How would you like to own your home outright?
What would it feel like to never make a mortgage payment ever again?
For our Mortgage Freedom series, we're interviewing Colin Murphy who eliminated his mortgage in less than five years. Colin is a father, a husband, and a Chicago native. He's going to let us peek inside and see how he made this monumental feat happen.
Andy Hill: When did you decide that you wanted to pay off your mortgage?
Colin Murphy: Well, probably the day we signed the mortgage paperwork! We were the standard family that moved from one house to a little bit bigger one. It was looking at those numbers on the paper and actually saying, “30 years?! I mean, what's life going to be like in 30 years?”
Shortly after that ink dried, we were convinced that this was going to become a goal of ours.
How did your wife feel about paying off the mortgage?
Well, she was kind of deferring to me on the financial stuff … strengths and weaknesses of each couple. But we were only married a couple of years when we bought the house that we're in now.
While we were both working together towards our financial goals, we didn't really have the express talks at that point of what exactly we want to do with our money. We were both working and we weren't having checks bounce or anything like that. We just figured life was on autopilot and that was okay.
It really wasn't until after we were in the house that we realized the gravity of what we had done. That's when we really started having these talks about paying off the mortgage early.
Did you guys have any debt before you started this mortgage pay down process?
A little bit.
As I mentioned, we were in a small townhouse before and my wife had a little bit of student loan debt (about $15,000, not outrageous). And then we both had cars. Not fancy cars, but cars that required monthly checks. But we were fortunate that we didn't have credit card debt. We didn't have any sort of medical debt or anything.
So we didn't have a lot of big pitfalls. But we still had those nagging bills every month that were kind of hurting us.
What did you to get rid of those student loans and the other debt?
Like you and many others out there, I kind of stumbled into all this through Dave Ramsey. It was literally YouTube videos. It was being bored in the middle of the night. I work odd hours and finding these people that were screaming and celebrating and all this stuff, and it took me a little bit to come around.
I mean, I got to be honest. It seemed a little bit odd at first. But again, we were both working, and when you don't have creditors knocking on the door, you just kind of figure everything is okay even though you don't really have a purpose.
We started talking when we were in our old house like, “Hey! Let's get the cars paid off. Let's get the student loans paid off.” And honestly, we didn't really have a reason why we wanted to pay off our debt. I figured there are thousands of people doing this. There's got to be some sort of freedom that I'm missing.
I'd like to say we had some heroic moment where we stood together arm in arm and thought through it, but it really didn't happen that way for us.
When did you start paying down the mortgage?
We bought the house right at the beginning of 2016 and we got married in 2014. So prior to that, we were just our own independent financial people.
We combined our finances right away and were always risk-averse. We had high cash balances, which I know isn't ideal when we talk about the actual dollars and cents. But it was a sense of comfort for us.
We put 20% down. So right from the start, we had that mortgage balance. Basically, we made it a goal right then to start paying it off more than our monthly minimums.
What was the original principal?
The principal on the loan was $208,000. It was a 30-year fixed rate mortgage.
Related Article: 15-Year Mortgage Paid Off in 5 Years
How did you pay your mortgage off in under 5 years?
When we moved into that house, we were pregnant with our first child. So moving was already stressful enough.
We were both working at the time, and we knew we were going to have some expenses coming up. So every dime we had at that point that was above and beyond our monthly bills went to that mortgage principal. We thought it wasn't going to be as quick as it was, but it really compounds, and it became a monthly goal.
Tracking our finances was important to us. We did, and we still do have a budget every month. So we knew we had that zero-sum budgeting, where we knew where every dollar was going. And every dollar above our minimums was going to that mortgage every month.
It became a goal where we'd have our meetings at the beginning of the month saying, “Hey. This is what our month looks like. How big can we get that mortgage principal number this month?”
So it was contagious. It became kind of addictive in a way.
What did you do to increase your income or decrease your expenses during the mortgage pay down process?
There was a lot.
For my profession, there's always overtime available. Overtime became my side hustle and my second job. Because you start factoring in what you're making per hour and it's there if you're willing to work odd hours.
I started teaching part-time too at a local college. It was just some entry-level 100 and 200-level courses. It was mostly online so it helped a lot too with flexibility, especially when our first child came along.
And I have to give credit to my wife here too. She got real big into some of these Facebook garage sales groups and moms groups. You know as well as anyone the outrageous prices of some of these children's toys or supplies or diapers.
