055 | Money Plans After the Mortgage is Paid Off?

Money Plans After the Mortgage is Paid Off

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Last week, Nicole and I made a really FUN phone call. We reached out to our mortgage company and said that we’re ready to pay off our 15-year loan. It was awesome!

I honestly can’t believe we’re here! After 4 years of extra payments and me repeatedly telling my patient wife the monthly balance … our day has come!

On the call with the mortgage company I was thinking, “They’re going to tell me that I can’t pay it off for some reason. There’s going to be some sort of legal fine print that I didn’t read correctly.” Nope, it was a very nice woman who walked us through the process.

She told us that we’re going to receive a letter in the mail next week. Once the letter comes in, we’ll need to get a certified check from our bank and pay a $30 processing fee and then … NO MORE MORTGAGE!

via GIPHY

I appreciate the encouragement we’ve received through the blog and the questions we’ve received as well. In fact, I wanted to highlight one of those questions right now. This one comes from Melissa …

Q&Andy: Post Mortgage Money Plans

MELISSA:  Hey Andy, I really enjoy the show and your blog. You talk a lot about paying off your mortgage and I think that’s great. I’m in a Dave Ramsey Group that talks about baby steps 6-7 and beyond. What are your plans for your extra cash when the mortgage is gone?

Great question Melissa – Thank you!

We actually haven’t thought about it much lately. We’ve just been so focused on paying it down that we haven’t really hammered out what our life after the mortgage really looks like.

Your question gave me a good jolt! Thank you. I dove through the numbers yesterday and we’ll have about $35,000 extra next year to allocate accordingly. 

Here’s how we’re thinking of breaking it down (and surely this plan will change 100 times in the next few months, but nevertheless, here we go):

1. Family Vacations ($3,000)

Although we’re taking advantage of credit card rewards heavily for our vacations next year, we’ll still be increasing our spending overall.

We’re planning a Disney vacation in the Spring right around Calvin’s 4th birthday. (Please email me and tell me if we’re nuts for taking a 4-year-old to Disney – too early?)

My parents are celebrating their 50th wedding anniversary next year! We’ll be joining them in December somewhere warm and tropical to escape our Michigan winter and make some great memories.

($35,000 – $3,000 = $32,000)

2. Tax Favored Savings ($6,000)

Since we’ve been maxing out our Roth IRAs and my 401k at work, it is time to take advantage of the next tax-favored savings strategy: the HSA.

An Health Savings Account (HSA) will help us save for future medical expenses and further protect our family. If for some reason our family doesn’t need all of the money we’ve saved in the HSA for medical expenses, it can be withdrawn at age 59.5 penalty free. It’s like a secret 401k!

($32,000 – $6,000 = $26,000)

3. Rental Property ($20,000)

Over the past year, I’ve been reading a lot of real estate investing books and interviewing a series of experts on the podcast all with the goal of increasing my knowledge in real estate.

Nicole and I are excited about purchasing our first rental property in late 2018. We have a lot to learn, but we’re excited about working on the challenge together.

($26,000 – $20,000 = $6,000)

4. Taxable Brokerage Account ($2,000)

Investing outside of real estate will be just as important as well. We’ll open a brokerage account to increase our passive income. In hindsight, I should have opened one of these up in my early 20’s, but the future is all that matters now.

($6,000 – $2,000 = $4,000)

5. Increase our Kid’s College Savings ($2,000)

When Zoey and Calvin were born, we opened a 529 account for both of them so we could take advantage of the power of compound interest.

We’ll increase that annual savings rate slightly to help the accounts grow. In reality, I don’t think we’ll be saving up for the full amount needed for the two of them to go to an in-state college. The costs are just too high. We’ll be encouraging our kids to get college scholarships and to get some jobs during school to help.

6. Give More ($1,000)

Right now, our giving centers around two children we’ve “adopted” through World Vision, a local family we sponsor for Christmas and our local church.

