Comedian Kathy Griffin is worth a lot of money: around $35 million, she tells The Cut in a recent interview. But she manages it well: She calls her credit score "ridiculous" in a good way and, she says, she's completely debt-free.
Griffin even chose to buy her $10.5 million house in cash. "I didn't want to be an actress with no job security going, 'Oh my God, I have this baller house but I'm scared of the mortgage,'" she says. "No. I bought the one where I went, 'Boom. I can afford it.'"
Suze Orman's advice about not buying more house than you can manage, Griffin says, was part of the inspiration for the decision, and it is likely that Orman and other experts would agree with Griffin's decision to buy outright and eliminate mortgage payments altogether.
Orman has offered similar advice to ordinary people in conversation with CNBC Make It: Only buy a home you can afford.
While it's totally OK to finance your home with a mortgage, "if you're going to buy a house, be responsible with it," Orman says. "And if you're going to stay living it that house for the rest of your life, pay off that mortgage as soon as you possibly can."
That's because everything you owe, including your home, costs you money, and that can affect not just your bottom line but also your mental health. "Debt is bondage," Orman says. "You will never, ever, ever have financial freedom if you have debt."
Kevin O'Leary, star of ABC's "Shark Tank," suggests that you think long and hard before taking on a mortgage.
"It's not always a good investment and, in my opinion, most people in their 20s, or even 30s, have no reason to be taking on that kind of debt," he tells CNBC Make It. "Homes don't always gain as much value as you expect — at least not anymore, and at least not quickly."
If you do choose to buy a home, he says, pay it off as quickly as possible. Getting rid of the mortgage should take priority over using that money to invest in stocks or bonds.
That's because "there's never an incentive to stay in debt, " he says. "Life is unpredictable. What happens if you're laid off or incur unexpected expenses elsewhere? Your once-manageable mortgage is suddenly going to seem not-so-manageable."
No matter what your net worth, it's important to remember that you should only buy a home if you can afford it, which means that you can handle the down payment as well as the homeowners insurance, property taxes, closing costs and other associated costs.
Even if you buy a home that fits within your budget, paying off your mortgage shouldn't be your only financial goal. Orman notes that you should focus on your mortgage after you've contributed enough to your 401(k) to receive any employer match or maxed out your Roth IRA.
You should also have an emergency fund with three-to-six months' worth of living expenses saved up. The future is unpredictable and owning your home outright isn't worth going into debt for if you must cope with an expensive crisis.
Finally, make sure eliminating your mortgage makes sense given your lifestyle and other priorities. What level of risk are you willing to take on? What do your other assets look like? Does it make sense for you, tax-wise? Read up on the potential drawbacks before adopting a new financial plan.
As for Griffin, the decision was worth it. Not only does she have one less bill to pay, but owning her home outright grants her a sense of long-term security. "I can f------ die in this house," she says.
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