To this day, she knows exactly what she should pay per item and it's phenomenal. And while that's not an income-producing thing, it kind of is in the sense that you're going to spend that money anyway, so she's saved us thousands of dollars a year I'm convinced, from the minute our first child was born.
Related Article: 26 Smart Ways Parents Can Make More Money
Outside of raising your child and saving big money on shopping, was your wife also working during this time?
She was working full-time when we were first married until our daughter, our oldest, was almost two. She worked in emergency medicine, so we were both on odd schedules and it became just so chaotic when it came to childcare and because we were both in 24-7 jobs. It's one thing to try to get childcare from 9-5 Monday to Friday, but when you're looking for childcare Sunday night at midnight or Christmas morning, it just became a point where we just said, “What do you do?”
I mean, even if you have the money, trying to find the availability is just not possible. The other part of that to is that she liked her job, but she didn't love her job, and it was tough for her going back.
We both made the decision that for our family, for stress and everything like that, her ultimately staying home was going to be what we did.
Were there times as a young father where you're putting in this extra effort and you're like, “Man, I don't know if I could do this”?
It was tough because you want to balance these financial goals that you have with your family, that you know are the best move in the long run, with not missing out on those early moments of your child's life either … or your young, relatively young marriage.
I was very fortunate with the partnership that I had with my wife. I'm still very fortunate every day that I have the wife I do. To be able to work as a team and say, “Hey, this is temporary. We have some goals that we know in the long term will help our family.”
Sometimes the benefits of doing this with young kids as opposed to older kids is while they're demanding in terms of their day-to-day, you don't have those after-school activities. Whether it's sports or music, you really want to be there.
So the benefit with our daughter, now she is not even three. We were able to say, “Hey, this is the early part of life, but when we get this all done, now when we come to those memorable stages in parenthood. I can be there now, but I don't have to work those hours anymore.”
How did you celebrate your mortgage freedom day?
We went into the bank and we ended up paying kind of a windfall payment at the end. Cash had been kind of just peace of mind for us, and we finally made the plunge and said “Hey, we have the money now to do this, if we want to do it.”
We went into the bank and set up the wire transfer, and the banker kind of looked at us and she said, “You want to do what?!” And we said, “Well, we're here to pay off our house.” And she looked at us like we had three heads.
We did do the picture outside the bank. It was funny because it was a weekday, and I was off work and we said, “You know, we should celebrate,” but you form these habits. You're not spending crazy amounts of money anymore. So we actually went home, and we had a home-cooked meal. We watched Netflix. I think we turned on Paw Patrol or something for our child. And because we can't got back to that, “Let's go out to the lavish dinner or stuff” because we had gotten rid of that as part of our thing.
We kind of chuckled that night, laying down on the couch, saying, “This is typical, right? This big celebration of this huge thing and we're back to just what we do.”
What are your plans for the future?
This journey changed a little bit now that my wife is staying at home. We did go down to one income so the cash flow wasn't quite as high as it was as we were paying off the mortgage. We've definitely increased my retirement.
A couple months ago, we also found out that we have two more babies on the way this summer, rather than just a one. That initial daunting thought of, “Oh my gosh, we're going from a family of three to five” is exciting.
But I will tell you, my wife and I have said countless times, “Boy, we're just so fortunate to not have the financial stress of a mortgage.” Because little did we know what life would give us.
Related Article: With no mortgage, what do you do with the extra money?
What advice would you give someone looking to pay off their mortgage early?
You have to be in lock-step with your significant other. That goes without saying, but it's true. I mean, when we were house hunting, we didn't think at the time my wife would ever be a stay-at-home mom. You have to prepare for all these options. Not just your knowns, that you have might have illness, that you might have childcare needs, but your unknowns.
Our daughter was a year before my wife said, “Hey, I really want to stay home.” And that wasn't going to be on the budget otherwise. So you have to prepare for the unknowns.
And I know it's cliche, but, my gosh, you have to budget. Trying to go through this and say, “We want to pay extra on our mortgage,” when you have no idea what extra means every month is huge.
I would say especially, too, for people that are working at nontraditional employment, where overtime is an option, set your budget based on your lowest possible monthly income. What you know it's going to be. And then when you have these windfalls of overtime availability or something, you just have a pile of cash to move in, rather than building your budget based around maybe getting overtime. And then when you don't, now you're in trouble because you budget for money you don't have.
So plan for the unknown, base that budget on your lowest number, and you'd better make sure you got a good partner on the way because that makes it a lot easier.