We're paying off our mortgage in less than 5 years

I am not a financial genius by any means. At times in my life, I've maxed out all available credit
and found myself in debt up to my eyes. But as of June 7, 20!, my "ife and I are mortgage#free.
$%at's four years and 0 mont%s from t%e day "e made our first payment.
Why we're paying off our mortgage
&%ortly after being married in 200', my "ife and I %ad a ne" %ome built less t%an 0 minutes
a"ay from our (obs. )e moved into our %ome in July 200* and %ad our first payment due t%e
follo"ing mont%. +ur original mortgage "as in t%e amount of ,-',7*0 on a !0#year fixed#rate
loan at -.*7- percent, "%ic% gave us a mont%ly payment of ,.27 /before insurance and taxes0.
$%is meant at t%e completion of our !0 years of dedicated payments "e "ould %ave paid
,!!!,*'* /give or ta1e0 ## and ,77,07* of t%at "ould go to t%e lender, (ust for %aving let us
borro" money.
Initially "e %ad no intentions of living in our %ome for more t%an a fe" years, so "e only made
t%e minimum mont%ly payments during t%e first year. $%e goal "as to finis% our attic and
basement, build a dec1, and t%en sell t%e %ome and do"nsi2e. But after t%e birt% of our first c%ild
and deciding to %ave a second, "e reali2ed t%e %ouse did meet our needs and "e "anted to raise
our c%ildren t%ere. +nce "e decided to remain in t%e %ouse, "e 1ne" t%e sooner it "as paid for
t%e sooner "e "ould be free from t%e s%ac1les of debt3 t%e sooner "e "ould %ave t%e ability to
use our money for more t%an (ust mont%ly bills.
)e devised a plan to pay off t%e mortgage and 4suffer4 for a fe" years "%ile our c%ildren "ere
young. )e figured "%ile t%ey "ere babies and toddlers "e "ouldn't "ant to %ave many
adventures a"ay from %ome /5isney "it% a # and !#year old, no t%an1s0 and t%ey "ouldn't
re6uire many %ig%#dollar necessities /play doug% and crayons provide nearly endless
entertainment early on0.
How we did it
)e pooled resources. $%is meant ta1ing every penny made and concentrating t%at beam of
li6uidity in t%e direction of our mortgage debt. +ur %ouse%old income is 6uite average, but "%en
"e closely examined our finances, "e found t%at "e %ad muc% more t%an "e "ere putting fort%
to pay to"ard our mortgage. I'm an analyst for a day (ob and of course I deal "it% numbers a
great deal, so I created my o"n budget s%eets and amorti2ation c%arts. In t%e end, t%ere "ere
several contributing factors t%at %elped us pay off our mortgage in less t%an five years7
• )e made bi#"ee1ly payments and ensured t%e extra payment eac% mont% "ent directly
to principal. +nce t%e ban1 started receiving an extra full payment every t"o "ee1s t%ey
immediately started applying it to our account as a future payment3 "e learned t%is lesson
6uic1ly and after t%at made sure t%e ban1 coded our account to only apply one payment a
mont% and put everyt%ing else to"ard principal .
• )e refinanced. After 2' mont%s of payments on our original mortgage, "e %ad only
"%ittled it do"n to a little over ,87,000. In 9ovember 200 "e refinanced t%is amount
to an interest rate of 8.!7-, staying "it% a !0#year fixed mortgage. +ur ne" payment "as
,7!7 /before insurance and taxes0.
:;eady to refinance your mortgage< =lic1 to compare rates from multiple lenders no".>
• )e lived "ell "it%in our means. ?ood"ill sa" t%e ma(ority of our business.
• Anytime "e %ad extra money "e applied it to t%e mortgage. $%is "as everyt%ing from an
unexpected tax refund to finding opportunities for overtime at "or1.
• )e lo"ered our savings contributions. +ur 801 contributions "ere originally set at -
percent, so "e cut t%is do"n to - percent and still received our employer matc% of -
percent. )e also %ad mont%ly allotments going to"ard -2. college savings accounts for
our c%ildren3 after reali2ing our pooling efforts "ould only re6uire t%ese contributions to
be discontinued for a fe" years, "e decided to stop t%em temporarily until t%e mortgage
"as paid off .
