Today I have the pleasure of sharing an awesome story of another blogger who shares his experience and vast knowledge about personal finance. I think the story that he's telling today about how he became completely debt free by paying off the mortgage changed his outlook is something we are all striving for and some of us might have even completed as well. I would encourage to you to check out his story here and then head over to view more of his expertise over at MustardSeedMoney.com to learn more! I hope you enjoy and I'll let Rob take it from here.
My parents instilled in me from a young age that debt was detrimental and something to be avoided. Growing up, I noticed my parents’ obsession with paying off their mortgages. Each month, they would make extra payments in order to have the house paid off as soon as possible. I didn’t quite understand why they would do this. I figured if the bank was loaning them the money, that they should spend their money elsewhere. But, they believed that the less debt they had, the better they slept at night.
Buying My First Home
It wasn’t until I bought my own house that I fully understood what they were talking about. I bought my first home in 2004. I honestly thought that I would stay there for two years and then flip the house for something bigger and better. Living in the house going on 13 years now, it is obvious that things did not go according to that plan.
Affording the Home
When I originally bought the house, it was definitely more than I could afford by myself. But, as you know, banks weren’t really concerned about that during this time. I took on three other roommates to help defray the bills associated, but I was still paying over half my paycheck towards the house.
At that point, I knew I needed to increase my pay. I went back to school at night, at my local community college, in order to pick up accounting credits. By doing so, I was able to qualify for higher-level jobs. These night classes opened a door to an accounting job in the government, which also coincided with a pay raise.
Tackling My Mortgage
Even with the extra cushion, I began to hate my mortgage. Watching so much of my paycheck leaving each month was difficult to swallow. So then I went back to my parents to obtain some insight into paying off my mortgage. They explained how much interest I would save, and right after that, I created my own amortization spreadsheet.
I became obsessed with the amortization spreadsheet. Whether it was a couple extra dollars or a whole bonus, I was constantly tinkering with the spreadsheet to see the outcome of different scenarios.
I knew at that point that I needed to earn even more and figure out ways to cut down on some of my expenses. At work, I continued to look for projects at work that would allow me to move up and make more money. I was fortunate to excel on those projects and receive recognition through promotions over the years.
The best advice that I received was that I should continue living off my old salary and apply any extra money towards the mortgage. So that’s what I did relentlessly.
Paying off the Mortgage vs Investing
I know some may think I am crazy for paying off my mortgage early. Instead, I could have invested this money into the stock market. I recently plugged in all the numbers to see how much money I would have made if I had invested in the stock market instead of into mortgage. The difference between the two was 0.1%. As many remember, the 2000's were a lost decade when it came to the stock market. So, by paying off my mortgage, I was more than happy to forgo the 0.1% I would have gained in the market.
I have to admit, at times it was a little difficult to deny myself some splurges. My friends were driving brand new BMWs, Mini Coopers, and Lexuses. There I was, driving a turn of the decade Honda that had dents all over it with peeling paint. Being a 20-something single guy driving a beat up Honda was not exactly winning me any awards with the ladies. My wife even admitted after we got married that she paused when I pulled into her driveway to pick her up. Needless to say, she looked past that, and we’ve been happily married, and debt-free, for four years now. Neither of us regret that old Honda because it allowed us to achieve financial freedom that much sooner.
I was able to pay off my mortgage in 7.5 years. When I finally paid it off, it didn’t really sink in until a couple months later. There was no party or celebration. Looking back, I wish I had done something to commemorate that milestone a bit more.
With that said, about six months later, my wife and I decided to plan a dream trip to Europe. The best part of the trip was I wasn’t worried about the money. Sure, we were still frugal and stayed at affordable, but nice, hotels. But I didn’t have "saving money for the mortgage" on the forefront of my mind. It allowed us to really enjoy ourselves.
So what’s life like now? Since the mortgage is paid off, my wife has the ability to take care of her special needs sister full-time. If we still had our mortgage, we wouldn’t be in the same position that we are now. On top of that, I decided that since I don’t have a mortgage anymore, that I would pursue projects at work that actually interested me.
Surprisingly, by pursuing projects that I am actually passionate about has led to me receiving two promotions since I’ve paid off my mortgage. People had always encouraged me to pursue my passion, but that advice was hard to apply when I was so focused on trying to pay off my mortgage.
Being debt-free has changed my life for the better, and I wish it upon everyone else who is reading this. While it may seem intimidating and daunting at first, start with baby steps, and you, too, can achieve financial freedom.
Are you ready to finally take control of your finances? Let my budgeting spreadsheets help!
Just fill out the form below and I'll send you the link to get the same exact budgeting spreadsheets that I use each month!
Included in the workbook:
- Monthly budget form
- Breakdown of savings form (for your sinking funds)
- Overview of your financial plan
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- How Paying Off the Mortgage In 7.5 Years Changed My Outlook - February 13, 2017