A blogger I enjoy reading regularly is Frugal Zeitgeist (FZ), a 30 something-year-old living in New York city, and last week she wrote a series of posts about her mortgage payoff milestone, how she did it and what she is going to do. An entertaining and informative series of posts worth reading. Not having to pay rent or a mortgage is one of the key steps to financial freedom. It frees up what is most likely one of your biggest expenses and allows you to channel that money to other wealth building pursuits.

I currently rent and have been looking to buy, yet the housing market is too shaky for my liking. I do feel though, that the next 5 to 6 months will be the best time to buy as house prices recover in 2009 after the presidential elections and most of the unknowns behind the sub prime crisis past us. Still FZ posts got me thinking about the very nice feeling and thought of paying off my biggest expense - accommodation, and what I would do with the freed up funds. I currently pay about $2000 a month in rent, and if I was to buy the place where I lived (with a 20% deposit) my mortgage payment would be about $3500 a month, or $42,000 for the year. This is a fair amount of dough and here are four things I could do with the money to speed my journey to financial freedom.

1. Invest it. This would be the most logical and wealth building move. Even if I were to put the freed up funds in a high interest savings account, paying 3.5%, I would get a risk free return of about $2000 a year. Still with inflation around 4% to 5%, I would end up losing money in real terms. A better bet, and to play an impending stock market recovery (I think), would be to invest in a variety of low cost mutual and exchange traded funds. Given the safety net of a paid off mortgage, my risk tolerance could be much higher, meaning I would be able to take some more risky type investments (commodities, foreign exchange trading) that are potentially more rewarding.

2. Education. This is investing in yourself and the returns from this are becoming a more in-demand employee which should lead to higher wages. More money allows more investments (see point 1), which means financial freedom is one step closer. I am starting on the road to pursue an MBA (more on this in a later post) and given they cost from $50,000 to $100,000 - the extra money from a paid of mortgage would definitely help pay off schooling costs.

3. Upgrade. A lot of people, once they pay off or get close to paying off their mortgage, decide to upgrade to a bigger house or better area. This means another big mortgage. Long term this will probably pay-off, but is it the best wealth building move for financial freedom? A lot of studies and statistics have shown that investing in stocks provides a better return in the long term. Upgrading your house to me is more a personal and family decision, than a financial decision.

4. Investment property - With the freed up cash, I could invest in a properly (apartment, town house) that can be rented out. If the rent covers the mortgage payment this is a zero sum investment and over time the investment property will provide capital growth and a growing stream of passive income. However becoming a landlord has its own challenges.

All the above are options I would strongly consider if I were in the position of having paid off my mortgage (a pipe dream for now!). However the key thing as FZ did is to also reward yourself a bit and give a little bit to some good causes. $100 a month will do a lot of good for some charities and won't hurt your bottom line too much, given your improved cash flow.

As you can see paying off your home is a huge achievement and it opens up so many more financial options to you and that is why it is close to my number one step for getting to financial freedom sooner. Do you have any other suggestions on what you would do with the money you freed up from paying off your mortgage? When I buy a house my goal is to pay off as soon as possible (taking tax implications into account), so that I can pursue other wealth building activities.

Consider LendingTree when looking for your next mortgage or for refinancing options