To get out of debt, I sold individual stocks in my portfolio to pay off the mortgage ($195,000), Student Loans ($54,000) and my largest credit card balance ($9,000) in a lump sum. Yes, I now owe longterm capital gains taxes to Uncle Sam.
WHY - I needed to eliminate the obligation of paying principle + interest to the banks. My portfolio returned 20% in the last 10yrs vs my mortgage apr of 2.8% (if you convert the mortgage rate of 2.8% to the actual dollar amount I’m sending to the bank, I’d be throwing money away paying interest, monthly, for another 19yrs!).
HOW - Mortgage payments: 19 yrs left. So my plan is to invest 90% or more of the freed-up monthly payments (principle + interest) so that my stock portfolio can quickly gain back $300k in 3yrs. I don’t plan on going back into debt. I use dollar cost averaging whether the market is up or down. I don’t time the market.
Best perk: cost of living is now significantly lower without the debt payments.
Second best perk: the $195,000 paid off mortgage is not lost. Simply transferred and stored. I’ll get all that back if I sold my house!
For public accountability I plan to provide periodic updates starting today. I’m measuring my portfolio returns from Jan 1, 2025 to track how long it’ll take to get to $300,000 total returns from that date.
May 12, 2025: $19,000 cumulative return so far