“Paid in full”

I turned to my husband and showed him the subject line of the email we’d just received from our mortgage company. We did it! 

I’m sharing this in hopes that others who have this goal will feel empowered. Or maybe it’ll encourage someone who needed a boost to set a new goal for themselves. Young adults have inspired me with trading in their fancy cars to go for a debt-free lifestyle, and others from all lifestyles who have paid off hundreds of thousands of dollars of debt, or arrived at a paid off mortgage. I thank them for their example, and for the extra motivated to make this our reality. 

I’m not going to fully go into numbers here but I will let you know a few important ones… 

$0 that’s how much we inherited from family. 

18 and 22: Our ages when we got married.

Less than $100: How much I had in my bank account when we tied the knot.

We didn’t fall into a lot of money, and we don’t have millions in the bank. We are a comfortable middle class family of 5, though it didn’t start that way.

This isn’t to say we haven’t had things to help us along the way. Right from the get go–which I’ll share in a moment–As newlyweds, we had a few things that helped set us on a good path.

Our Opportunities

1. One of the best wedding gifts: A Book

One called The Four Laws of Debt Free Prosperity. (I believe re-released as “The Four Laws of Financial Prosperity”). I laid on our thrifted futon and devoured it in one evening while avoiding homework. We didn’t have cable and this was before Netflix. It talks about tracking your expenses, not spending more than you make, and having financial goals. The principals aren’t rocket science, but to two newlyweds with their whole lives in front of them, this set the groundwork for how we’d think about money.

2. We’ve always saved

When we worked as early morning custodians, when I was making commission at a call center, or we were working full-time salary jobs at a police and news station. As our income went up, our spending didn’t always inflate with it, but our savings always did. We opted for less expensive things (see thrifted futon) over nice things for years and years, and for the most part, still do.

When I took the chance and quit my new reporter job it was a complex and scary decision that allowed us to cut childcare, and slash our budgets again where we could to live off one income. Then eventually I started working for myself, and making more. Those habits allowed us to live off a fraction of what we make.

3. Scholarships

My husband started college on a golf scholarship at a state school. I started at a community college. Both of us transferred to a University and applied for grants and scholarships. We each took out one student loan to cover our tuition our first semester together at BYU (a very inexpensive private University), but paid it off once I won scholarships. We didn’t know a lot about money but neither of us wanted to get into a lot of debt for college. I was going to be a journalist and knew I wasn’t going to be making a lot of money, so it didn’t make sense to get into debt for tens (or hundreds) of thousands of dollars. We preferred to cash flow it, and we hope to use the same strategy with our kids.

While in college I sat in a Personal Finance class (I needed an extra elective credit), and was fascinated and in over my head as the professor talked about retirement accounts and compound interest. Was this something rich kids learned about? But one thing that stuck with me was a set of case studies he shared with different successful business people who all had salaries well over anything I ever imagined I’d make. $150k, $380k, and $1.5 million. He scribbled these numbers on the board and I thought those people must be SET! But as he continued on with the lesson, discussing their huge houses, expensive boats, vacations and cars… He shared how all of them had gone bankrupt. 

Welp. 

Needless to say, that left an impression. 

Our Mistakes

Despite those impressionable lessons, my husband and I did make two notable poor financial decisions in college. One was taking out a car loan for one of our cars right after my husband was promoted to an assistant manager position at his retail job. We quickly realized that was not smart and promised ourselves we’d pay cash for cars from now on.  

The other was buying a condo in Utah right before the recession (of course we didn’t know about the impending recession) and a year before we moved to Texas. We took a loss every month for 10 years. Our savings came in handy for both of those things. We paid off the car early, and were finally able to sell our condo before beginning to build our dream home. 

So to recap: We started off our marriage in a crappy apartment with a roach infestation. Our dining room set consisted of a cardboard box and folding chairs (that were a wedding gift!). We put our money in envelopes every month for our different types of spending: groceries, personal, clothes, and so on. Then, we stuck with that envelope method until we had established good spending habits. We still made mistakes now and then, but overall were heading in the right trajectory.

Our Wins

We set savings goals. Oh I had lots of goals I was saving for: A trip to Hawaii, or a fancy new car. But every time we’d reach the savings goal, I’d change my mind on the type of car or vacation I wanted. And we’d just keep the money in savings, continuing to add to it, and enjoyed less extravagant trips and cars along the way. That’s ultimately what led us to be at this point today.

I never bought that brand new car. We don’t spend money on alcohol and we don’t have expensive taste. I have one pair of Uggs… My most expensive pair of shoes. The rest are $30 or less. A fancy dinner for us is one at Olive Garden or Outback Steakhouse. I’ve never spent $100 on jeans.

And when it came to building this dream house of ours, we went for the BASICS. We were making enough to finance more, but our goal was to keep the amount well below our means. We declined the hardwood floors, the upgraded white cabinets. The raised ceilings with beams. We didn’t get fancy tile backsplash or pretty chandeliers. We got boob lights and level 1 carpet. As a result we probably built one of the least expensive houses in our neighborhood. But we love it. It’s on 2 acres, we plan to fix it up as we go, and now… it’s paid for!

Our Mortgage Payoff

We applied Dave Ramsey’s “debt snowball” baby step to savings accounts and extra on our mortgage principal. We used a huge chunk of our savings when we closed on our house with a 51% down payment.  Right after, we set the goal to pay it off within five years. It felt lofty at the time, but not impossible considering how much we’d been used saving. We’d already been living off less than we made so we just had to keep it up for a few more years. 

It’s also worth noting that our interest rate was terrible. With excellent credit and a huge down payment we still had a 5% interest rate. A year into our mortgage our bank offered a refinance deal for under 3% but it came to the tune of thousands of dollars in processing fees. I decided we’d stick it to them and pay it off even earlier, ultimately saving us (and them losing) hundreds of thousands of dollars in interest, and shoving their fees where the sun don’t shine.

A Paid off Mortgage: Setting the Goal

At the beginning of this I wrote down my goals in my Passion Planner. My Lifetime goals, 3 year and one year. Under “lifetime” I wrote I wanted to be financially independent. Under 3 years I wrote I wanted to be homeschooling my kids again and pay off my house. It was a couple years early but hey, let’s call it a stretch goal!

I told my husband, and a couple friends about my goal, and I told myself, every single day. I put it on my vision board. The more I told myself and ran the numbers the more I could see it. If we could just spend a little less. COVID-19 actually helped with that aspect. We decided to have Jayda take a year off of competitive cheer, adding more savings to our pockets. And not being able to travel anywhere also allowed us to put more away. Family vacation money became mortgage money. Play money became mortgage money. Gas money became mortgage money. You get the idea.

I ran the numbers over and over and over and then I saw how we could do it–Pay our house off by the end of the year.

While I sat at the bank with my face mask on as I wired off the payoff balance and the banker congratulated me, and I was in disbelief. But sitting next to my husband a few days later, reading that email, it finally hit me. We did it.

It would be cool to say our story is unique (and it is in that it is our own), but I’ve read countless similar stories of people paying off more debt than we even owed on our home. Next week I’ll share a blog post with my favorite easy-to-read money books and resources that have helped me along the way more than I can express. If you have any questions let me know, I’ll go through those too.

Tags: debt free, dream big, dream house, homebuilding, paying off home