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During late 2013 while I was traveling out-of-town for work, my wife Nicole found our “forever house”.
This home had everything she was looking for including an attached garage, open floor plan, updated kitchen, walk-in closet and a big backyard on a half-acre lot. She told me that this was THE ONE and as soon as I got home from out-of-town, I had to see it.
My wife has excellent taste and the majority of the time we are in sync. I wasn’t worried about liking it. I was worried about getting a BIG MORTGAGE to pay for it!
Honestly, I had been burned before. My first home purchase was a disaster.
I bought more home than I could afford in 2004 and when the housing market tanked in metro Detroit around 2009, I owed more on the house than it was worth. I did not want to be in that position again.
Surprisingly, when I got a look at the house Nicole found, I loved it too. It felt like home instantaneously. Even the neighbors were perfect.
We decided to go for it.
BUT… I had a few rules that we discussed to ensure we would pay off our mortgage in 5 years:
1. Get a 15-Year Mortgage
In our first house together, I had made a lot of uneducated first time home buyer mistakes that I didn’t want to repeat. One of those areas I was bound to improve was with the mortgage process.
My first mortgage was based on a 30-year pay off period. 30 freakin’ years to pay it off! I’m sorry … That is just too long to wait to experience true debt freedom.
This time would be different.
When we bought our new house in 2013, the rates were at an all-time low. We worked with LendingTree and got hooked up with a $195,000 15-year mortgage at a 3% interest rate with no points.
This 15-year mortgage had higher monthly payments of around $1,900 (including taxes and insurance), but the bulk of it was going to the principal every month instead of our mortgage company’s pockets. Nicole and I agreed that if we couldn’t afford to pay the larger monthly payments of a 15-year mortgage then we shouldn’t buy the house.
Looking back, the 15-year mortgage was one of the best decisions we’ve made so far.
Not only were we paying less interest to the mortgage company by going with the 15-year mortgage over the 30-year mortgage, but the mortgage principal also went down by a sizable amount each month.
(Check out LendingTree to find the lowest rate possible for your 15-year mortgage. We’re glad we did!)
2. Make Additional Principal Payments
My second nerdy money rule to crush our new mortgage in 5 years was to make additional monthly payments toward the principal each month. We would do this by reducing our expenses and increasing our income.
Here are some of the ways we cut back:
- Less eating out for dinners
- Packing my lunch for work
- Dialing back our grocery spending (we love Aldi!)
- Cutting the cord on cable
- Going with high deductible insurance plans
- Saying no to family and friends more (this was the hardest)
Although these sacrifices felt difficult, we had a healthy income between $160,000-$180,000 during the mortgage payoff process. So it wasn’t that much sacrifice really, it was more just us getting used to the “new normal”.
And we were prepared as well. A couple of years prior, we had eliminated our $48,032 of debt (car and student debt) by living on a lot less than we make. Having no debt definitely helped!
By reducing our expenses, we were able to make additional principal payments each month. This had a major impact on the dramatic reduction of our mortgage. Yes, we had a 15-year mortgage, but we wanted to turn it into a 5-year mortgage.
I don’t always receive bonuses for work. It depends on how my company is doing or how I perform that year. During the payoff process, I was fortunate enough to receive two bonuses for a solid performance. That unexpected money was also sent to attack the mortgage.
Sell stuff online
We also sold a lot of our stuff on Craigslist, eBay and Facebook Marketplace. A road bike, a moped, clothes, purses and furniture … anything we weren’t using regularly and didn’t make us happy was sold.
Live on less (Paycheck mind trick)
My company pays me 26 times per year (every two weeks) as opposed to 24 times per year (1st of the month, 15th of the month). Nicole and I agreed when we bought the house, we would only live off of 24 paychecks annually instead of the 26 we actually received.
So twice a year, we have made a BIG payment on the principal with those two additional paychecks. This consistent biannual payment took a huge bite out of the overall principal balance.
3. Have a Monthly Budget Party
Nicole and I agreed to meet every month to create and review a monthly budget. I dubbed this the “budget party“.
She did not find it to be much of a “party” per se, but I figured if I call it a party she might be more willing to show up. (spoiler alert: it worked!)
Pick a Budgeting Tool
The monthly party consisted of pizza, a glass of wine and us developing a zero-based budget through Mint where every dollar that we earn each month is committed. This way we were controlling our money instead of our money controlling us.
For the couples out there, Zeta is a great resource too. This tool is specifically designed to help couples track their finances together.
