Our first question of the month comes in from Nick from Tampa who responded to a blog post I wrote about paying off our mortgage (here's the article):
I love this blog post. As a former Dave Ramsey groupie myself, I’m really excited for y’all!
Would love to hear about your perspective one year later. I’m curious where you’re at with this? Have you followed through on your plans to allocate your savings like you say at the end of the post?
Have you invested in other opportunities?
How have the vacations gone?
Do you regret paying the mortgage off or do you still feel it was a smart decision?
From, Nick from Teach My Kids Money
Nick, I’m really glad you asked that question. Before you asked, I really hadn’t looked back and tracked what we’ve done with our money since paying off the mortgage a year ago.
But now … you motivated me to look into it. So I did!
Here’s what I discovered. In my article, I talk about the 8 categories where we would more than likely allocate the money. I’ll go through those 8 right now and update you on how we did:
1. Real Estate Savings
Last year, Nicole and I agreed that we wanted to get into the buy and hold rental property game in metro Detroit. The goal was to get some properties to provide us with consistent monthly cash flow.
Now we’ve looked at some single family homes online and in person, but we haven’t bought anything just yet. We haven’t found one that feels right or one that fits our price range just yet.
In the process of reading a bunch of real estate books and interviewing a half-dozen real estate experts, we been able to save up about $40,000!
We’ve been keeping that in an online savings account all year. It has a 2% APY right now so it’s stocking away some extra cash for us while it waits for us to pull the real estate trigger.
2. Family Vacations
Last year I made it a goal to vacation more with the family after our mortgage freedom … and vacation we did!
May: Cabo San Lucas
We went on a 5-day all-inclusive family vacation for 4 to Cabo San Lucas! That was an incredible time together!
This vacation was mostly purchased with points so it actually cost us less than $300. Hey, even though we didn’t pay top dollar, it still counts!
July & September: Northern Michigan
We visited my family in northern Michigan. It is absolutely the time of year to visit explore #PureMichigan in my opinion.
September: Disney World
For their 50th anniversary, my parents treated us for a family trip to Disney World. This was an incredible time!
Nicole and I were interviewed on the Report the Magic podcast about it. If you're thinking about going to Disney any time soon, check out this podcast. It's a wealth of knowledge!
October: Southern California
Nicole and I traveled to Southern California for a long weekend of fun in the sun. We ran on the beach, we drove in a BMW convertible (free), stayed at the W in Beverly Hills (free) and attended a friend's wedding near Sequoia National Park.
This trip was covered by points as well. Yes, another nearly free vacation! All in all, we spent around $70 on this trip.
By the way, we learned all of these travel hacking skills from Travel Miles 101. Check it out!
And last but certainly not least, we’re headed to Cancun in December for a weeklong trip after Christmas. This one, we could not cover with points. We have to use real money … boo! C’est la vie.
All in all, we will have spent around $6,000 on our trips this year. A great use of our post mortgage money!
3. Max Out Tax Favored Retirement Options
In the past, we had been maxing out our 401k and Roth IRA. After paying off the mortgage, I wanted to go for the trifecta of tax favored retirement savings by maxing out an HSA.
This did not go as planned, but I'm not bummed about it at all. We made good use of our money in other ways. Here's how our contributions will end up for 2018:
- 401k: $18,500
- Roth IRA (me): $2,500
- Roth IRA (Nicole): $2,500
- HSA: $4,500
Maxing out my 401k at work makes a lot of sense because I get a generous match of 15%. (Thanks awesome employer!!)
Perhaps we could have saved less in the real estate fund and maxed all of these out, but we’re excited about getting into real estate sooner than later. So it’s all good.
Related Article: Protect Your Health and Wealth with an HSA
4. Increase our Kid’s 529 College Savings
We did increase our kids 529 college savings quite a bit in 2018.
2017 (529 Savings): $1,200 per year
2018 (529 Savings): $3,600 per year
We’re shooting to have $100,000 for each kid when they go to school. We decided we don’t want to fully fund their college funds for a couple of reasons:
- Our kids may not decide to go to a regular 4-year university
- If they do, they can help us make up the difference with scholarships and working if need be
I’ve spoken with a lot of parents about this and saving half sounds like a good safe zone where we’re not investing too much, but we’re not also letting our kids drown in student debt.
5. Taxable Brokerage Account
We started this one late in the year and now have around $1,000 in it.
We use Vanguard as our investment partner. Lots of well diversified funds with low fees.
I like building up our taxable brokerage so we can access funds earlier than our typical retirement age. It’ll take a while to build it up, but you gotta start somewhere!
6. Give More to Charities We Love
This is the one I’m most proud of.
I researched dozens of charities and found ones that really resonated with me. A lot of them are focused in helping kids have a better shot at life.
- Sandy Hook Promise: Provides training to children and adults to prevent senseless gun violence in schools.
- Malala Fund: Invests in education programs for girls globally. Founded by Nobel Laurete Malala Yousefsi.
- Thorn: Dedicated to end child sex trafficking
- Feeding America: A hunger relief organization food bank with a nationwide network of food banks feeding the hungry.
- World Vision: Sponsors children in poverty-stricken areas across the world.
- charity: water: Provides drinking water to people in developing nations
- Together We Rise: Dedicated to transforming the way kids experience foster care in America (this was motivated by my conversation with Jillian Johnsrud a couple of weeks ago)
Overall, we increased our charitable giving by around $2,000 from the previous year. And we’re hoping to do more in 2019!
Related Article: Why I'm Increasing My Charitable Giving (And How My Kids Are Helping)
7. Invest More in my Small Business
Even though I planned on utilizing some of the extra “bye-bye mortgage money” to grow this small business of mine, I ultimately decided to only use revenue from my business. That way, I’m only spending what I’m making and no more.
So far it’s worked out great!
I've earned around $10,000 in revenue this year so far from this side business. And I only used that revenue to invest in the business and none of our personal income.
I still have a lot to learn about growing a small business, but I’m having fun figuring it out.
And I get to chat with all you fun people (comment below and say hi)!
8. Finally Decorate our Home
This was the most important investment for the stability of our marriage my friends! I tried to squirrel away more cash for the real estate fund, but that did not go over well with Nicole. I also made a promise to her that she’d finally have the chance to decorate the house how she wanted.
We spent around $5,000 on home improvement and I’m really glad we did. The house looks and feels like a comfortable hotel. In fact, I’m on the road right now and I’m SO excited to get home to spend time with Nicole and the kids in our awesome home.
Our awesomely decorated paid for home!
So Nick … that’s how we’ve used the money so far this year. All in all, I think I was pretty close to what I laid out in the article with some deviations along the way.
Oh, and to your last question Nick …
I don’t regret paying off the mortgage one bit. I love living in my paid for home and knowing that even if I lost my job, we’d still keep our house. One year later, the decision still feels right. Now, we’re looking forward to our next family financial adventure.
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Money Master of the Week
Brittney Lynn from Dallas recently crushed $50,000 of debt in just 2.5 years!
How did she do that?
- Used Dave Ramsey‘s Debt Snowball Method
- Diligently tracked her spending
- Partnered up with her spouse
- Sold stuff around the house they didn’t need
What's her next financial goal?
With the debt out of their lives, Brittney was able to pursue her passion and start her own business! Way to go Brittney!
If you want to check out Brittney’s new business, go to BrittneyLLynn.com.
Brittney is our Money Master of the Week!
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I would first pay off all debt and then invest the rest of it every month with the intention to pay for my children’s college with no debt.
Those are awesome plans!