Drumroll, please! Alright, alright. I don’t really need a drumroll since the title is one giant spoiler alert. Since you already know that we put over $30,000 towards our debt in 2017, let’s take a look at how two millennial teachers raising a newborn did it.
The Final Numbers
Just like in years past, this total includes payments toward the principal and toward interest. If you want a clearer picture of how things shook out, we paid just under $25,000 toward the principal and just under $6,000 in interest. What these numbers don’t show is probably even more significant than what they do show.
In 2017, we were still both teachers. Neither of us made anywhere close to six-figure salaries on our own. It was also the year that we became parents, and I took an unpaid maternity leave. That means that even though we had less money coming in we still managed to put more money toward our debt than we did in 2015 and 2016. Excuse me while I go find a really big horn to toot.
How We Paid So Much
Usually, somewhere in these huge debt payoff posts is the call to earn more money. I’ll be honest. It wouldn’t hurt. In fact, it’s probably the best way to slay debt. But that isn’t what we did. In fact, the tiny pay bump that I earned thanks to my annual raise (don’t get too excited; about 1%) and continuing my Master’s degree didn’t compare to what I paid in tuition. Never mind the almost $20,000 I lost out on by staying home.
So if we didn’t earn more money, what did we do differently this year? Truthfully, we operated out of a scarcity mindset and reaped the benefits of being overprepared. For the better part of 2017, we spent time creating a baby fund. Once the medical bills came and went, we were able to shift back into a perspective of abundance. After reexamining how much money we wanted to add to our emergency fund now that our household has another +1, we funneled the rest into the biggest mortgage payment we’ve ever made. It also didn’t hurt our bottom line that I side hustled up until an hour before my water broke. OK, fine. Technically, I was submitting drafts and sending in lesson plans from my phone in the intake room at the hospital. What can I say? Mama gots to get paid.
Why We Paid So Much
I hate debt. Specifically, I hate my mortgage, especially because for so long, it was debt in disguise. I’m also not a fan of paying interest. At all. I know some people like to argue that paying only the minimum frees up money for other investments, but we still managed to max out our Roth IRAs. And we aren’t wading into the rental property waters anytime soon because keeping a small human alive is maxing out my time and patience as it is. In short, this is what works for us in terms of the funds we have available and our money personalities. Don’t like it? Don’t worry about it. Unless you want to pay off my mortgage. Then, I’ll spend the dollars however you’d like.
Why We Aren’t Refinancing
Every month, I question if moving our 30-year mortgage to a 15-year mortgage would be the smarter choice. In fact, question isn’t the right word. I obsess over mortgage interest calculators, even though I already know the math would shake out since we pay double payments each month. In comparing the calculator results, there’s no denying the interest we would save switching to a 15-year mortgage. And you know how much I hate interest (because I just said it one paragraph ago and you are paying attention, aren’t you?).
But here’s the thing. I have come to really appreciate the flexibility that a 30-year mortgage affords us. We can increase our payments dramatically (Here comes the horn again…toot! toot!). We can also scale back and divert the money toward other goals like a baby fund. In a lot of ways, I have come to regard this 30-year mortgage as a second safety net. But don’t worry, I’m still doing everything I can to shake it off by my 40th birthday.
So Tell Me…What debt did you destroy last year? Would you refinance my mortgage if you were me? Do you love calculators as much as I do?
Congratulations on paying off so much debt in the same year you had Baby #1!! I was *not* in the same headspace when mine was born, let me tell ya!
This year was a great debt payoff year for us. We ended up paying off a total of $36,276 in debt payments (which I hadn’t totaled up until just now–thanks for the inspiration!) on top of paying $14,000 for a new roof, maxing out retirement funds, and other savings. I am hoping that next year we don’t pay off so much debt because we want to invest more! 🙂 But we don’t hate our mortgage as much as you (although we may be selling and eliminating it anyway?!). I am very glad we picked a 15 year mortgage when we bought. I would not change that decision for anything. We’ve been able to pay off the principal so much faster. But if we had a 30 year? Not sure I would refinance. I know what you mean about the freedom it gives you. That’s a big one. And I doubt you’d save *that* much if you refinanced, since you’re prepaying so fast. Great job Penny! Now tell me how you manage to spend just $200 on groceries a month?!!!
Haha. My biggest grocery secret is living by an Aldi! That’s almost like cheating. Congrats to you on all the debt you paid down, in addition to all the other excellent money moves you made!
Thanks Penny! I sure miss Aldi!! 🙂
Last January, I tried to refinance my mortgage to a 15-year fixed from my current 30-year ARM. Unfortunately, the appraisal came back too low, and I was still “technically” underwater on my mortgage after almost 11 years. So that hurt, even more so because of the money I paid out for a worthless appraisal that could have gone towards my mortgage principal.
