Budgetboost.co is supported by its readers. If you click on or buy something via a link on this page, we may earn a commission.

“Debt Free for Life” by David Bach – Mortgage Debt Chapter Review

As some of you may know, I don’t read many personal finance books.  My tastes trend towards mysteries and suspense.  BUT, out of all of the personal finance books I have read, The Automatic Millionaire by David Bach has always been my favorite.  I love common sense advice that is simple to use and can make huge positive impacts on someone’s life.

Now I have the honor of reviewing a chapter of David Bach’s new book, Debt Free for Life.  Here is my personal take on Chapter 9, Mortgage Debt: How to Protect Your Home and Pay Off Your Mortgage Early.

My Personal Take on Mortgage Debt

I will be honest, I asked to review this chapter specifically.  I truly believe that paying off a mortgage early is one of the keys to financial security.  Sure, there are worst debts.  There are higher interest debts.  There may even be higher interest investments.  BUT, there is no security blanket in the world better for me than finally being able to live payment free in my own home.

That is why Mr. BFS and I found an affordable home ($114,000), put 20% down, and overpay the mortgage every month.  If we just keep on the same track, our house will be paid off in 10 years total or less.  We’ll be completely debt free at around age 32 and 33.  That will make our early retirement dreams even easier to attain.

Bach’s Breakdown of Mortgage Debt

David Bach has once again impressed me with a straight-forward look at debt and EASY ways to get rid of it quickly!  His mortgage debt chapter highlights the benefits of fixed-term mortgages and ways to use them to your advantage.  He also gives advice on the best refinance companies or handling a bad mortgage situation.

In my opinion, the highlights of the Chapter 9 – Mortgage Debt include:

—> His wonderfully quick explanation and visual of the tens of thousands of dollars anyone can save if they can afford a 15 year mortgage instead of a 30 year term.

My husband and I would have been looking at a $530 payment for 30 years instead of the $740 payment we have with our 15 year loan, so the decision was pretty easy.  It was pretty cheap either way, so why not go with a 15 year term, right?

—> His biweekly payment suggestion and visual for 30 year fixed-rate terms.  It shows that anyone who pays half of their mortgage payment every two weeks can shave 5-7 years off their 30 year term and save tens of thousands of dollars overall.  Biweekly payments on a $300,000 mortgage at 6% will shave off 6 years and $72,000!

—> Bach also suggests how to switch over to a fixed-rate mortgage if you plan on living in your home for more than 5 years and are in a variable-rate mortgage currently.  He follows this with points to pay attention to during a refinance.

—> The last part of the chapter is for anyone in a mortgage crisis right now.  He gives great advice to anyone who is currently struggling to keep their home including places to contact and options you may have.

—> As with all of his chapters, there is a small checklist at the end for anyone trying to go after debt freedom for life.

My Summary

Overall, I couldn’t agree more with David Bach.  Mortgage debt freedom is an important step to financial security and his suggestions are common sense ways to get there faster.  It may not be a brand new idea, but it surely is worth mentioning by anyone as much as possible.  Plus Bach has a great way of simplifying ideas without being condescending.  I personally enjoy his very straight-forward writing style and appreciate the examples he selects to use.  Bach seems like a guy that personal finance geeks like us could have a good conversation with.  I give Debt Free for Life my personal thumbs up!

Crystal at Budgeting in the Fun Stuff.  I did receive a free copy of David Bach’s “Debt Free for Life” in order to be able to do the review, but I volunteered for it in advance since I did very much enjoy “The Automatic Millionaire” before I ever even knew what a personal finance blog was, lol. Aside from using apps to buy stocks we don’t really have a lot of “automatic” money decisions being made for us right now. Perhaps I should dig in and find more ways to have money working for us.

Here are some other chapter reviews from the blogosphere:

  • Barbara Friedberg Personal Finance’s Chapter 5 review, Debt Reduction is like Dieting
  • Bucksome Boomer’s Chapter 5 review, David Bach’s DOLP Method to Pay Down Debt
  • The Saved Quarter’s Chapter 10 review, The Student Loan Diet: A Review
  • Bible Money Matters’ Chapter 13 review, A Review for Debt Free for Life by David Bach

18 thoughts on ““Debt Free for Life” by David Bach – Mortgage Debt Chapter Review”

  1. Bogey

    I actually just wrote a post that talked about mortgage debt yesterday. I think what the mortgage industry thinks people can afford is way overblown. I think think the “old conservative” mortgage debt ratios are too aggressive. THe old number used to be that your mortgage payment (principal, interest, taxes and insurance) should not be more than 28% of your gross income. FIrst of all, 28% is a lot, and second of all, why calculate based on gross income? Gross income doesn’t come home.

