Many years ago, I shared how Dave and I agreed (before we were even married) to live off 50% of our income.
We honestly weren’t sure how long we would (or could) stick to it, but our initial intentions were to do it for as long as possible.
Our rationale for living off 50% of our income was 3-fold:
- We would be financially OK if one of us lost our job or if one of us wanted to stay home with future children.
- We would start our married life living well below our means and creating frugal habits that would hopefully last a lifetime.
- We would QUICKLY build a nice savings nest-egg, which we could then use to make extra principal payments on our student loans and mortgage.
At the time, we both made roughly the same (very tiny!) income, so Dave’s paycheck was directly deposited into our checking account, while my entire paycheck was directly deposited into our savings account. I explain more about living off half our income in this post.
After sharing how we lived off 50% of our income, I intentionally didn’t mention much about our mortgage until a couple years ago when I confirmed (within the context of another blog post) that we had indeed paid it off.
I guess we felt that paying off our mortgage was just another item to cross off our to-do list — not necessarily something with a 5-step program I could outline and share in a blog post.
However, for the last several years, I have been asked over and over and OVER again to share more about “how” we paid off our mortgage in less than 6 years… and although the obvious answer is that we simply made payments until the debt was gone, I have come up with a list of 6 things I feel helped us tremendously in our efforts to pay off or mortgage so early.
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1. We prioritized debt-free living from the beginning.
I often joke that I folded my t-shirts like Marie Kondo WAY before “konmari” was a popular fad… and I saw the benefit of debt-free living way before Dave Ramsey was a household name. Just think how wealthy we could be if I figured out a way to promote my t-shirt folding when I was in middle school or promote financial freedom in high school!
In all seriousness, Dave and I are not Dave Ramsey followers, nor do we agree with his no-credit card mentality; HOWEVER, the fact that we both prioritized living debt-free even when we were in college is probably not totally “normal” these days.
I suppose we can thank our fairly frugal, level-headed, all-things-in-moderation parents for this! 🙂
Whatever the case, we entered into our marriage with 2 student loans and a mortgage… along with the drive and determination to pay it all off ASAP.
In order to do this, we prioritized paying off this debt over pretty much everything else.
We didn’t go out to eat (ever).
We didn’t travel ever (after our honeymoon).
We didn’t have cable, internet, smart phones, or any subscriptions for anything.
We kept our heat at 60º (no, I’m not joking) and rarely ever used our air conditioning.
We didn’t buy anything unless we absolutely 100% needed it and couldn’t borrow it.
Even if we did truly need something, we almost always found it used.
I kept our grocery budget to less than $40 a week (often closer to $20 a week!)
We both picked up SO many side jobs.
I sold TONS of stuff on Craigslist (lots of furniture I’d find for free or buy cheaply, then repaint and sell for more).
I could list 50 more crazy frugal things we did in those early years, all with the intention of putting a large chunk of our income towards the principal payment on our student loans and mortgage.
2. We chose to live in a low-cost-of-living area.
Before we were married, Dave taught in California for one year — and although it probably would have been fun to move to CA, neither of us were thrilled about living in such a HIGH cost of living area on a Christian school teacher’s salary (his salary was not adjusted for cost of living, so he actually made more his 2nd year teaching in Michigan!)
Thankfully, he found a job back in Michigan, which meant we could stay here after we were married and capitalize on a MUCH lower cost of living!
I realize this is not always possible, but it is a huge reason we were able to pay off our mortgage so quickly, even with our fairly low income.
3. We bought much LESS than we could technically afford.
Realistically the bank would have loaned us 3 or 4 times the money we needed to buy our house — but we declined.
We made a larger down-payment (around 45%) and mortgaged the rest, knowing we still needed a decent amount of cash on hand to fund all our upcoming home renovations.
4. We took out the shortest mortgage we could afford.
We took out a 7-year mortgage on our farmhouse… I think the bank thought we were crazy!
They were pushing for us to do 15, but we were set on 7 — with the intention of paying it off early (which we did).
By choosing a shorter mortgage, we got a drastic reduction on our interest rate (I believe it was 2.49%) which made it that much easier to pay the debt down quickly.
