avoid Getting Sucked Into These Asset Bubbles

I’ve made no secret about my growing concern about the economy and the financial, crypto and housing markets. I think a lot of people are going to get hurt because they’re going all-in with asset prices at their peak.

Just think about the message surrounding one of the most expensive housing markets on the planet. We are told that housing has reached a permanently high plateau and to buy now or get priced out forever.

We have record high household debt (largely due to real estate insanity). And we’re told that it doesn’t matter because interest rates are so low and the debt will likely inflate away!

Stock prices are at record highs and we’re told that it’s okay because of cheap money and central banks supporting the markets.

We’re also seeing frenzied investing in the Crypto space because we’re told that it’s the future…just like the Internet in the ’90s (I think I remember how that one ended).

What If Things Go Wrong?

My concern is that what if the rosy narratives are dead wrong! The biggest problem we face in the global economy is too much debt. As I said in a recent post, global debt is nearly twice as much as where it was in 2008 and back then it was enough to take down the entire global financial system.

The solution over the past decade to our debt problem has been to double the size of the original problem. No de-leveraging ever happened!

What’s worst is that the policies of central banks around the world have brought out the absolute worst in human behaviour. The low interest rate and quantitative easing programs were designed to support a fragile economic recovery. Instead, these policies fuelled massive risk taking and the formation of huge asset bubbles in housing, stocks, bonds, crypto etc. And this pattern has spread around the world.

Some money from programs like the enhanced unemployment benefits and pandemic support have been used to play in the stock and crypto markets.

There’s also a record amount of leverage in the system as a whole. So when things turn the other way there will be a massive unwinding.

In general, I think the setup here is extremely risky for average investors as markets have all the hallmark signs of a bubble.

Some Anti-Bubble Financial Moves

So against that backdrop, we’re doing the safest thing we can to avoid becoming collateral damage when these bubbles burst. Our goal is to pay off our mortgage as soon as possible.

Paying down debt is the least exciting thing a personal finance blogger can do in these crazy times. But I think it’s the best move for anyone with any kind of debt. A dollar going down on debt is a dollar added to your net worth. A dollar invested into these bubbles could easily become 50 cents.

Patience has been shown to be a key factor in financial success. I think a lot of people have been duped into thinking that they can make some easy money in these markets. Data shows that there are no shortcuts when building true wealth.

Study after study has revealed that real wealth is built slowly and steadily over time. True wealth is more the result of small but important financial habits than it is getting lucky on some meme stock or Dogecoin.

True wealth is built by doing really simple things such as:

Getting out of debt,

Living below one’s means and

Saving small amounts of money regularly.

In addition to paying off our mortgage (which is non-deductible debt), we are building up our cash savings and slowly adding some physical precious metals to the mix.

Once we make this final lump sum mortgage payment and increase our weekly payment to the max, we will have done everything we could do to kill our mortgage. It will be fully paid by Spring 2022. Starting in September, we plan to build cash to take advantage of any market sell off. We also plan to restore our passive dividend income.

Save, Invest, Build Wealth and Prosper

In case you’re wondering here’s where we park our money and some financial services that we use:

For our precious metals we use Silver Gold Bull because they price match and offer fast, insured, delivery.

We use Tangerine for our daily banking because they offer incredible products and no-fee banking.

For our Savings we use the EQ Bank Savings Plus Account because we need to make highest return possible on our cash savings. Never heard of it? Click the link to check out my EQ Bank Savings Plus Account Review.

For investing we use TD Waterhouse (for legacy investments) and Questrade because it offers incredible value with low cost stock purchases and free ETF purchases.  If you haven’t done so already, check out my Questrade Review to see why it’s the best deal around.  Get $50 in Free Trades when you signup for Questrade through this link.

Cheers and thanks for reading Becoming Debt Free.