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As of last week, my husband and I are 100% debt free. We made our final mortgage payment, and we have zero debt. It feels fantastic!
We lived in our first house for 6 years and our current house for 11 years. That’s 17 years of mortgage payments!
Honestly, I debated about whether I should even write about this. Anonymous blog commenters can be really harsh. And, money is a touchy subject. It makes people uncomfortable. It’s controversial, and it can ruin relationships. Knowing someone’s financial situation can create expectations. I hope that doesn’t happen to us.
Neither my husband nor I were born with silver spoons. When we got married, we had over $10k in credit card debt. We made a plan to pay it off ASAP and save up for my husband’s MBA and two adoptions. My employer wouldn’t give me the time off to deal with my kids’ needs, so I quit my job. Shortly after, our surprise 3rd child came along.
The truth is, we really struggled to get by after I quit my corporate job. We made some mistakes, but we persevered with our financial goals.
There are so many factors that came together to get us in this position. Some of those factors were out of our control, but some were definitely our choices.
We Have No Student Loans/Parental Dependency/Job Loss
My husband and I both started out with a major advantage in that we didn’t have student loans when we got married. I received a big scholarship for my Bachelor’s degree at a private university. As I continued in college, I applied for even more scholarships. By my senior year, I had enough scholarships to cover my entire tuition. I took out a small loan for grad school that I paid off a few years later.
My husband also did not incur any student loans. He attended community college while living at home and then went to an in-state public university. We are both grateful that our parents could help us pay for college without loans.
Both sets of our parents saved up for their own retirements so they would not be a financial burden to us. That, in my opinion, is one of the greatest “gifts” that parents can give their children.
Lastly, we haven’t had any major job losses that have left us without wages or health insurance (knock on wood!)
We Live in a Lower Cost of Living Area
We live in the suburbs of Dallas, Texas. Our cost of living index is 107.9. While it’s not the cheapest area to live in, it’s certainly less expensive than my hometown in Colorado or many places on the east and west coast.
We Stick to a Budget and Pay off Credit Cards Every Month
I have been keeping track of our income and expenses on a spreadsheet since before we were married. I know I should be using an actual program to do this, but I am old school. In short, we don’t buy what we can’t afford. We don’t keep balances on our credit cards. And yes, there have been times when I’ve had to tell my husband to cut back on spending. Believe it or not, he’s the bigger spender, not me.
We Purchased a Home Below our Means
We purchased our 2500 square foot home in 2010 for $215,000. While we were approved for a larger loan, we wanted to keep our living expenses low so that we wouldn’t have to worry about making enough money to cover a high mortgage payment.
We Put All of the Equity from our Old Home into our New House
Our first house was smaller and meant for a family of four, not a family of five. When we sold it, we put all of the equity into our new home instead of cashing out part or all of it. That kept our payments low and obviously had an impact on our total mortgage amount.
We Refinanced Our Mortgage
When interest rates went down, we refinanced our home to a lower rate. We also shortened our mortgage length to a 20-year loan instead of the traditional 30-year loan. In retrospect, I wish we would have picked a 15-year loan, but I was hesitant at the time because of the higher required payment.
We Set Up Biweekly Payments Instead of Monthly Payments
When we refinanced, we set up our automatic payments for biweekly deductions instead of monthly deductions. You can read more about that here.
We Didn’t Upsize Our Home (Again)
Even though we moved to a slightly larger house when we added a third child, our home is still considered by most in this area to be a “starter home”. Compared to many other neighborhoods in this part of suburbia, our neighborhood houses are smaller and not as upscale as most. Still, we resisted the urge to buy a bigger/fancier house.
We Paid Extra on our Mortgage Every Month
Since the beginning, we have paid extra principal on our mortgage every month. To start, we rounded up our automatic deductions from our bank account to include an extra $150 a month. On top of that, we used money from work bonuses and money from my “side gigs” to dump extra money into our mortgage. Since I quit my corporate job, I’ve always had side gigs like mystery shopping, product tester, Mturk worker as well as freelance writer.
We Cut Back on Expenses
In order to have extra money to add to our mortgage payments and stay out of debt, we had to cut back on other expenses, especially in the beginning. My oldest son did not get a new car for his 16th birthday. He’s driving a 6-year-old hand-me-down car that used to belong to my husband. As a family, we cut back on going out to eat and other local entertainment expenses. When my kids were younger, I bought their clothes from second-hand stores. I don’t get my nails done every week or buy expensive clothes and makeup for myself. We don’t have a Starbucks daily habit, and we do our own yard work and home repairs.
I Received an Inheritance
Since I’m keeping it real on here, I received an inheritance this year that we used to help pay off part of our mortgage early. Before the inheritance, we were on track to pay off our mortgage 2 years from now. This extra money enabled us to speed up that timeline. It’s definitely not the biggest reason we are debt free. But, my parents were penny-pinchers and invested smartly for their retirement.
What We Didn’t Cut Back On…
I made sure we didn’t sacrifice our retirement savings in order to pay off our mortgage. It’s crucial to contribute enough to get the employer match and also have the benefit of years of compound interest.
And we sure as heck didn’t cut back on travel! We used miles and points from credit card bonuses to fund some incredible trips, including numerous trips to Colorado, Florida and Mexico as well as a huge trip to Australia and New Zealand and many cruises.
Final Thoughts
I know that many financial planners don’t agree with paying off the mortgage early. It’s a “good debt” to have, and with interest rates so low, money can make higher returns through investments. However, in our situation, I think it was a good move.
We are happy being debt free. Nothing we did was rocket science. It was a combination of good luck and financial discipline.