5. We set up auto-payments for much more than the minimum.
We had our mortgage payment automatically debited from our bank account on a specified date each month. However, instead of paying the minimum amount needed to pay off our mortgage in 7 years, we paid extra towards the principal balance each month.
There were times when we made double payments — with all the extras directly applied to the principal balance (not interest).
These auto-payments were (in my opinion) the main reason we were able to see our goal come to fruition. The fact that everything was automated each month and I didn’t have to think about anything made it next to impossible to miss a payment, forget a payment, or decide we really didn’t have enough to put extra towards principal. It was already done, the money was already allocated, there wasn’t anything I could easily do to stop it!
6. We made an extra principal-only payment every year.
Every year, we made an extra principal-only payment — sometimes it was only $300, other times it was $4000. Just whatever extra money we felt comfortable putting towards our principal balance. These payments HUGELY impacted how quickly we were able to pay off the mortgage.
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I realize some of these tips and ideas are not realistic for many of you — especially choosing to live in a low cost-of-living area.
HOWEVER, if there’s one bit of encouragement I want to leave you with, it’s that Dave and I do NOT make all that much money.
I don’t say this to complain, but rather, because it’s our reality (and our choice)…
Dave chose to be a Christian school teacher, which means he makes considerably less than the average public school teacher (and you know public school teachers don’t do it for the money either!)
I chose to start my own business and to work from home while raising my children (without any childcare, virtual assistants, nannies, house keepers, or employees). If I feel my plate is too full, I simply remove something (usually work related) and accept that my income will be less while I’m at home with my children.
Thankfully, we have practiced living off considerably less than we earn from the very beginning of our marriage, so even with a moderate household income, we were still able to pay off our mortgage roughly 24 years early (while simultaneously paying cash to completely gut and renovate our entire home and yard!)
If we can do it… YOU can do it too!
Maybe it will take longer than 6 years, but even if you do it in 26 years, that’s still 4 years worth of interest payments you’ll save!
But honestly, if having a mortgage is not a hardship or burden for you and you’d rather spend your money on vacations or other valuable experiences, I think that’s totally acceptable too. It’s your money, and you’re allowed to handle it how you see fit — provided it doesn’t directly harm someone else in the process.
Dave and I were happy to be debt-free so early in our lives, but our personalities are such that debt seems to bother us quite a bit.
Debt-free living isn’t for everyone, and even though it’s a fad right now, it is far from the most important thing in life.
If you’re interested in paying off your mortgage early, I hope my post offered some motivation.
If you could care less about paying off your mortgage early but still managed to make it all the way to the end of this post, I’ll leave you with 2 money jokes (courtesy of Nora’s joke books!)
Why is money called dough?
Because we all knead it.
What happened when the cat swallowed a coin?
There was money in the kitty.
Kellie says
Andrea, this was such a GRACIOUS, informative post. Even though we are debt-free as well (aside from our mortgage), I have found most of these “you too can be debt free” posts discouraging, unrealistic, and obnoxious. Yours is not – thank you! There is not a one size fits all, nor a “debt gospel” and I love that you were honest about what worked for you guys. Thanks for sharing! I’m super encouraged by you!
Andrea says
well thanks Kellie!
Honestly, this is the best compliment you could have given me on this post — because I was SO hesitant to write based on the fact that I am not a fan of most of the other “we paid off our mortgage” posts on the internet.
It was a big deal for Dave and myself, but no one else really needs to care about it — however, I suppose if my tips are helpful for others, then they should be shared!
Heather says
A 60-degree thermostat in a Michigan winter is an impressive feat of willpower. I would die. Also impressive: a 45 percent down payment. How an earth were a couple of 20-somethings able to nail that much down (even with the extreme frugality)? Most people struggle to scrimp and save for even the minimum 20 percent.
Andrea says
yeah it was crazy cold. We had to turn it up if people came over, and it was SO hard getting out of bed in the morning 🙂
Also, keep in mind we live in a low cost of living area — so a 45% down payment on a less expensive house isn’t as difficult to achieve. But yes, considering we make considerably less than other places in the country, we did still have to save A LOT to make it happen!