• )e avoided ot%er forms of debt. @or example, our t"o paid#for reliable ve%icles meant
"e didn't %ave car payments absorbing our income. )e decided not to purc%ase a ne" car
unless one of t%e current ve%icles died. $%an1fully, t%ey %eld on.
• )e originally %ad separate %is and %ers spending accounts t%at allo"ed us eac% to ma1e
minor impulse buys "it%out ac6uiring t%e blessing of t%e ot%er3 t%ese "ere cut out.
• )e reevaluated our mont%ly bills. After a number of p%one calls and negotiations I "as
able to lo"er our cable, cellp%one, and car insurance bills. )e eliminated our %ome land
line entirely, and "e also %ad our %ome security service disconnected.
• $%e tax man "as getting more t%an %is s%are eac% payc%ec1, "%ic% meant every year "e
"ere getting a substantial tax return. )e reconfigured our tax deductions "it% a goal of
never o"ing but trying to gauge our return as close to 2ero as possible. $%is added t%at
muc% more eac% payday to our ban1 account. In t%e fe" occasions t%at "e received
lumps of tax money bac1, of course t%ose funds "ent directly to our mortgage, do"n to
t%e last penny.
• Aastly, "e loo1ed at "ays "e could s%rin1 our utilities. @or electric savings, "e installed
programmable t%ermostats and lo"ered t%e %eat temperature and raised t%e air#
conditioning temperature3 in t%e "inter "e boug%t mini oscillating %eaters /"it% safety
s%utoffs0 for eac% bedroom and turned off t%e %eat from 7 p.m. until 8 p.m. t%e next day3
"e closed t%e vents in any room t%at "as not in use /including t%e basement, attic,
bat%rooms, and laundry room03 as incandescent lig%t bulbs ble" out "e replaced t%em
"it% compact fluorescents. All of t%ese c%anges decreased our average mont%ly electric
usage by almost -0 percent, from around ,*00 to 2,000 1ilo"att#%our to "%ere "e are
no" at approximately ,000 1"%. )e also applied a fe" "ater conservation rules as "ell
## opting to ta1e s%o"ers at t%e free gym facilities available at our places of "or1,
enacting 4if it's yello" let it mello", if it's bro"n flus% it do"n,4 "as%ing all dis%es by
%and, and purc%asing energy#efficient front loads ## t%at dropped our "ater bill do"n to
an average of only ,2- a mont%, "%ic% is as lo" as it gets in our area.
)e %ad some unexpected items pop up during t%ese years. $%ere "ere post#=%ristmas -0#
percent#off sales t%at "e couldn't resist. )e "ere affected by t%e derec%o storms in summer
202. And "e did %ave a fe" events arise t%at re6uired us to travel. Bven t%oug% "e cut bac1 so
muc% and "ere applying a lot of our income to"ard our mortgage, "e still found enoug% money
to spend some"%at freely on food and little luxuries li1e 5ora t%e Bxplorer stic1ers and dinosaur
fruit snac1s.
Life with no mortgage
)%at next< )e plan to ta1e our 80/10 contributions bac1 up to - percent, resume our mont%ly
allocations to"ard t%e -2. accounts, and start saving to our discretionary accounts so "e can
finally begin ma1ing a fe" impulse buys "it%out generating a position paper on %o" t%e need
out"eig%s t%e cost to s"ay t%e opinion of t%e ot%er party /t%at's in marriage terms0. )e "ill most
li1ely 1eep t%e remaining savings practices "e've adopted and possibly "or1 to"ard reducing
our mont%ly obligations even furt%er. I %ave been bitten by t%e energy conservation bug during
t%is endeavor and %ave pitc%ed plans to include some solar and t%ermal additions to our %ome.
I "is% I could say "e are going to do somet%ing extraordinary ## li1e an extravagant family
vacation ## to celebrate our financial con6uest but as for rig%t no" "e %ave no plans to do so,
since our c%ildren are still young enoug% t%at t%ey are muc% %appier running t%roug% t%e
sprin1ler in t%e yard t%an riding in a car for 0 %ours (ust to pile in a %otel or stand in line at a
t%eme par1. But in a fe" years, once "e %ave t"o potty#trained non#nap#ta1ing c%ildren, "e plan
to go all out and ta1e a 5isney cruise.