The beautiful fall day outside of my office windows made it tough to concentrate that day. Not only were the leaves on the trees changing, our family’s financial situation was about to change as well.
Eventually, I made my way out of the office for the day and into the crisp autumn air. I took a deep breath to appreciate the moment and said to myself, “THIS is going to be a life changing day for our family.”
After driving to our local bank, I met my wife Nicole and my kids, Zoey (5) and Calvin (3), in the parking lot. We had agreed to meet there because we always do things as a family. This day would be no different.
After Zoey snagged two Jolly Ranchers from the free candy dish at the counter, we approached the next available bank teller.
Bank Teller: “How can I help you today?”
Me: (over excited and probably scaring other customers) “We’d like to pay off our mortgage!!”
Finally our day had come!
The wire transfer was fairly immediate. It was all said in done in less than 15 minutes. I looked online that night and our mortgage balance read $0.00.
I never thought I'd like the number zero so much. #debtfree pic.twitter.com/Dl5vI8V4ve— Andy Hill (@AndyHillMKM) November 17, 2017
We’re completely debt free at 35 years old and have our whole lives ahead of us.
How We Paid Off Our Mortgage in Less Than 4 Years
When I started my blog, I wrote a post about how we were paying off our 15-year mortgage in 5 years (yes, we’re 1 year early!). It was my public proclamation that our family was going to do something incredible. That blog promise helped me stick to my goals because you can’t go back on what you say on the internet! It’s f-o-r-e-v-e-r!
Over the past year, I received a lot of positive encouragement about our mission to become completely debt free. I also received a lot of questions on how specifically we were getting it done.
To help provide clarity and satiate my nerdery for spreadsheets, I went back and tracked each monthly statement in detail.
Year 1: 2014
Purchase Price ($350,000)
Although our home is valued at over $400,000 today, when we bought it at the end of 2013 it was worth $350,000. Two thumbs up for real estate appreciation!
Huge Down Payment ($350,000 – $155,000 = $195,000)
By living on a consistent monthly budget and saving over 50% of our income for multiple years, we were able to amass $155,000 for our down payment. This was essentially 45% down on the new house! We figured, the less mortgage we had, the quicker we’d be able to pay it off.
In the years leading up to this point, Nicole and I worked together to completely pay off all of our consumer debt in 2011 and lived as DINKs for a few years. Even when we had our daughter Zoey in 2012, we were still both working and saving like crazy people.
My slight obsession with Dave Ramsey and his teachings helped as well.
Sale of Last Home ($195,000 – $33,600 = $161,400)
After living in my 1,100 square foot bachelor pad for nearly 10 years, Nicole and I agreed it was time for an upgrade. Alas, we had some good memories there!
When we sold that house shortly after we bought our forever home. We used the proceeds from the sale ($33,600) to further pay down our mortgage to $161,400.
15-Year Mortgage ($161,400 – $11,977 = $149,423)
We decided to go with a 15-year mortgage to allow for higher principal payments and an overall shorter window for paying it all off. To get the lowest rate possible, we worked with LendingTree. We got a 3% fixed rate with no points.
Going with a 15-year mortgage versus a 30-year mortgage was a no-brainer for us. In year one, our principal payments were $11,977 alone!
Additional Principal Payments ($149,423 – $35,203 = $114,220)
Double Income … Then Single Income
Nicole and I were both still working at this point so we continued to use our double income to make major additional principal payments. That is until … This adorable blessing came into our lives.
Around halfway through the year, we decided that Nicole would stay at home with our two kids and put her career on pause. Although life as a stay-at-home Mom can be difficult, she was excited about the change and the ability to closely bond with our young children.
As you can see from the chart above, this loss of income brought down our additional principal payments dramatically. No problem. He was worth it. We're keeping him.
Two Additional Paychecks
Instead of getting paid 24 times per year (twice per month) at my job, I get paid every two weeks. This means I get 26 paychecks instead of 24.
In 2014 (and beyond), I just pretended that I only got 24 paychecks. That way, I could throw the other 2 paychecks at the mortgage as well.
We kept up this ritual even after Nicole started staying home with the kids.