Kristen @ Joyfully Thriving says
Well done, Andrea! And I love that you have shared how you did it on a lower Christian teacher’s salary. We’re in the same boat, and pay extra each year but won’t pay it off as quickly. We do travel every year and live debt free and save lots. Just slightly different choices but I am still amazed at you guys! Thanks for sharing your story!
Nancy Pease says
Hi, Andrea.
I keep hearing about how it’s better to get tax breaks rather than pay off one’s mortgage early. I’ve never been clear on that. Wouldn’t one actually save more over the years by paying it off early and then saving (if you choose) what would have once been mortgage payments AND being debt free house-wise?
Andrea says
you know — for us, the tax breaks didn’t really matter. I’m sure there are good tax breaks, but we’d rather own our home outright and not have to pay the interest than get a few tax breaks. It all depends very much on your personal situation, so it might be worth asking your financial advisor about.
Rhonda says
Our financial adviser has always told us that paying off a mortgage shouldn’t be a priority (and ours is a relatively low interest rate). We are in our early 40’s and if paid on time would be done with it before usual retirement age. But, I think now that we have eliminated other debt (medical school loans, car payments), I am pushing more for paying it off early. I do agree, it’s hard to really know what is “best”. Now that the tax laws are changing, I’m not sure mortgage interest is much of a tax break (at least it didn’t seem so for the 2018 taxes we just had done).
Andrea says
yes, there are many schools of thought for this — and each person’s financial picture is different. Depending on the interest rate, the amount of your mortgage, and your income, the tax break might be worth it.
For us, it was not worth it as we wanted the knowledge that we were completely debt free. Maybe we might have come out a tiny bit “ahead” in the long run if we had kept our mortgage longer, but for the time being, we are enjoying the fact that we are debt-free.
Do what works for you — as long as you are striving to be financially responsible, I think you’re doing OK!
Valerie says
Congrats and thanks for the post! This reminded me of our early married years, buying our first house during the early 80’s when interest rates were hovering around 18%! We could barely afford a small 2 bedroom, but scrimped on everything else to do it. And I chuckled about the thermostat at 60 degrees! We now have a large old house and the gas bills were crazy in the winter, so we’ve always kept our thermostat at 62 during the day and 58 at night. You do what you have to do! Thanks for sharing your experience!
Andrea says
you know what — our furnace actually stopped working last night (boooo) so our house is currently 62*F right now. The repair guy is scheduled for 1pm today!
Elizabeth says
Well done! I’m also curious as to how you put 45% down, a big down payment makes a huge difference!
Andrea says
part of it was just savings as we KNEW we eventually wanted to buy a fixer-upper house. But also the sale of our first (much smaller) house! We had to make sure to keep enough cash on hand for a bunch of renovations too.
Natalia says
Great work and great tips, Andrea!
Yes, being mortgage free is so wonderful! My husband and I have enjoyed this freedom for a few years and we love it. Hard work is definetly rewarding!
Kate says
This is a huge goal of mine so I appreciate the encouragement here! Question- What about your first house? I assume the sale of that home is what helped you be able to put so much down? We put 20% down on our second home (could have done more but used the rest of the money from the sale of the first home to make much needed repairs). We have a 15 year, hoping to pay it off 3-5 years early! 🙂
Allison says
This is such great advice and shows a lot of determination and commitment. It is very admirable.
Having a good parental role model is also important. My mom was a spender and not helpful at all in teaching about finances. My husband’s parents were frugal but refused to ever discuss finances with their kids. Now my husband is the spender and I am the saver so it is difficult as we are not always being on the same page.
We both love to travel and show our daughter the world. The difference is that I am willing to make sacrifices in our everyday life to save for those trips and to travel as frugally as possible. It is much more difficult for my husband to make the same sacrifices and he dreams of more luxury travel. Since I do all the travel planning, he has had to travel my way.
