Photo by Nina Kitaeva on Unsplash
Since we started this process in 2017, we’ve been trying to finagle our way into complete debt freedom via the mortgage payoff. In the span of 4 years, we went from ~$75k in debt to having $30k for a house down payment and became first time home-owners. We were both in our first big-kid jobs during this process, so income was fine but not exorbitant.
Since that time, I’ve gone through nursing school and 3 nursing jobs, and Art has obtained a CDL B license and transitioned to a driving job. We have more than doubled our income since we took on a mortgage but having 2 kids and a lack of financial direction resulted in a lot of that income sifting through our fingers in the form of splurge spending and needless gadgets. Art can attest to the silly compulsions I’ve had over the years, like the knockoff robot vacuum that seems to only exist to suck off pieces of our living room rug tassels or terrorize Dee and our pooch. Despite all of this, we have come to the end of the line.
We have consistently made extra payments each month towards principal, even if the payments were only $200. The only time this stopped, was in the early days of Covid, when we substantially increased our savings in case of a layoff. The stress of the unknown caused a deep anxiety in me that could only be quelled by knowing we’d have enough to cover food and living expenses for a good chunk of time, and we watched our savings grow higher than we’d ever seen it before.
Once things opened back up and it was clear our jobs were safe, we dumped some of that savings into our mortgage and began to allow ourselves more discretionary spending. Probably too much. Alas, I can’t turn back time, but we did start to get more serious with my most recent job change. Once I started to make bonuses, we consistently stuck that money into the mortgage each month once it arrived and began to aggressively pay things down.
We’re 8 years in (with one refinance to lower interest rate from 4.5 to 3.375) and owe $9,100. Payday is next week, and I am almost sick with excitement and nervousness. We have enough in our bank right now to cover this, but we’d have to survive on air for the next 5 days till payday comes to secure us. I’d rather not gamble my entire existence, so we will be waiting till payday and then paying this sucker off.
I wish I could scream from the rooftops but it’s so odd and atypical, it would seem like bragging or insensitive to talk about it with others who still have their mortgage. It would be odd to bring it up to neighbors or friends with a completely different lifestyle, so I have come here to let out my excitement and trepidation. 5 more days.
I won’t even know what to do with myself. Since I started college, I’ve always had some form of debt. We paid off our student loans and personal debt and had a period of 2 years where we earned very little but saved up $30k for a down payment and purchased a new (to us) car in that timeframe, but have never had a period where we weren’t paying something down or preparing for a huge purchase that would put us outside of our debt-free status. This feels huge.
Once we’ve knocked out the mortgage, our living expenses will go down substantially. The only other rival expense is toddler daycare, which we’re stuck with for the next 4 years. Once Dee switches to before and after care, we will have a substantially decreased bill, much more manageable than the current $800 monthly expense. Which I understand is MUCH better for 2 kids than many other families pay. So, the momentum will kick into high gear in those 4 years but for now, having an extra $1100 base in my pocket plus the extra $4,000 we’ve been putting towards principal monthly will fully fund our 401ks and Roths IRAs. We should theoretically have a little left over to enjoy life with our kids, meet friends and family out when there is opportunity for quality time, and any expenses that come up.
I’ve recently found the secret of using credit for cash back and have dipped my brain into the world of points travel, which sounds like a full-time job and fills me with fear and overwhelm. Allora, I won’t be doing that anytime soon, but it’s an option for the future. In the meantime, I am spending just as I always would, don’t buy things I don’t need, and pay my balance off as soon as it clears so I know exactly how much is in my bank. This seems like a great way to get a little extra based on the current levels of spending. I kind of wish I hadn’t listened to Dave Ramsey for the last 13 years. He’s spot on for paying off debt, but I really wish I hadn’t taken his advice in investing in American Funds and losing a couple of thousand to front loading fees and a high expense ratio. Or the advice on credit and any kind of loans.
What’s Next Up?
I can’t say we will never go back into debt. It’s almost time for Art to get a new car, his is on its last leg, leaking oil like a sieve. It makes more sense to continue to invest in retirement and finance the remaining balance on a car once we’ve saved a decent down payment as long as the loan rates aren’t crazy. I hope that our home is our forever home and don’t see any reason to get rid of it since we’d like to always have a landing pad for the kids or a place they can visit once they’ve flown the coop. If we were to downsize in our old age, I’d hope the value of our current home would pay for the new home. But I am leaving my options open. And I’m going to continue to utilize credit in a responsible way to get those carrots they dangle. There is very little risk in this if the card is used for living expenses like groceries and utilities and seems no different than an auto loan.
The goal next month is to max out our 401ks and Roth IRAs (over several months, not immediately. We don’t have the cash for that!). We will celebrate our win with a $25 dollar of Aldi champagne, a home cooked steak and some grilled veggies, then start saving for a family vacation later this year. Outside of retirement, I like the idea of everything being savings until proven otherwise. We’ve opened a high yield savings account and plan to keep an emergency fund there. I’d like to bring that back up to 6-12 months of expenses. After that and the monthly fun outings with the family, maybe we will open a brokerage account if there is enough left over.
I’ll just be excited to have options. If the world goes to hell in a handbasket, it will be bad, but it will be moderately less bad since housing is paid for. We can survive a long time as needed if we pare down on fun spending. I have tried and failed several times at vegetable gardening and always seem to spend a ton in startup, while reaping 3-4 grape tomatoes and a green bean or two before the aphids, birds and stink bugs wipe everything out. But if I had to, I could go back to the basics if someone was laid off and try to grow as much of our food as possible. I feel very optimistic about our future. We have the safety and security of a steady, stable home base.
Photo by Jason Leung on Unsplash
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