At the end of Year 1, our principal balance was $114,220.
Year 2: 2015
15-Year Mortgage ($114,220 – $13,172 = $101,048)
At this point, the regular principal payments were well over $1,000 per month making the pay down process that much easier.
With the aggressive mortgage schedule from our 15-year mortgage from LendingTree, our balance decreased to $101,048.
Impatient Debt Crushing Guy ($101,048 – $5,000 = $96,048)
I don’t know why I started to get impatient at this point. Perhaps it was our decreased income. I decided to take $5,000 out of our savings account and pay down our mortgage so we could break the $100,000 mark in our mortgage balance.
This decreased our Emergency Fund savings from 6-months to 5-months. I wouldn’t recommend this move especially when you’re the sole breadwinner with an infant at home. Not smart, Andy!
Additional Principal Payments ($96,048 – $13,500 = $82,548)
Compared to 2014, we drastically reduced our additional principal payments due to going to a single income. Despite that, Nicole and I worked closely together to keep paying down the principal where we could.
Facebook, Craigslist and eBay – Oh my!
Nicole has never enjoyed clutter. She designs our home with a minimalist touch. To honor her design sense and continue plugging away at this mortgage, we started to go through our house and sell whatever did not bring us joy.
I swear we were able to bring in at least $1,000 over the course of a few months just through selling stuff we didn’t need anymore. Purses, bikes, electronics … you name it, we sold it.
I even sold my precious moped.
I used to ride it a lot to my previous job, but I hadn’t used it once since we moved into our new home. That red wonder bike only maxed out at 35 mph and my new neighborhood has 45 mph roads all around us. I’d rather live than ride.
Two Additional Paychecks (again)
We kept up with the tradition of using my 2 extra annual paychecks and throwing those at the mortgage.
Those 2 extra checks were the jab and the right hook that helped get our mortgage down to $82,548 by the end of 2015.
Year 3: 2016
15-Year Mortgage ($82,548 – $14,154 = $68,394)
Even without extra payments, the 15-year mortgage absolutely clobbered our principal by itself. Payments consistently exceeded $1,100 monthly and totaled $14,154 for the year.
Additional Principal Payments ($68,394 – $17,156 = $51,238)
In 2016, we were pretty consistent with the previous year’s additional principal payments. The only difference is that I was able to receive a bonus at work for crushing my sales goals!
That pay increase from work became more fuel for the mortgage fire!
At the end of 2016, our balance landed at $51,238.
Year 4: 2017
Late in 2016, I declared in my brain and on my blog that we’d be paying off the mortgage by Christmas 2017. I really had no idea how it was going to happen given that we didn’t have enough money to actually do that. I figured I’d put it out there anyway and find a way.
Let’s pay this baby off!
15-Year Mortgage ($51,238 – $12,639 = $38,599)
The 15-year mortgage principal payment went into overdrive in the final year. $12,639 was eliminated by the time we asked the mortgage company for our payoff quote.
Additional Principal Payments ($38,599 – $22,000 = $16,599)
Our regular monthly principal payments continued, but this year we were graced with a nice tax return (good mistake).
My excitement around paying off the mortgage early improved my performance at my job. So much so, I received another bonus! Like I’m trying to teach my daughter when she’s doing her chores, hard work definitely does equal reward.
Return of the Impatient Debt Crushing Guy ($16,599 – $16,599 = $0!)
So remember when I said that I shouldn’t have taken out of our Emergency Fund to pay down the mortgage. Whoops. I did it again.
But in reality, our Emergency Fund doesn’t need to be as large anymore. Without a mortgage, our expenses are dramatically lower. So the 5-month Emergency Fund that we had before magically turns into a 6-month Emergency Fund. Poof!
Am I using the magic of math to justify my actions? Ab-so-freaking lutely…
We’re MORTGAGE FREE!
Depending on how our budget shakes out next year, we’re going to have $35,000 extra to play with! I detailed how we’re allocating the extra money next year, but here are the high-level categories:
- Buy-and-Hold Real Estate Savings
- Family Vacations
- Max Out Tax-Favored Savings Options like HSA
- Increase our Kid’s 529 Accounts
- Contribute to a Taxable Brokerage Account
- Give More to Charities We Love
- Invest More in my Podcast
Oh, and of course, allocate some cash for my wife to finally decorate her “new” house. (Thank you for your patience my love!)
