I’ve been going back and forth on the idea of completely obliterating our mortgage in the next 5 years or less. You’ll find financial experts on both sides of the coin who will tell you to not worry about your mortgage debt if the interest rate is low (around 4% or less) and instead use your money to invest. On the other hand, other experts will tell you to get out of debt entirely as soon as possible.
Mortgage debt is extremely personal to everyone who holds one.
Personally, I don’t like debt. I never have.
I grew up learning about debt and it’s dangers. I worked in a bank for several years as one of my many jobs in college (I worked 3 part-time jobs then). I saw firsthand what missing payments and fees could eat right out of one’s account. I cringed when a customer would tell me they checked their ATM balance earlier that day, forgot they wrote checks and spent their entire balance at the store. Whoops! There’s a $32 fee for that.
I was told often growing up that “debt is a part of life” and I refuse to believe that has to be true. My use of consumer debt is strategic to save money and reap the rewards. I’ve never paid a dime in interest on a credit card, nor do I plan to. I saw what a trap they were in college, and thankfully I did not get sucked in. Chris was not so lucky.
We had student loans which felt so heavy while they hung over our heads. Did you know the only way to absolve yourself of them is to pay them or die? I worked our financial plan to obliterate them as quickly as possible in the late-2000’s and found we were able to demolish about $100,000 in loans and pay cash for a new car in a few short years. In addition, we paid out-of-pocket for Chris’ graduate degree and both of our post-graduate studies. Still, I am unsure of how we really did that on such low salaries at the time, of course, I know we did, I lived it!
We’ve never been given lump sum monetary gifts or had anything handed to us. We’ve made it through some pretty tough times on our own with minimal support (thanks for those dinner’s ‘rents!). Through living a frugal life, though, we’ve been able to continually build ourselves back up despite our downfalls.
Mortgages have always hung over my head, literally. Chris doesn’t have as much concern about them as I do. While my current mortgage does not keep me up at night, my previous one did. I hated where we lived, and I hated more paying interest and PMI for a neighborhood I was terrified to sleep in. On top of that, we were so underwater that it seemed like we’d never get out. Luckily, from living frugally, we saved enough to pay our way out without a short sale or foreclosure; by paying those buying our home a hefty chunk at closing.
Currently, I love our home and our neighborhood, so I don’t stress so much about our forever home and its costs. We don’t have any plans to move anytime soon, but still I’d like to be completely debt-free.
When I started getting serious about our finances and living frugally, my goal was to be debt-free by 30. We were exactly debt-free minus a mortgage by the time I was 30 from working diligently at our debt! My second goal has always been to be completely utterly debt-free by 40. I even started a Tumblr four years ago called, Debt Free by Forty (but I deleted it, silly me).
So, Chris and I have discussed at length our goals for our mortgage debt, retirement savings, and future plans (we’d both like to travel more). We’ve decided it might be best for us to feel the squeeze for about 5 years in order to obliterate this debt and move on with our lives. At that point, our children would be old enough to handle longer travel plans and trips, things we truly don’t feel would be enjoyable for us to do with an 8-month-old and a 4-year-old.
As a little background, we work in public education and make average to lower salaries than those in private industry. We’re not administrators and we make well below six figures each. Our paychecks appear to diminish yearly as more taxes, pension, and healthcare costs are taken out. Seeing our paychecks get lower every year caused me to look at our expenses six years ago and try to create the gap we have today (so as pay goes down and expenses increase, we’re not completely trapped).
Though, we’re a little nervous to tighten the reins even more than we have in the past year. There are other things we’d like to do like take short trips, and I would still like to get a different car sometimes. We’ve been a little more spendy than usual this past year redoing the bathrooms, kitchen, outdoors, and in the coming summer our office. We also have a few minor projects on the table to discuss. It’s going to be a shift in mindset once again if we decide to pursue this path.
The other option we have is to live like we’re paying off our mortgage and instead invest the difference. This is appealing, as it allows us a little more spendy freedom and is a bit more average. Since our mortgage is right on the cusp of the pay-off or not pay-off interest rate, I go back and forth as to what is best. I don’t want to make the wrong decision. And in this case, it’s purely a personal tolerance for risk.
Instead of just committing to the goal immediately, we’re going to spend the next two months living uber frugally as if we were already on that journey. We’re going to get back to truly sticking within our food budget, and attempting to live on our lowest salary.
If all goes well in the coming few months, we’ll make the decision to start our mortgage payoff plan in October. From there, the current trajectory has our mortgage paid off as early as October 2020, about 4 years from the start of our plan, and 6 years total for holding the mortgage. Our children will be 8 and 5 years old if all went as planned (which life never does!).
It seems a long way off, and not so distant at the same time. I’ll be sharing updates on how it’s going and if we decide to make any adjustments when we dive in. I’m hoping keeping you updated on our journey will help to keep us inspired to live well below our means.
For now, I’ll share more about our uber frugal choices in coming posts and how we’re going to make this a reality…