Even though his parents were so frugal when their kids were young, they now tell their adult children that “if you want it, you should get it because you deserve it.” It frustrated me so much when my husband would follow their advice because every month he spent over $800 on electronics, games, etc. that drop value so quickly. Now that my sister-in-law, her husband, and 2 boys had to move in with my husband’s parents because this spending mentality got them is so much debt, my husband in the last few months has started to see my point of view. I am raising my daughter to be conscious of value for money and the importance of saving.
Christina says
I think regardless of whether the reader is trying to pay off their mortgage early, this post demonstrates the importance of knowing your priorities/goals and then pursuing them with laser like focus. You and your husband placed a priority on not having any debt. You focused on that goal and you accomplished it by lining up your actions with your priority. A lot of people may say that they want to have no debt, but their actions and their spending don’t line up with what they are saying. I think this is a good post to reflect on – regardless of your goals.
Chris says
Yes. This.
Esther says
This is awesome! My husband and I have a strong aversion to debt as well. We are hoping to have our mortgage paid off in the next few months – 15 years ahead of schedule! I cannot wait!
Brenda says
This post came at just the right time. We are in the process of buying our first home and this is something we are committed do doing.
Andrea says
oh good — congrats on the new house!
shan says
Andrea, LOVED your post!! Bless your hearts for having such determination, and yes, both your parents and Dave’s must have set a great example for you. We live in a retirement community where there are people who still have a mortgage 🙁 I am very frugal due to parental example and life necessity. My first husband, a young cardiologist, died of cancer at the age of 38, and at 34 I was left with two children under four. By God’s grace, I have been financially responsible and raised my children to be educated and financially responsible. Now my husband and I enjoy a debt free life in retirement, with enough left to share with those in need. Your post should really inspire other young families! God bless!!!
Linda B. says
Interestingly, my husband and I are one of those couples who live in a retirement community and still have a mortgage. We have worked with a financial planner for over 25 years who has done brilliantly with our investments and we were both able to retire in our early 50s. We are more than comfortable financially. One of the counterintuitive things we learned from our financial planner is that having a mortgage in our situation is a GOOD thing. It is one of the only tax deductions currently allowed and it enables us to have an additional $400,000 in our investment portfolio earning FAR more than the 2.3% we are currently paying as interest on our mortgage while we make minimum payments on the mortgage. Our neighbors look at us oddly if we say something about a mortgage, but I believe we are in a far more stable financial position than most of them. The way our portfolio is set up, we are generating investment income in excess of $60,000 per year on that $400,000. So, yes, we could have a paid off mortgage or we could have an additional $60,000 per year in income. We’re choosing the additional $60,000 in income each year while being secure in the knowledge that we could easily pay off our mortgage if circumstances change.
Andrea says
yes, my parents actually have a bunch of rental properties and COULD pay the mortgage off on several of them but don’t — simply because they can do other things with their money and then benefit from the tax deductions.
I definitely understand where you are coming from (obviously very knowledgable when it comes to finances)!
That said, for Dave and myself, it just gives us a sense of “peace” to know that we are debt free and don’t have any of that financial stuff to worry about when we have so many other expenses like tuition for our kids, home projects, etc.
I don’t think there’s a right or wrong way — but for now, the simple fact of KNOWING we don’t have any debt is very reassuring for us 🙂
Andrea says
wow — what a story! Thanks for sharing Shan!
Kristen says
Hi Andrea,
Thank you for another excellent post! My husband and I also committed to living off of one income from the start of our marriage, and I can say now, 26 years later, that it can be difficult and trying, but it’s worth it! Can I ask if you and Dave started contributing to your retirement accounts and were faithful to those contributions at the start of your marriage while living off of 50% of your income? We only contributed a small amount to my husband’s retirement account, not mine, so we could build up a small savings acct. You are an inspiration to readers of all ages and walks of life. Your posts are fabulous! Thank you!
Kristen
Andrea says
Good question Kristen!
Yes, we’ve always contributed the maximum amount to BOTH our retirements accounts as we felt that was super important for us. However, there were months when money was super tight and we would use some of our savings to make that contribution. We felt that once we had a good emergency fund, we would be OK with using a small amount of our savings to put towards our retirement accounts if absolutely necessary.
That was just our preferences though.