Nicole and I are incredibly excited about the future we've created for our family. We're completely debt free and loving life.
We're celebrating with a trip to an all-inclusive family trip to Cabo San Lucas!
How would you use an extra $35,000?
Let me know in the comments below!
That’s awesome. Now if I could just figure out how to make that kind of money. 56 yes old. $27,000 a year. Most I’ve ever made at a job. I try and try. Some college. Just not smart enough to succeed.
I feel you Kathy. Posts and blog articles like this can feel defeating and disheartening when your income is not what you’d like it to be.
The gig economy is pretty exciting right now and people are finding all sorts of ways to make new money outside of their full-time job. Here are some ideas to consider: https://marriagekidsandmoney.com/podcast/side-hustles-parents-can-do-from-home/
Hey Andy, thanks for the inspiration! We will be paying off our mortgage this week and I was fully planning to do it online with just the click of a mouse. However, after reading your post, my wife and I decided to take the kids (ages 9 and 5) with us to make a big deal about it. Hopefully this will be a life lesson that they remember when they have homes of their own.
What an incredible note to receive to kick off my Monday morning! Thank you so much for sharing this awesome news. And CONGRATULATIONS for paying off your mortgage!! What a life changing event for your family ?❤️?
How much do you make at your job? Without knowing your income and living expenses the numbers are irrelevant.
During the 4 year time period, our HHI varied widely ($100k-$200k) as we went from two people working to one person working. And then one person working with a side hustle.
BTW, are you “THE” Bobby Flay?!
Hi Andy, Nice story and congratulations. Just heard your story at ChooseFI. Sounds like you’re still doing great. For comparisons sake about how much is your family’s total expenses during a year or a month on average?
We’ll be between $60k-$70k on expenses this year.
I love this! I bought my home back in 2004 when houses were a lot higher in my area and it’s ALMOST back up to the value it was when I bought it. I bought my house with just 5% down and did a 30 year mortgage (If only I knew then what I know now). I have a decent interest rate and have been doing biweekly payments from the beginning. I am now applying extra payments each month and my dream goal is to pay it off in the next 5 years or maybe, like you, I’ll get there sooner! Thanks for the motivation!
I’m so glad to hear that this article motivates you. Since you’re a hard working entrepreneur, I HONESTLY believe you’ll have it paid off in 4 years.
Congrats Andy! Amazing story. I’d take the extra $35K and max out any tax advantaged accounts retirement accounts first. I’d then look at funding college plans and/or taxable investing. I’d also make sure to prioritize a little fun along the way!
I like your style Jason! We’ll work to max HSA next year for the first time. Also, we’ll get the taxable brokerage going as well. And yes, fun! More fun!
Love following your journey and appreciate you breaking down how you did it. You and Nicole did a fantastic job working as a team. Best wishes for the rest of this year and beyond!
You’ve encouraged us to step up our mortgage pay off plans. 🙂
I’m so glad to hear we’ve encouraged you to crush your mortgage too! We’re due for another “chat” soon Elle! I’ll email you.
Congrats to the entire family, Andy! Sounds like you’ve got a solid plan for your money. Here’s to your continued success in 2018!
Thank you Amy! We’re excited for the next chapter. For now, we celebrate!
Congratulations! Big milestone.
We paid ours off in mid-2007. We followed a similar trajectory. Paying lumps on a 5/1 ARM that we had no intention of keeping for the full 5 years.
10+ years of being debt free have been awesome. We saved more, spent more, my wife decided to stay at home during that period.
No regrets. Congrats again!
I would skip the buy and hold real estate as it is a second job and I’m sure you work enough. Max 401k, max Roth, max HSA. The rest is gravy. We built up 529s and a taxable account for lots of flexibility.
Thank you Wade! I really appreciate this perspective. The last thing I want is ANOTHER job with real estate. Congratulations on breaking the debt cycle over 10 years ago!