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May 20, 2020

From $46,000 of Credit Card and Car Debt to Mortgage-Free – with Bob Lotich


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Have you ever wondered what it would feel like to own your home outright? Maybe you’ve always wanted to pay off your mortgage early or maybe the idea of being mortgage-free seems like an impossible dream. Perhaps you’re somewhere in between. 

Many of us are in different places on our debt freedom journeys. Not only do the amounts of debt and sizes of our mortgage vary, but so do our income levels. That’s why I wanted to invite another voice to the mortgage payoff conversation. 

I interviewed Bob Lotich, a Certified Educator in Personal Finance and creator of SeedTime Money, about his journey to becoming mortgage-free. Bob’s journey started with two entry-level jobs and includes the Great Recession. His perspective is certainly relatable and important during these unpredictable times.

Find out more about Bob’s story and learn how you can also pay off your mortgage early.

Click play below to listen to our podcast interview:

From Credit Card Debt to Mortgage Free

Bob's journey to mortgage freedom begins with debt. Prior to paying down a mortgage principal of over $150,000, he and his wife tackled credit card debt and car loans. Let's explore his journey from $46,000 of debt to total freedom.

When Bob and his wife decided to become mortgage-free, they didn't actually start with their house. They started with consumer debt and car loans. Bob points out that many people have valid reasons for taking on debt. Maybe it’s a medical crisis or another emergency. Sometimes, debt is unavoidable.

In his case, though, Bob says it was nothing more than stupid spending. He found himself falling deep into consumer debt due to impulse spending. When describing his problem, he says that he struggled with saying no to himself. 

Before he got serious about paying off his credit card debt, he was facing about $15,000 of debt. Once he and his wife got married, their collective debt was $46,000, thanks to credit card debt and car loans. 

The debt started to weigh on them. Bob cites the part of the Bible that says the borrower is a slave to the lender. He recalls feeling that burden on the occasions that he missed a payment. Initially, he felt that debt was simply part of life. Once he realized there was another option, though, he was quick to pursue it. 

How He Got Out of Credit Card Debt

When Bob started his debt payoff journey, he and his wife worked together. They both realized that they were spending more than they made. As a result, they knew they needed to make massive lifestyle changes. 

He says they started cutting expenses like crazy. That means that they were slashing things like their food budget and eating out. While it was hard at first, he knew that it was important to try to make any and all sacrifices that they could. After all, these cuts were only temporary and they would lead to debt freedom faster. 

Bob and Linda’s debt freedom journey started with two entry-level, low paying jobs. He was just starting out a financial services firm and she was a church receptionist. Combined, they had about $50,000 of income to work with.

They knew since their income was modest, their expense reductions had to be big. So the cuts they made worked for them. As a result, they paid off their credit card debt and car loans in about 3 years

When Bob walked out of the bank with his car title in his hand, he says he felt giddy like a kid. That giddiness combined with the feeling of freedom is what compelled them on. Rather than stopping with paying down their credit cards and car loans, they wanted total debt freedom. That’s why they went after their mortgage next. 

Why They Wanted to Be Mortgage Free

Mortgage freedom certainly doesn't happen overnight. Neither does the decision to become mortgage-free. But the more Bob and Linda thought about it, the more it made sense. One thing Bob kept asking himself is, ‘What will happen when our house is paid off?”

He recalled the amount of freedom he felt when he paid off his car. He couldn’t help but think that being mortgage free would be even more liberating.

While they did give themselves permission to loosen the reins and celebrate a little after paying off their consumer debt, they remained focused on total debt freedom. They saw being mortgage-free as a way to dramatically shrink the biggest bill waiting for them each month. Bob points out the difference between looking at a mortgage bill versus another bill like your electric bill.

In addition to making their current financial situation much better, mortgage freedom meant something else to them. They contemplated the possibility of starting a family one day. Like it does for so many of us, the possibility of parenthood makes financial independence all the more appealing. Bob jokes that he kept hearing how expensive kids were, so being mortgage-free would really give him and Linda a huge head start. 

How They Paid Off Their Mortgage Early

When they decided to pay off their mortgage early, they focused their energy on what was working. For them, it meant putting any extra income toward their debt. They recommitted to keeping their standard of living low. Of course, they allowed themselves to splurge a bit from time to time. However, they wanted to make sure they did not inflate their lifestyle when their income went up. Instead, they continued to save aggressively. 

Things got complicated during the Great Recession, though. Bob was laid off, and by the end of 2008, he made the switch to full-time blogger. He says he was fortunate to secure a retention bonus and a severance package before his job ended. That money became an emergency fund for him to transition into entrepreneurship

As his business started to grow, they saved even more money. They also increased their charitable giving. Bob says there’s no concrete explanation he can point to, but he is convinced giving more actually helped them along their mortgage freedom journey. Within three years, they put over $150,000 toward their mortgage and become mortgage-free.

While Bob and his wife did consider investing more or buying rentals, they said it wasn’t strictly about the math. For them, it was psychological and emotional, too. Instead of only looking at numbers, he says the focus was on the sense of peace that comes from owing no one. 

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What They Do With Their Money Now They Are Mortgage Free

Debt freedom is truly life-changing. One thing to consider about deciding to pay off your mortgage early is what you might do with that money afterward. For many people, that can be over $1,000 a month freed up by becoming mortgage-free.

In the case of Bob and Linda, they began to give even more. He says they tithed 10% from the beginning of their marriage. Mortgage freedom now means that they can find more and more charities and ministries to support. Without a mortgage, Bob says that they are more able to take part in something bigger than themselves. 

In addition to helping the community and different causes they care about, Bob and Linda also made time to celebrate their accomplishment. Mortgage freedom coupled with entrepreneurship meant that Bob could focus on continuing to grow his business. That combination resulted in a powerful sense of freedom that they still enjoy today. 

While they are mortgage-free, their budget is still hard at work. Bob says they set money aside to travel. Though, he also points out that learning to travel hack helps offset some of those costs. Still, being mortgage-free means they can prioritize getting out and seeing more of the United States and the rest of the world. Plus, they are maxing out their Roth IRAs and increasing their investments.

And those children that they thought about when they started their mortgage pay off journey? They have three little kids now. Bob says that they, of course, require their own kind of funding. A growing family certainly reshapes the way they are spending now, too.

Related Post: I completed Dave Ramsey's Baby Steps. Should I invest in rental properties now?

Key Takeaways on Becoming Mortgage Free

When you are just starting your debt payoff journey, deciding to pay off your mortgage early can be overwhelming. As Bob points out, so much of wanting to be mortgage-free starts with budgeting.

Rather than viewing it as something restrictive, think of a budget as a tool that leads you to the life you truly want. Creating a budget can help you maintain the spread between your income and your expenses. That space is what will accelerate your mortgage freedom journey and other financial goals you have. 

To learn more about becoming mortgage free, check out the following posts to get inspired:

What do you think about paying off your mortgage early and becoming mortgage-free?

Please let us know in the comments below.

Young mortgage free family

Andy Hill

Andy Hill, AFC® is the award-winning family finance coach behind Marriage Kids and Money - a platform dedicated to helping families build wealth and happiness. With millions of podcast downloads and video views, Andy’s message of family financial empowerment has resonated with listeners, readers and viewers across the world. When he's not "talking money", Andy enjoys being a Soccer Dad, singing karaoke with his wife and relaxing on his hammock.

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The Marriage Kids and Money Podcast is dedicated to helping young families build wealth and happiness.

With over 400 episodes and counting, we share interviews with wealthy families, award-winning authors, and personal finance experts to help you find your version of family financial independence.

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