Years ago, my wife and I were faced with a young family, an average paycheck and a 30-year mortgage. As a spender, a 30-year mortgage didn’t concern me one bit. As a saver, my wife saw the mortgage as an obstacle to building a significant emergency fund. Every month just under $1000 went to Wells Fargo. While I saw this as simply the cost of buying a house, my wife saw this as a roadblock to financial security. She knew we needed to pay the mortgage early.
To prove that a mortgage is normal, I broke out the charts and graphs along with our interest rate and expected returns on stocks. Obviously, the debt of a mortgage with a low interest rate made more sense than paying off that debt. I was also going through MBA courses at the time so clearly knew what I was talking about with professors, books and experts to back me up. All my powers of persuasion were to no avail. We did pay the mortgage early.
Make It A Game
The charts and graphs don’t excite my wife but crossing things off keeps her motivated. Flipping through the amortization table Wells Fargo provided we saw how little principle we paid each month. She saw the ability to cross off more than two years of principle payments with a relatively small additional payment. We needed to make it a game. How much could we squeeze our budget each month to remove pages or months from the amortization table?
Since we did make it a game, we needed to know the rules to pay the mortgage early. The rules were very simple and provided a great compromise between my approach and my wife’s approach.
- Keeping the goal in focus
- Keeping the payment history available
- No sacrifices in necessary expenses
- No sacrifices in family activities and sensible entertainment expenses
Keeping the Goal in Focus
Keeping the goal in focus provided the motivation while we stared at a few years with a restricted budget. The goal to pay the mortgage early and supercharge our savings drove us during the tough months. Part of keeping the goal in focus involved both of us sharing the same vision. When we started, we would pour through the amortization table to see how many principle payments could be removed each month. As time went on, we would discuss it once or twice a month.
Keeping the Payment History Available
The further we went through the amortization table the more difficult it was to cancel months of principle payments. Sometimes we felt that we lost some momentum. We were coming to the end of this phase of our journey because our mortgage was nearly paid. Going through the payment history, we relive the steps along the way. Often, we could remember challenges and sacrifices during a particular month or couple of months. We never threw out the original folder or paperwork including the printed amortization table. Since we crossed out the lines of the table, keeping the payment history available was easy.
No Sacrifices in Necessary Expenses
The interesting thing about a tight budget is the pull to make cuts in inappropriate expenses. We were not going to spend several years eating salads, Raman noodles and beans. We also kept our wardrobe updated during the time we were paying our mortgage. While we did not sacrifice the necessary expenses, we did keep the expenses relatively low by tracking sales and ensuring the best deals and rebates. Just because we wanted to pay the mortgage early, we still needed to maintain a life that was enjoyable. The belt-tightening came through properly prioritizing our expenses and watching for great deals.
No sacrifices in family activities and sensible entertainment expenses
With young children, we went on vacations each year. That time together is vital for development and closeness. To take vacations and day trips, my wife participated in contests through several social media platforms. She would target a specific location that we were interested in. Hotels and restaurants post complimentary rooms and meals all the time. Usually the trips cost the price of gas or just a little more for incidental expenses.
Pay the Mortgage Early
The rules to this game worked well. We were able to pay the mortgage early. In less than five years, we paid the entire balance of our mortgage while earning a moderate income. We celebrated the achievement with just a few members of the family. We have watched in amazement how our savings has accelerated since our final payment. Looking back, all the charts and graphs could not have predicted where we would be after just a couple years.
Let’s Hear Your Story
Reading this type of article indicates you are interested in savings. If you have paid your mortgage early or plan to pay the mortgage early add your story. Everybody that pays their mortgage early is slightly different. Explain what makes you different and how you got there.