Lately, I’ve been inspired by organizations like NEFE and dFree that are working to promote financial empowerment in our country. 

In 2018, Nicole and I will be working to focus our giving. Does it make more sense to give most or all of our money to one organization we believe in? Or a variety of organizations?

7. Invest More in Marriage, Kids and Money ($1,000)

I see this website and podcast being a solid income source down the road. Given that, I will be putting more of my money towards its growth. 

The connections I’ve made through having a blog have been amazing so far. Blogging about my passion for family finance has given me the opportunity to write for an men’s magazine named STAND – a magazine for men who give a damn. I’ve also been featured in Business Insider, NerdWallet, Rockstar Finance, AOL Finance and several money-smart podcasts. It has been a blast! 

If you want to develop your first blog, I developed a 10-step guide for getting your blog started on WordPress. It’s the same process I went through last year. It takes like 15-20 minutes and BOOM – you’re a blogger.

Thank you for writing in Melissa and inspiring me to update our family plan post mortgage. I’m pumped to put this new allocation into action starting next month!


Money Master of the Week

Congratulations to Mr. and Mrs. Kiwi for paying off $60,000 in student, medical and auto debt within 3 years of graduating college. What a way to start off your marriage!

Congratulations on being our Money Master of the Week!

Learn more about this inspiring couple at KiwiandKeweenaw.com.

If you have a financial victory you want to share on this show, please contact me with the details. Your story will inspire others to save more, make more and protect their family’s future.


Show Resources

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How to Start a Blog

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Carpe Diem Quote

“The best way to predict the future is to create it.” – Abraham Lincoln

What would do you do with YOUR money after your mortgage is paid off?


 

Author: Andy Hill

Andy Hill, a mid-30’s father of two living in the metro Detroit area, pens the MarriageKidsandMoney.com (MKM) blog taking you through the trials and tribulations of being a young parent and husband who is planning for his family’s future and winning with money.

5 thoughts on “055 | Money Plans After the Mortgage is Paid Off?”

  1. Hi Andy, just found your site. And was reading a couple posts you have done. First off, congrats to you and your wife for the commitment, discipline, and fortitude to set a plan and then work the plan on your mortgage.

    I then started to read your next article on “what to do after the mortgage is paid. And I feel you have another concise but also visual plan based on a series of goals.

    I did read this statement you made and wondered whether the word “monthly” was supposed to be annually. I don’t mean any disrespect by it if in fact you and your wife have an extra 35k each month. But if that’s your additional freed cash flow now, if it is in fact monthly…you can allocate a he’ll of a lot more to Disney than just 3 grand. Hahaha.

    Congrats again on doing something that sounded right, But you then actually took the time to figure out “what it would specifically mean to YOU” if you went after it. I hope this finds you and your family great…And that you will splurge a little and have one back of a Holiday season up ahead.

    Happy Holidays – Jp

    “Your question gave me a good jolt! Thank you. I dove through the numbers yesterday and we’ll have about $35,000 extra each month to allocate accordingly.”

    1. Thank you so much JP! You are exactly right. The $35k is for the whole year not per month. I goofed. It is now updated thanks to you. I re-listened to the audio on my podcast after I read your comment and I “say it” correctly, but I “wrote it” incorrectly. Man, $35k per month?! That Disney trip would be EPIC!

      I appreciate your kind words and I’m glad to hear you’ve found some articles to dive into. Nicole and I are talking about how to celebrate this family win as I type this. So far, my 5-year old daughter wants to go to the local water park, my 3-year old son wants to play with the neighbors, my wife wants a pedicure and I want a week off of work. These are not gigantic requests so I’m sure we can do them all.

      Best wishes to you and your family JP!

    1. Thank you so much. We’re still deciding on our mode of celebration but we will more than likely use our typical mortgage payment in December for some family fun. Zoey (my 5-year old) wants to go to the local water park. Sounds like fun to me!

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