After Years Of Budgeting To Eliminate Credit Card Debt,
student loans, our car notes and building up wealth. It was time to seriously consider getting completely debt free. Our last financial goal is to pay off the mortgage.
Once again, I had to review our budget to determine how we can achieve this goal within the next 10 years or so. Our journey to home ownership spans almost thirty years and includes three homes. There were many financial mistakes with our first home but by the time we arrived at our third home, I like to think we finally got it right.
Our last financial goal is to pay off the mortgage.
First Home Mistakes
When we purchased our first home, I must admit we had no idea what we were getting into. I had just remarried; had a baby and we were now purchasing a home all within one year. For the first time there wasn’t enough money to cover all the expenses. There is a huge difference in expenses from renting to owning. Of course, we did not budget for all these life changes to happen in such a short period of time nor the extra expense of home ownership. We were young and we just let life happen to us. We quickly became house poor with mounting credit card debt to help us get by. Therefore, we had no choice but to budget our way out of debt. Cutting here and cutting there, making deals with our creditors just to keep our head above water. Hence, we used the rob Paul to pay Peter method, which did not work very well in the long run. Eventually, we worked our way out of it by getting better jobs and learning to live below our means.
No Longer House Poor
When it came time for us to buy our second home, we were determined not to be house poor ever again. Even though it is recommended to use the 28% rule to determined how much house you can afford. We preferred to use our budget to determine what we could afford. We clearly learned from our mistakes. As a result of this strategy, we were able to buy our second home and live comfortably.
Seventeen years later, after we began making bi-monthly payments we were able to pay down our mortgage faster. As a result of this we were able to purchase our retirement home early. Hence, bi-monthly payments reduced the out-standing mortgage significantly because you are making an extra payment per year. Thereby, we increased our profit when we sold our home by lowering what we owed significantly. You can set this up with your mortgage company. You can schedule additional funds yourself to pay down your principal equivalent to a bi-monthly payment. Just make sure the extra funds are going towards the principal and there or no penalty for early payoff.

Pay Off The Mortgage Plan
We are currently making two extra payments a year to pay off the mortgage. We plan continue to increase this until we are making two full mortgage payments per month. Another plan I am working on is to try to live off one income and use the other income to pay off the mortgage. I am thinking we will again review any nonessential items in our budget and reallocating some savings. We have already maxed our emergency funds and 401k.
We have budgeted for our home to be paid off within ten years, because that is when we plan to retire. As a result, this is the last step to being completely debt free. The cars, credit cards and student loans are all paid off.
All through the years we have learned all we could about budgeting, saving for the things we wanted and retirement savings. It hasn’t always been easy for us, but the lessons we learned are invaluable. There were many, many mistakes made along the way. However, in the long run all it took was for us to develop a spending plan so that we could live. Please read my blog Create a Spending Plan.
Let’s budget, spend and live!
Sabrina
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