    I believe the new ratio for house buying should be keeping the payment at 20% of NET income (take home pay). It’s extreme, yes, but if you get this one big financial decision right, you’ll do very well.

  2. Holly

    @ Bogey:
    I had thought that the 28% did not include taxes and insurance when I purchased my house. Big mistake! Of course the mortgage brokers and realtors don’t bother to advise their clients since that is not their job; they just want to rush them through the sale.

    What I wouldn’t do to be able to buy a decent house where I live for $114,000!

  3. Jackie

    Did he offer additional suggestions on ways to get your mortgage paid off faster? I like his writing style too — very straightforward.

  4. Barb Friedberg

    Very nice job on this chapter. I admire your determination and discipline. Altough I’m not a proponent of early mortgage payoff for our family, I totally understand the freedom of an early payoff. I highly recommend this book, it is an easy read with inspiration and motivation to succeed financially.

  5. Crystal @ BFS

    @Bogey, yes, the less someone puts into basic home expenses, the better. With our mortgage and property taxes, we are right at 19% of our take home pay…

    @Holly, yeah, we were preapproved for $175,000. We would have been paying off this baby forever!!! $114,000 for a 1750 sq.ft. house is even a good deal here – it was a foreclosure that would have been in the $130,000-$140,000 range. But keep in mind the average income in Houston, TX is lower than other places too. 🙂

    @Jackie, the 3 ways he mentioned that I remember really easily were to pay half your mortgage biweekly, add 10% towards principal on each payment, or make an extra payment every year. He highlighted the biweekly payments since people are way more likely to follow through when it is automated.

    @Barb, thanks! Your chapter review was fantastic too!

  6. krantcents

    I am always in favor of paying less in interest! I also think of opportunity costs of paying my mortgage off early. Since the IRS subsidizes mortgages, the net mortgage rate is pretty low and you could invest the extra principle and achieve a higher rate.

  7. DoNotWait

    Crystal, so nice for you to get it done in 10 years! We actually have a higher mortgage based on 25 years, but are paying it weekly with a doubled interest rate basis. Basically, we’re paying it like if it were a 15 years. Except it gives us the freedom to make lower payments in case a bad financial situation would happen to us. I think this is one good way to use a 30 years mortgage. Don’t you think?

  8. Crystal @ BFS

    @krantcents, I might have to think about paying off my mortgage faster if we ever saw any tax break, but since we pay less than $4000 in mortgage interest a year, the $11,400 standard deduction for my husband and me is just a better way to go. So we really see no help from the IRS…

    @DoNotWait, paying off a longer term faster really does lead to more flexibility! I agree!

    The difference between a 30 year mortgage vs a 15 year mortgage for us was a $550 monthly payment instead of $740…just not a big enough difference to justify the extra 1% of interest (we got 5.375% for 15 years vs 6.5% for 30 years). But we were in a special siuation – we had 20% down and our mortgage was for $91,200, which is pretty low to start with…

  9. Everyday Tips

    BFS- you and your husband are going to be all set at a very young age. Great, great job. You should hold a seminar for young adults so they can learn how to just buy what you need instead of being swayed by extras and such.

    Great review. I too pay down extra on our mortgage. I can’t wait for that debt to be gone.

  10. Jeff @ Sustainable life blog

    Great tips crystal – I may be in the market for a new home soon (landlord wants to sell) and I could use something like this. I got the david bach book for free (a digital copy) a while back, and now I think I may have to look at it.

  11. Crystal @ BFS

    @Everyday Tips, woot for a fellow debt hater! 🙂 I think that learning solid money basics early in life is simply a great idea but I wouldn’t even know where to start on getting a young adult seminar together…maybe part of my full time blogging career could be to work on the college kids too, lol.