Chris says
This is an extremely valueable post, Andrea. I feel that probably a lot of people don’t know that they even have the option of paying off their home early. I worked with someone years ago who had a sports car. She had also recently bought a small home. She mentioned to me, “Why couldn’t you pay off a home in a few years, just like a car”.
I wanted to mention something I feel is important but then I read the comments and someone asked the question. That is – to make sure that your payments are going to PRINCIPAL ONLY. Also, when we paid our house off, we made sure there was no prepayment penalty. I don’t know if they still have prepayment penalties or not, but it would be good for someone to check. I loved to print off amortization schedules and when I made a payment, I would see how much interest I was saving on each payment! 🙂
Chris says
I also want to say that you are TOUGH! I don’t think I could keep the temp at 60 degrees. 🙂
Andrea says
haha — looking back we DO laugh at ourselves for this. We were FREEZING all the time, but it helped us feel like we were doing as much as we could to save, save, save. Now we set our thermostat at 70 all winter long 🙂
Andrea says
Thanks for mentioning — yes, Principal Only is key!
Meghan says
Great post, Andrea! I wish we had your motivation, but we love to travel and we can’t have both. We are planning to pay off the mortgage within a year or two (it’s been 9 years) so my husband can potentially change careers while keeping the same level of lifestyle. How much emergency fund did you keep while paying off your house? Did you ever struggle with wanted to invest extra money instead of paying on the house? We have a decent chunk in savings that we should put on the house but haven’t. Maybe that money represents options to us?
Andrea says
haha — well at least you’re honest with yourself and don’t constantly beat yourself up about the fact that you are choosing to spend your money in different ways!
As for an “emergency fund” we’ve always just kept an even $10,000 in savings no matter what. We never let it get lower than that for any reason, and that serves as our emergency fund. We never used any of this towards our house — I feel like the minute you do something like that, you’re bound to have a true emergency come up, and then you’re stuck!
Meghan says
I think that having $10,000 in your emergency fund shows that you are confident and purposeful in your money management. You don’t fearfully have too much in there because you know your spending and lifestyle needs.
Andrea says
honestly, that’s just a number someone told us to keep on hand. They were really smart financially, so we just decided to go with it!
Denise says
Andrea,
Thank you so much for this post! I appreciated how you and your husband knew your core values and were committed to them!
Thank you for sharing!
Denise
Sam says
Hi Andrea
Thanks for this! I found it super helpful!
We’re also putting extra on our mortgage and hope to have it paid within 7 years from now.
I was wondering if you could explain this to me. How do we know if the extra funds are going directly on the principal? For example if we’re paying more than is required every month is it going on the principal or do we have to request that ?
Thanks!
Andrea says
Good question!
There are usually 2 options for extra payments:
1. pay towards principal
2. pay down interest for that month (or somethings the next month)
We always had the option of selecting if we wanted our extra payments to go towards interest or “principal only” and we always selected “principal only”.
I have a feeling your extra payments would be going towards principal (as that is often the default) however it might be worth asking your lenders, just to be sure.
Chris says
I found the following AFTER I read this post of yours the other day. I thought it might be helpful. It was referred to on a blog called Budgets Are Sexy but couldn’t find it today and just googled it.
QUOTE: Most lenders allow you to pay 10% of your mortgage balance as an overpayment per year if you’re still in your introductory fixed, tracker or discount period. If you’re beyond that intro deal and paying your lender’s standard variable rate (SVR), you can usually overpay by as much as you want.
Chris says
It was kind of neat. Because it’s just a blog I read regularly – I wasn’t searching for it. I had never heard of a minimum on overpayments, before.
Andrea says
that IS interesting — thanks for sharing!
Avia says
Sam – my experience has been that you have to tell them to put it toward principal and then watch to make sure they do. We had a lender a few years back that consistently didn’t do that and it was very frustrating. If they don’t put it toward principal they will basically pay your payment early – interest and principal like usual. So eventually you won’t have a mortgage payment due because you’ll be “paid ahead”. But you for sure want your principal paid down because the faster you pay down principal the less you will pay in interest in the long run.