For most of us, housing is one of the biggest expenses we face each month. Experts suggest keeping housing to 30% of your budget, yet high cost-of-living areas can claim much more. It's a huge expense no matter where you live, and many people can't imagine what it's like to live without a mortgage. If you’ve ever wondered exactly what it feels like to be mortgage-free, you won’t want to miss this conversation.
As someone who also prioritized paying off our mortgage, I love to hear other people's stories about debt freedom. It's especially important to share these stories, as no two journeys are alike.
Keith Robinson sat down with me to discuss the actual earth-shattering moment he and his family became mortgage-free. In addition to sharing the twists and turns of his debt-free journey in California, he also delivers actionable tips if you want to pay off your mortgage early.
Let’s dive in.
Why He Wanted to Pay Off His Mortgage Early
When anyone talks about paying off a mortgage early, it can seem impossible. After all, for most people, that means moving six figures worth of money. That’s why I asked Keith to deconstruct why and how he paid off his mortgage early.
Toward the end of his debt-payoff journey, he swapped houses and made extra payments in huge chunks. Of course, we'll get to those details, but the start is actually the most important part of his journey. After Keith and his wife bought their house in 2012, they decided to put a little extra toward the mortgage each month.
Keith heard finance guru Dave Ramsey talk about the benefits of living in a mortgage-free house. He also had some friends who started talking about how paying a little bit extra each month can really add up. Not only does paying extra toward your mortgage shave off interest, it reduces the overall number of payments you need to make.
Once he and his wife started chipping away at their mortgage, they were eager to continue. Keith says they would often think, “Let’s do a little bit more.” Soon enough, they were watching their progress snowball and enjoying the glimmers of freedom and security that progress showed them.
Partnering Up to Be Mortgage Free
Keith never refers to just himself when he talks about becoming mortgage-free. Working as a team not only helped Keith and his wife pay off their debt faster, it also pushed them toward a life they love. That’s why Keith says it’s so important to get your spouse on board with any financial plan.
Initially, they were both in agreement on paying small amounts of extra money each month toward their mortgage. They liked the idea of being mortgage-free, and they felt that chipping away at it a little bit at a time would still allow them both to live how they wanted.
Once Keith started thinking about ramping up the payments, though, he realized the importance of partnership. Instead of focusing solely on numbers and spreadsheets, Keith and Rachael worked on identifying shared goals.
One of the first things they realized was how much they wanted to start a family. They also knew that they wanted to give Rachael the option to stay home with their child. They saw paying down their mortgage as an opportunity to get more control over designing their dream lives, so they seized the chance.
After they set their goal and made their plan, they made sure to stay on the same page. Each month, they had money meetings to assess their progress and reflect on their goals. Eventually, they realized that their current home was more than they needed.
Together, they started considering a move. Keith came up with a plan to sell their current home in favor of a smaller one they could attempt to buy outright. Once they discussed how they could make their new house a dream home for both of them, they got ready to make the move.
Preparing to Get Lucky in Any Market
As much as people might want to think otherwise, it’s hard, if not impossible, to time a market. Whether you’re talking about the stock market or the real estate market, no one has a crystal ball. That’s why Keith says part of what worked in their favor was sheer luck. Since he and his wife bought their first home in 2012, they felt that their journey to be mortgage-free came at the most opportune time.
While it’s impossible to replicate someone else’s luck, Keith is quick to point out that luck isn’t just timing. Luck is when preparation meets opportunity. Because they put themselves in a position to be financially prepared, they were able to jump on a great deal.
Steps to Becoming Mortgage Free
Keith works as a jail deputy, and he credits learning when to say yes and when to say no with their mortgage freedom. The hustling he did at work and the work Rachael did at home supporting their family put them in a position to seize opportunities. Then, when those opportunities came, they were resourceful with the results.
Saying Yes When Others Say No
When they first started their journey to pay off their mortgage early, Keith made less than $70,000 a year. However, the flexible lifestyle he and Rachael maintained with her working at home, allowed him to say yes to more money at work. He could agree to forced overtime and unusual schedule rotations because Rachael’s days off could align with his without disrupting their time together with their child.
Since they weren’t tied to another work calendar, Keith could be more flexible than many other families. In fact, Keith says that he clocked over 500 hours of overtime, and having a plan for all of that overtime money helped them become mortgage-free. In his best year, thanks to several promotions and a huge heaping of overtime work, he brought home around $140,000.