    @Jeff, out of all the financial gurus, I like Bach best. It’s pretty simple to follow his advice or my own though – spend the least amount you can for the house that fits your needs, take the shortest fixed term that you can comfortably afford, and pay it off as soon as you can. 🙂

  12. JT McGee

    I may not be in 100% agreement in paying off things ASAP, especially with rates so low, but for people who want to run their person finances, and not be run BY their personal finances, paying off the home is a huge comfort that would give a lot of people some room to breathe.

    If you want to become filthy rich (ooh, ooh, me, me!) then paying off a home as fast as possible probably isn’t the way to do it, as it is leverage that makes most people filthy rich. However, there’s plenty of evidence that paying off a home ASAP is the safest and most sure way to become wealthy, and there’s nothing wrong with that! I’m sure as I actually…uh, reach a point where I consider myself an adult, I’ll see the beauty in comfort, as well.

    Congratulations with your progress, both in paying off a home and in blogging. Your blog is so encouraging–it’s hard to leave without a smile.

  13. First Gen American

    I absolutely hate paying interest..even for a mortgage. It feels like money is being taken away from me with nothing in return. This may not be entirely true, but that’s how it feels to me.

  14. Crystal @ BFS

    @JT, I get where you are coming from, but I just don’t think that paying off a mortgage early will kill anyone’s dreams of being filthy rich. Why would it?

    My husband and I are paying off our home in 10 years total by making $900 payments every month. Even if we made the $740 payments instead, how is that $160 a month keeping us from becoming any more rich than we are right now?

    I think filthy rich people are usually the ones that put the effort into a new idea or business that takes off and I doubt the extra $160 a month is keeping us from that.

    If anything, having our house paid off 6 years from now may allow us to take advantage of the extra $900 a month we will have to truly pursue a new business or investment with gusto. What do you think?

    @First Gen, that’s how I feel too…it’s like actually flushing the money…I can’t even get a cupcake with the thousands of dollars I will end up paying to borrow money…

  15. JT McGee

    @ Crystal – It’s more of a leverage thing. You’re definitely right in that starting your own business is the best way to get filthy rich, but in more general terms, borrowing at X% and making X+2% is an excellent way to get filthy rich. It’s scalable.

    When you really look at it, paying off a mortgage at…say 6% is saying that you don’t think you could get a better return elsewhere. Factor in the home interest write-off, and the target is even lower.

    I didn’t mean to come off as if it couldn’t be done, it most certainly can. You may value having the security of a paid off home more than I do, and I can see the comfort in paying it off and using the money to invest in something new, or to buoy a new project.

    The way I see it is that you are borrowing at a very, very low interest rate. To start paying off would be to say that higher returns aren’t available elsewhere. I guess what I’m getting at is debt doesn’t really matter if there are better returns to be found somewhere else.

    Maybe taking this to an extreme would help showcase the thinking: Would you pay off a 1% per year loan, right now?

  16. Crystal @ BFS

    @JT, I do understand the leverage thing, but in my case, I really doubt the extra $160 we’re paying a month really would make us much more than the 5.375% return we’re getting by paying off the mortgage. In our case, it really is 5.375% since the standard $11,400 deduction is bigger than if we itemized, so we really do not get any tax benefits from our mortgage. Even if we invested the $160 in stocks and made a 10% return or better over the next 10 years, I really cannot see that as a huge win as opposed to getting a 5.375% guaranteed return and then having the full use of $900 to invest as we see fit 6 years from now. Plus, with interest rates so low right now for savings and CDs, paying off a mortgage is a really awesome low risk investment right now…

    And I know I am one of the weird debt-haters that really would pay off a 1% ASAP. I even paid off our 0% furniture loan 3-4 months early just because I hate owing people money. It’s just a mindset difference I think…

    But you are very correct, leveraging your investment money can be a winning strategy. Like you said, it’s just a matter of what makes you comfortable, right?

  17. JT McGee

    Absolutely! It’s all about comfort. I’m sure we could make the argument that feeling safe in your finances means you’ll actually make more, as you’ll be able to dedicate full time thought and feeling toward whatever it is you’re doing at the time, instead of worrying about finances.

    I guess sometimes there’s more to the story than what the finance calculator tells you. 🙂

Comments are closed.