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… Given my history with mortgages and feeling overwhelmed by the realities of homeownership, 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 complete 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.
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 didn't always receive bonuses at work. It depended on how my company was doing that year or how I performed. 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.
Estimated total mortgage payoff impact: $6,000
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.
Estimated total mortgage payoff impact: $3,000
Live on less (Paycheck mind trick)
My company paid 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.
Estimated total mortgage payoff impact:: $30,000
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: 15 Budget Apps That Make Your Personal Finance Goals Easy
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. And then you look back years later, and you've made HUGE financial progress. In a sense, you set it and forget it.
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 came with my full-time job and young parenthood, we both agreed that if we were going to do this crazy “15-year mortgage paid off in 5-years” extravaganza then we still needed 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).
- Getting babysitters so we could do a date night out every once in a while
The last thing we wanted to be was “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 stay 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 our kids graduate college without loans.
Our kid’s 529 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. We would work fewer hours at our jobs and spend more time doing the things we love.
Or better yet, we would 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 paid off our 15-year mortgage in less than 5 years. In fact, it was just a bit under 4 years!
We had an epic mortgage payoff celebration together as a family to commemorate this big moment in our lives. Check out the video below to see what a “mortgage piñata” looks like!
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 already 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 that year.
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 highlight 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
Design a 30-Hour Work Week We Enjoy
Nicole recently took a part-time job that she loves. After 5+ years as a stay-at-home Mom, she was ready to add something else into her life. Now, she has a nice balance of work and family life that makes her smile.
I decided to leave my full-time career in corporate event marketing and pursue my passion of helping young families build wealth full time. It was a big decision to leave a six-figure career and become an entrepreneur, but we were financially prepared for the big leap and I was ready for a change.
Lately, we've both developed an incredible balance of family time, personal time and doing work we enjoy.
15 Year Mortgage Paid Off in Less Than 5 Years (The Details)
Since we paid off our mortgage, I have 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
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. 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)
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.
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, 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.
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 burning fire!
Year 4: 2017
Late in 2016, I declared 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 to make it a reality.
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!
The Mortgage Free Movement
After paying off our mortgage, I thought it would be fun to learn from and feature other families who did the same. The freedom and options these families have because they are now mortgage-free is incredible. Check out these stories below and find one that resonates with you.
- Pay Mortgage Early on Less than $50,000 Per Year – with Jessi Fearon
- How the Great Recession Motivated Me to Pay Off My Mortgage Early – with Christin McKamey
- How our Kids Helped Us Become Mortgage Free – with J'Neal McCoy
- Pay Off the Mortgage Early or Invest More? – with Kevin Hooper
- Mortgage Free: Complete Debt Freedom During a Financial Crisis – with Keith Robinson
These are just a handful of the stories we've collected about families paying off their mortgages early. If you're interested in listening or reading more stories about how to pay to off your mortgage early, click here.
And hey, if you've paid off your mortgage, I'd love to hear from you. Sharing your financial wins could inspire others to win too. More inspiration. More mortgage free families. And so on. What a wonderful mortgage free world that would be!
How would paying off your mortgage early change your life?
Please let me know in the comments below.
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“It takes two flints to make a fire.”Louisa May Alcott