But the debt I slayed in 2017 included $15k (plus taxes?) for the car I purchased in August (debt dead by November!!!) and a combined $6k+ in mortgage principal and interest. I’m not obsessive about the mortgage debt, but I do love seeing the balance go down each month. I dropped below $82k at year end, so I’ll be reaching $80k this summer (with no additional payments). Maybe I’ll set a stretch goal of reaching $75k by year end?!
Do it! I love that stretch goal. Congrats!
Late December 2016 we paid off our mortgage so now we don’t have any debts to pay down (given we pay off the credit cards in full each month). I’ve definitely gotten used to not writing those checks! And we really didn’t need to refinance even though we had a 4.75% interest rate— our rate of prepayment made it not worthwhile compared to refinancing costs.
That’s what I’m thinking about a refi. We are sitting at 3.5%, which I think is still pretty competitive. Congrats on being debt free. I’m jealous!
By the time you’re our age, you will be too!
I paid off $72,000 of my line of credit last year! A lot of that was the result of taking most of my house fund and putting it on the line of credit, as I realized that I would likely never buy a house until the line of credit was gone. I’m hoping to see the end of my line of credit this year.
That sounds like the right move. If the line of credit was a brick wall of sorts keeping you from buying, then it makes sense to tackle the wall first!
Congratulations on an amazing year of slaying your debts! It’s super inspiring see you smash your goals and move that much closer to debt free life 🙂
Thank you! We are so excited. I’m trying to dial it down a little bit because it’s been fun to top our paydown amount each year…but I’m not sure we can keep doing it! I’m trying to remind myself any progress is awesome.
All hail the debt slayer! Congrats on making so much progress last year, especially with the arrival of your little one. While I’ve been adding extra principal payments to my mortgage, I’m also keeping it at a 30-year rather than a 15-year for the flexibility. While we have an emergency fund, I still like the comfort of knowing we could pay less on the mortgage if we had to for any reason.
That’s exactly how I feel, Gary! Between that and my emergency fund, I feel like I can breathe much easier.
Well done Penny! We did not shake off the shackles of debt in 2017. We started out the year with zero debt, and by year’s end had a mortgage (see my post, Oldsters Buy a House – not a link). At the moment we own two houses and will be selling one this year and applying the proceeds to the new house, but under the best of circumstances we will still owe some on the new house by year’s end. I intend to work a few more years (because I enjoy it) and intend to be mortgage free by the time I hang up my spurs, so the picture is not too bleak. I also live in an area of Appalachia where property values are reasonable so even if we carried a mortgage into retirement, it would not be the end of the world.
You’re always welcome to drop links, Oldster! I’m cruising over to your blog now, though. That sounds like a smart decision to set down roots where you did. Sadly, I’m not sure that our area is really friendly for retirement (property taxes are bananas), but they are great for raising a baby since we are so close to family!
Woot woot! Congrats on the progress given the circumstances! But not really a surprise given you were really well prepared 😉
And I would definitely not refinance your mortgage. Keep the flexibility and keep making those extra payments when you can!
As for calculators, I’m guilty of going on Zillow and going through hypothetical scenarios for my first home purchase in 5 years haha!
I am addicted to Zillow. My husband will walk by my laptop and ask, “Ummm? Are we moving?” Nope, just being nosey!
Slaaaaay that mortgage, y’all! That’s amazing!
We were able to pay off my $25k student loans last year. At the end of December we were able to slam another $15k onto Mr. Picky Pincher’s loans. If all goes according to plan, we’ll be free of student loans before the end of 2018! 🙂
Woohoo! Congrats to you and Mr. Picky Pincher. That is outstanding news!
Great job on paying down that mortgage!
I’m actually working on my financial update post right now. Our debt payoff was spread out across THE LAST CREDIT CARD (now gone!), two mortgages (our house and the rental property), and student loans.
It’s a decent number despite buying the bus, going out on disability and maternity leave, and making contributions to the 401(k). The important thing is that we’re still moving in the right direction. This year should be a big one when it comes to debt payoffs 😉
We have a 15 year mortgage and I do occasionally wish we had gone with 30 (or 20 maybe??) for a little more flexibility in our monthly costs. Everything has worked out and we are paying it a little faster, and I just keep thinking that in less than 9 years we will be mortgage free! So before my 40th birthday as well!
All that to say, I don’t think refinancing is necessary or would help you out much at all! You’re doing great!
Yay way to go Penny, so happy for you guys. So inspiring keep doing your thing soon enough you will be debt free.
I’m glad you’ve been able to switch back in to an abundance mindset. You sound like it makes you feel more in control of the finances – even if you would make the exact same choices in either mindset. And flexibility on the 30 year sounds priceless since we don’t know what we’ll want in 6 months. I recall so many couples who thought that they would feel one way as parents who ended up feeling very differently when presented with a tiny human to take care of.