Avoiding Lifestyle Inflation
As their income grew, Keith and Rachael worked hard to avoid lifestyle inflation. Keith says that as more money came into their lives, they committed to paying down the mortgage with it. Any time there was an increase in income, they diverted at least half of it to their mortgage and the other half could go toward other goals or spending.
Keith says dodging lifestyle inflation isn’t easy. In fact, he points out that society and consumer culture is built to support lifestyle inflation. Yet, they decided that when more money came in, not all of it would go to fun. They also wanted to put some of it toward their future.
Related Interview: How Living on 50% of Our Income Helped Us Reach Financial Freedom
How He Paid Off Two Mortgages Early
Now that we know Keith and Rachael's reasoning, let’s talk about the more precise details of their mortgage freedom journey.
In 2012, they purchased a home in Southern California for $270,000. Keith jokes that if he realized then exactly how great of a deal that was, he would have bought a few more homes. They put 20% down on the house, which meant that they had a principal balance of $216,000 on a 30-year mortgage. In addition to landing a great deal on the purchase price, they also scored a fantastic interest rate of 2.95%.
That’s the story of the start of their mortgage, so how did they become mortgage-free 6.5 years later?
They chipped away at the principal slowly at first. Then, they made the decision to put half of each windfall–be it a raise or some other money–toward paying off their mortgage.
After they decided to sell their first home, they put the profits toward their new house. That meant that in 2018, they only had about $50,000 left on their mortgage. A year later, they were ready to pay it off entirely.
Keith’s family celebrated their day of debt freedom on Independence Day. Though the bank officially processed it on July 5, Keith pushed the button to pay off their debt on July 4, 2019. Right afterward, the house shook–literally! As if the Fourth of July celebration wasn’t dramatic enough, there was also a California earthquake to mark the occasion.
What It Means To Be Mortgage Free
One of the best parts of becoming mortgage-free is all the ways that you can dream beyond debt. It means something different to every person, so I asked Keith to share what his family's financial plans look like now with a paid-off mortgage.
Living a Life They Love Now and Later
Being mortgage-free brought a new sense of freedom into Keith’s life. As a family, they plan to enjoy life now and later. He and his wife were able to take their dream trip to London to celebrate their 10-year anniversary. He also added more to his 401k and fully funded a Roth IRA.
In addition to beefing up their retirement savings, mortgage freedom allows them to be more charitable. Keith says that charitable giving is hugely important to them, and they made the decision to donate while they paid down their debt.
Now that they are mortgage-free, they can be even more generous. With a five-year-old and a busy work schedule, Keith says his family doesn’t have a ton of time right now. But they do have extra income, and they want to give that to people in need.
Being Mortgage Free During a Financial Crisis
For young families, the Great Recession still looms large in our memories. It's no surprise that many people cite that financial crisis as a motivator to pursue debt-free living.
Now, with another financial crisis looming, Keith really appreciates being mortgage-free. When the Coronavirus pandemic and stock market slump hit, Keith says that it took his sense of security to a whole new level.
He realized that so many people were going to dread the first of the month. Yet, his family knows that they own their home free and clear. Having one less thing to worry about in the midst of a global crisis does a lot for their peace of mind and gives them more room to help others.
How You Can Become Mortgage Free
Keith says over and over again that making more money is part of the mortgage freedom puzzle. But if you want to become mortgage-free, it isn’t just about making good money. It’s about being good at allocating where your money goes after you earn it.
Keith suggests that you take the emotion out of it as much as possible. He acknowledges that he works well with numbers naturally, and he knows that isn’t the case for everyone.
Additionally, one specific way that you can push yourself closer to paying off your mortgage, is to start small like Keith did. Next month, put $5 extra toward your principal. Add $10 the month after that. Working in small increments allows you to feel success. Then, as you earn more or cut more expenses, you can put more money toward your balance.
To keep yourself motivated on your journey, start looking at your progress. It is so important to track the progress you are making. Find a way to chart your progress visually and make it a point to share and celebrate that growth.
Key Takeaways for Paying Off Your Mortgage Early
Living mortgage-free truly is a different type of freedom. No matter what you and your family dream about for your future, paying off your mortgage early is certainly something to consider. Though it might seem like an overwhelming task at first, if you start small and stay committed to your goals like Keith and his family, you might be mortgage-free sooner than you think.
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CARPE DIEM QUOTE
“You were given this life because you were strong enough to live it.”Unknown
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