What’s next for us, financially speaking? We have three kids we plan to get through college. We hope to cash flow some of their college expenses. Plus, the cost of boy teenage drivers ain’t cheap! In addition, we plan to start investing and saving non-retirement funds that we can have access to before age 59 1/2. My husband is considering an early retirement/drastic career change that will pay less (college professor). We also have a long list of home improvement ideas that we will get to some day.
Please know that I do not claim to be a personal finance expert. I have my own style that is a combination of Suze Orman’s advice and Dave Ramsey’s methods with a large dash of this miles and points hobby. If you’d like to read more personal finance stories, I recommend following Harlan’s journey to accumulate wealth on his blog Out and Out. He’s very transparent with his numbers and strategies. Also check out this list of personal finance blogs.
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Author: Nancy
Nancy lives near Dallas, Texas, with her husband and three kids. Her favorite vacations include the beach, cruising and everything Disney.
Congratulations! That is briliant. Thanks for sharing
We also paid off our mortgage last year, and have only a small HELOC left to pay off. It’s very exciting! Congrats!
Congrats to you as well, tscateh!
Congratulations! I am also debt and mortgage free and it’s a great feeling to be able to put a chunk of my paycheck into investment every month instead of paying down debt. My motto – invest invest invest, cut back on daily luxurious, but spend on travel. Congrats again in your big accomplishment!
@Joyce Thanks! And congrats to you and being debt free as well!
Impressive, I’m envious. Of course I have lived my whole life in some of the most expensive areas of the country, where it would be impossible to even buy a condo for $200k. I would love to be debt free, but not at the price of living in Texas.
I’ve seen friends live for their mortgage in fancy subdivisions scraping by, I don’t live like that and been blessed to keep my home even during unemployment. Totally agree with you on the 15 yr mortgage, wish I would have done the same and been done by now!
@Boraxo I understand. I used to live in Los Angeles, and I knew I would probably never own a house there. I like Texas, for the most part.
If you don’t mind sharing, did you ever invest into a personal brokerage account? I’ve been toying around with saving enough money to pay off a mortgage in full vs investing those funds in a brokerage account to get more gains than a savings account. There are always many schools of thought there and wanted to get your take since you paid off the mortgage in full.
This assumes that all other finances are fine, similar to your post, retirement maxed out, no CC debt, etc.
@jkered No, I didn’t invest in a personal brokerage account until just now. Honestly, I thought if we put the money in an account instead of paying off our mortgage, we’d just keep finding other things to spend it on. But the method works for some.
This is incredible! Thank you for sharing and with so much vulnerability. Allowing yourself to be so seen puts more of what you want to see into the world and it really does inspire others. Congrats on your accomplishments! <3
@Harlan Thank you, and I appreciate you sharing your goals and strategies on your blog. 🙂
Congratulations! That is awesome. I love your story. Thanks for sharing 🙂 it sounds like early pay off was a good idea especially given your financial goals and early retirement aspirations.
Personal finance is just that…personal. You’re the one who has to live with your choices so do what you think is best! Congrats again!
@Tammie Thanks! 🙂
Congratulations! That is really impressive with 3 children and one income! We paid off our home a few years ago and it is a wonderful feeling! We refinanced 2 times when rates dropped, and also made extra principal payments whenever we could. I commend you on the budget. I cringe to think of having one of those because I know I am guilty of impulse spending. You would think we would have lots of money with the house paid off but we paid out a little over $10,000 in medical bills last year between the two us us. That was us both hitting the maximum out of pocket. We still have to pay the co-pays for the doctor visits and for prescriptions. We have both hit the out of pocket max for this year as well. We would never be able to afford a nicer vacation if I had not found out about points and miles.
@Clyn6 Thanks, and congrats to you as well! I know what you mean about the medical bills. My husband is potentially looking at surgery this year. Ugh! I’m also glad you can use those miles and points for vacations.
That’s an achievement… congrats. I’d be the first to admit that I sometimes buy things beyond our mean and struggle to pay off, but I believe that not all debts are bad and must be paid off. I view mortgage as a good debt especially now days when the rate is below 3%… below avg inflation….as long as you have the self control to use that money to earn more than 3% instead of go out and buy nicer cars and other things. Plus most of you can deduct interests on your tax… so literally you are borrowing it for free. Invest wisely. at the end, it’s not how much your debt is… it’s the net worth that matters. Since 2007, I’ve been a long term stock and fund investor (never touched bitcoins or gamestop… none of those speculative nonsense), every time I had opportunity for refi because rate went down, I took out cash and invested in the market. My mortgage balance is same, if not more than I had back in 2007 LOL… but my stock portfolio has more than tripled over time. I can easily pay off entire mortgage today and still have money left over.
@tjp74 Thanks! Congrats to you as well. Growing your stock portfolio that much also takes so much discipline. It must be a relief to know you could pay off your mortgage any time if you wanted to.
Congrats Nancy! How fantastic to reach a major goal like that!!
Thanks, Julie!
Congrats! Living debt free is wise. Unfortunately our culture likes to tell us finance this, finance that, 12 months same as cash, tap your home equity to take a vacation, etc. I mentioned to a friend the other day that we’re saving up to buy a car in cash and they looked at me like I was nuts (which to be fair, is probably accurate).
Keep being weird!
@projectx Thanks, and you’re right, we’re weird. We bought my husband’s last car without a loan, and the dealer hardly knew what to do with us.
LOL! That sounds like it would be a very entertaining blog post!
Congrats. There is a good feeling about it. While I did not get mortgages on previous homes, we did this time around in 2019 since interest rates were so low (even though it’s higher than now). But You can always pull cash out of a refi later, but refi rates tend to be higher than purchase rates.
@Hal Thanks!
Congratulations! I can hear your enthusiasm in this accomplishment in your writing and it made me happy to read it. We should all follow your example!
Thank you, Bret!
Wow. Congratulations!!
@HML Thanks!