This “party” also helped us to discuss other important things like:
- Upcoming family events
- Weekend plans
- Date nights
- Future goals
With two little kids under 6 years old running around the house, we didn’t get enough time to talk. Our Budget Party helped with that.
Related Article: Should I Pay Off My Mortgage or Invest?
Make Consistent Additional Principal Payments
Since paying off the mortgage was a big deal to both of us, we ensured that the extra principal payments were included in this budget each month. With the additional principal payments being automated, it became our way of life.
It’s kind of like when you set up automated 401k contributions. You don’t even allow yourself to realize you have access to that money.
4. Have Fun
My wife is a good yin to my yang. She likes dreaming for the future with me and having a little less today so we can have more tomorrow. She also wants to make sure we’re enjoying our lives today.
With the madness that sometimes comes with my full-time job and young parenthood, we both agreed that if we were going to do this crazy 5-year mortgage payoff extravaganza then we still need to have fun.
Everyone defines fun differently. For us, it meant things like:
- Having themed birthday parties for our kids
- Spending time together for a date night
- Driving to Northern Michigan to visit our family for the weekend
- Going to Detroit Lions games (more torture than fun really).
The last thing we want is to be “house rich and life poor“. I can accurately say we still had fun during the mortgage payoff process. I think Nicole would agree.
5. Dream Big Dreams
In order to keep us motivated and excited about paying off the mortgage, we constantly reminded ourselves why we were doing this.
When we paid off our 15-year mortgage, we would:
Go on More Family Vacations
We would be able to go on an epic family vacation every year.
Perhaps we’d go to Mexico for a week during Christmas or Easter. The warm, beautiful sun would shine on our pale native Michigan skin while we lie on floating rafts in a picturesque infinity pool. Ah, so nice…
Help Our Kids Graduate Student Debt Free
With the $1.5 Trillion in student debt right now, we would do our best to help them avoid that mess.
Our kid’s college funds would grow and grow with the additional funds we have so that one day they could attend college and not have to worry about student loans. Wouldn’t that be an incredible gift?
Buy Our First Rental Property
We would be able to save for our first rental property and begin generating some true passive income. As the passive income builds over time, we would be able to reach financial independence and design a lifestyle we love.
Design a Part-Time Work Lifestyle
One of the best reasons to pay off our mortgage early was that we would both be able to design a part-time work lifestyle. Work less hours at our jobs and spend more time doing the things we love.
Or better yet, keep working full-time, but do work we’re passionate about instead of work we HAVE to do.
Give More to Charities We Care About
Without a mortgage payment, we would find charities that fill up our hearts and become more giving. Having an open hand with our money would help us discover where our passions truly lie.
These dreams kept us motivated and excited about the day our mortgage would be gone for good.
6. Celebrate with the Family
If we kept consistent with our goal, made sure to still have fun and kept dreaming of a brighter future for our family, we knew we’d pay off our 15-year mortgage early.
And we did.
On November 21, 2017, our family became completely mortgage-free.
We had an epic celebration together to commemorate this big moment in our lives!
7. Make Dreams Become a Reality
The sense of freedom we now have is incredible. Without a mortgage, my personal stress levels have decreased immensely. Our young family’s future looks bright.
Here are some of the ways we are bringing our post-mortgage dreams to life:
The following spring after we paid off our mortgage, we took our family to Cabo San Lucas for a week of fun in the sun. We hit up Disney World, Los Angeles and Florida in the year that followed.
Now, we’re addicted to getting out of town when it’s cold in Michigan. Money well spent!
Our family charitable giving has gone from 1% to 5% (of our take-home pay). We’re proud to give more, but we’re more proud to know the fine people leading these charities.
Here are a few charities that I admire and I’ve had the pleasure to interview on my podcast:
- Together We Rise: Supporting children in foster care
- Thorn: Protecting children against sexual exploitation on the internet
- Sandy Hook Promise: Preventing gun violence in schools
- Feeding America: Helping 37 million Americans who face hunger
Adjust our Work Situations
Nicole recently took a part-time job that she loves. Lately, I’m considering the same thing. She’s developed an incredible balance of family time, personal time and doing work she enjoys.
Who knows… maybe I’ll join her in this part-time work lifestyle soon!
Now that the mortgage is all paid off, I compiled the full details of how we did it. I hope it helps you on your journey to mortgage freedom.
How would paying off your mortgage change your life?
Please let me know in the comments below.
Check out LendingTree to get a low rate on your next 15-year mortgage. It worked well for our family!
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Carpe Diem Quote
“It takes two flints to make a fire.”Louisa May Alcott