From Financial Responsibility to Financial Freedom

OK, the title might be halfway misleading, if you assumed we have now torn ourselves away from the shackles of fiscal obligation, and have naught to do but sip from our wheat grass patch as we watch our neighbors go to work every morning.  We’re not there yet, nor do we expect to choose that lifestyle anytime soon.  But there’s something to be said about relieving the stresses of bills and HAVING to work excessive hours in order to sustain your lifestyle.  I’m not the only one to write about this. But this is our blog, and therefore our story.  We don’t talk about finances often, for as many others do we see it as a personal matter.  But people have asked, and after all we’re not doing this (only) for our health – Therefore, this post is brought to you by popular request.

We paid off our mortgage in seven years.

That’s right.  Seven.  And frankly we only tried starting at the last three years or so.  After reviewing our monthly statements and statistics, we decided we didn’t want to pay, literally, more money in interest than the initial loan amount we borrowed to buy the house.  I mean, who wants to pay twice as much for anything?  We also decided that “writing off” that interest was of almost no benefit, because interest rates are so low in this era.

But I don’t want to get preachy about tax benefit misconceptions.  Our goal is always sustainability, and we just want to tell you how we did it.  I’ll give you one hint:  It wasn’t because we make a lot of money.

In fact, if you’ve been following us for any amount of time, you know that our talents lie in saving money rather than making it.  We do OK, sure, but our income (for our state) is by all accounts average and maybe even a little modest.

Before this post gets too long, I will front-load the rules we followed to pay our mortgage off early:

  1. Don’t buy new things you don’t need.  If you think you need it, try to go without.  You may surprise yourself. Pretty much make your default decision on purchases “no”.  Learn to embrace garage sales and Craigslist, and consider making it yourself (bookshelf post coming soon).  If you can’t decide whether you should buy something, walk away.  You’ll have your answer the following day, if you haven’t forgotten about it.
  2. Grow your own food, but even if you don’t…
  3. Don’t eat out as a regular habit, especially as a work-time lunch habit.  Many people don’t realize how much they spend on this.  For many, it is the lion’s share of their paycheck.  Cook.  Buy groceries.  Buy nutrition in bulk (future post).  I know Chipotle tastes good, and sometimes it’s worth it.  But is it worth making a habit out of it?  We’re not talking cold turkey, but humble moderation.
  4. Shirk any unnecessary monthly bills – cable, gym, phone data going to waste, extra cars.
  5. Fix things yourself, even if it’s a struggle and takes “forever” – you’ll be far more prepared the next time, more skilled, and more knowledgeable.
  6. Start early.  The more extra money you put toward your loan sooner the less interest you will pay over time. New home buyers pay the most interest.  People on their 20th year aren’t paying nearly as much in interest (because they already have).  Your mortgage amortization schedule is designed to collect the profit (from you) early and brutally.  At one point in our loan, our monthly interest was nearly $1300.  All profit for the bank.

Andrea told our story in much more detail on here writing blog, which I’d invite you to read for more information.

http://www.andreagstewart.com/blog/http:/www.andreagstewart.com/paying-off-a-mortgage-in-seven-years

It contains most the pertinent details to how we reduced and applied money to our loan, including the handful of windfalls we acquired  (which made the difference of 8 1/2 years to 7, by estimate).  We did this because we don’t like the stress of owing money, we wanted to plan for retirement, and we just wanted to test ourselves as far as what we could go without.  We’ve never been into caustic environmental consumption, and even developed a healthy sense of guilt when we must reluctantly buy something new from the store, which may or may not have plastic parts, manufactured who knows where with dubious regard to human rights.  It’s a challenge to cut ourselves off completely in our society, and for most of us our only salvation is to minimize frequency.

After going a few years with a strict spending diet, we’ve felt no desire to increase consumption post-mortgage.  We still live a frugal existence and have discovered that we prefer it that way.

It’s not about suffering, as some are wont to call it, or restricting your life, or depriving yourself from the joys and experiences of life.  In some ways it was a discovery of what truly is needed to enjoy the day and be happy.  And because people have ranted at us before (ahem, Reddit users), I just want to make it clear: if you don’t want to do some or any or all of this stuff, than don’t.  That’s fine.  Don’t torture yourself.  And it’s not necessary to post a comment saying you don’t want to get your hands in the dirt to grow your own tomatoes or ride your bike to work.  Every person/household has a different need/value structure, and are fit to deem what they can and cannot go without, and how much work they are willing to put in after their day jobs.   There’s also a chance your situation isn’t good, or you have more obligations.  Be gentle on yourself, and know that any amount of savings and earning is a win.  A 15-20 year mortgage is still a success compared to 30 years.

We’ll get back to gardening soon.  Cheers,

-J

 

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