I hate my mortgage.
How’s that for today’s installment of Truths That Surprise No One?
No amount of rationalizations have ever made my mortgage seem palatable. I know our interest rate is low. I know we bought at a great time. I know that my money could be working harder for me in the market.
But I also know that homeownership with a mortgage is like being a renter who is still responsible for, well, everything.
So I’m determined to pay off our mortgage early. I hate to set too precise a number because I don’t want to set us up for disappointment. But the loose goal is to be mortgage-free by the time I’m 40.
And we’re getting close. That’s in no small part due to the sheer amount of hustle that we put in last year. We grew out income, we cut more expenses, and it let us do some really amazing things.
We both maxed out our Roths again last year, and we put over $33,000 toward our mortgage too.
It was a good year.
The Interest – $4,834.84
Previously, I would grin and bear it through all the lectures about how my mortgage is actually useful come tax time. Think of the interest you can write off. Now, thanks to the new tax laws, people have dialed that interest talk down.
But I still think a lot about it. And it mostly just makes me feel a little ill.
Thankfully, the interest we pay each year continues to drop.
This past year, $4834.84 went to interest. To interest. To interest. To the bank. I know I’m paying for the privilege of letting them lend me their money or whatever else is written on the Kool Aid packet my mortgage broker was serving.
But the lower our mortgage total gets, the less comfortable I am with paying any interest. I’m trying to do the mathematically-prudent thing by riding it out and investing alone the way, but finance is never just about numbers.
RELATED POST: Why Money is Always More than a Math Problem
Still, let’s celebrate while we can. We paid a lot of money toward our mortgage, but it’s less than it has been. That’s a win.
The Principal – $28,938.46
That is a really big number. It’s a really, really big number when you remember that my husband and I are both teachers.
We have good jobs. We are paid well. I will earn six figures before I retire, but I won’t cross that threshold anytime soon.
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It feels incredible to share that we paid almost $30,000 to the principal balance. And it is incredible.
However, it’s also important to remember that we are already on the hook for $12,000 a year. Of course, that’s principal and interest combined. But often times people ask me how we can afford to even put a thousand dollars a month towards debt (because your mortgage is a debt, people!). Honestly, we don’t have a choice.
Lessons Learned from Paying Down $33K in Debt
We paid down a bunch of debt this past year. In fact, it’s our biggest debt payoff year yet. We’ve also had some impressive years since I started blogging.
- Actually, We Paid Off $24K in Debt Last Year – 2015
- $27K in Debt Destroyed this Year – 2016
- How We Slayed $30K Worth of Debt in One Year – 2017
With all that money sliding out of our bank account, you can bet I learned a thing or two.
It just does. That’s the biggest lesson that anyone could ever learn. Period.
Ok, I’ll elaborate. Debt is difficult because it means that your money isn’t really yours. In a fantasyland, this is where I tell you that I am borrowing a page from The Rich Person’s Playbook, in which we take on reasonable debt in order to make money from our money.
But let’s get real.
Having an extra $1,000 a month is the real goal here. Might that mean investing? Sure. But it also might mean taking a vacation or paying cash for my son’s braces (he did not win the gene lottery when it comes to overbites, I fear). Being mortgage free feels like freedom, and that’s what we’re working toward. We want more choices in our lives, and having more money and fewer financial obligations is the perfect recipes for that.
RELATED POST: How I Found Financial Freedom Without the FI
Both is Usually Better…Or Just as Good
I will never understand how or why people think they have to make a single financial choice. There’s no reason why you can’t put extra toward your mortgage and invest.
If it helps you to laser-focus in on something, great! But for us, doing both works out well mathematically and emotionally. Our game plan for this year looks almost the same as last year. We start the year putting more of our extra money into our Roths, but we still put some extra toward our mortgage. Then, once our Roths are maxed thanks to extra paycheck months (hooray for March!), stipends, tax returns, and other side hustles, we double down on our mortgage.
This might change somewhat as we explore the different 403(b) options that my husband now has, but embracing both extra debt payoffs and investing is what feels right financially for us.
Finals Thoughts on Our Mortgage Payoff Progress
My 40th birthday is less than 8 years away. The thought of turning 40 is pretty unbelievable. The thought of turning 40 and not having a mortgage is the perfect fuel to keep going on this financial journey.
That’s how I know it’s the right call for us.
It’s hard to stay strong in suburbia. The land of subway tile and shiplap. The place where kitchen remodels are only complete if it includes rearranging your entire first floor, load-bearing walls be damned.
We know the money choices we are making are unusual. It’s tempting to fall in line with Joneses sometimes. But the fact that we have so many of our friends and neighbors lapped when it comes to paying off our last debt makes the hard work worth it.
So Tell Me…Where are you on your debt paydown journey? How can I cheer you on?
My goal was also to pay off my mortgage before I was 40-and I just did it recently at 38 (OK, 39 in June). For me, freeing up cash flow and financial security were the key reasons we choose this path. I’m fine with it not being the best math decision ever. Like you, we continued to invest during this time for both retirement and college. Now we can turn our focus to college-my oldest is going to be in school in just 2.5 more years. Keep up the good work Penny!
I will have my last payment(s) in April (possibly this friday if a cheque clears) on my dogs Vet bill from December. Thats over $5,000 gone in about 3 months which is not too bad. And I should get all my other debt other than my car (0% interest) and mortgage down to around $7k next month as well from like $30,000… thank you investments coming due! So that makes me happy as it will free up close to $800 a month that I can throw towards my LOC to hopefully get it paid off this year! Also I should be getting my designation in May with a very healthy pay bump for that as well.
I understand your feelings about debt. I’ve had mortgages, paid them off, got new ones, paid those off and so forth. But the truth is, if you did not have that mortgage, if you had never bought the house, you still wouldn’t have that money to invest. I think the question really needs to be: if I didn’t own this house (with my friends at the bank), what would the rent be for a place that I loved as much as this? My guess for most folks with families is that the difference between what rent would be and what the mortgage is is not that great. And with mortgages, they go away – rent never does, and it increases regularly. By the time you pay your mortgage debt off, your rent would have gone up 50% or more. While your mortgage payments may go up some due to tax increases and insurance rates, you guys are so much better off doing it this way.
It’s right to hate debt. Debt is the devil. But in this case, the devil you know is much better, and more reliable, than the one you don’t.
I couldn’t have said this better myself. As much as I am proud that we are paying so much extra on our debt, my skin crawls every time I think about the opportunity cost that I am losing while paying it off. Yes I could invest that money instead and grow my numbers, but I’m the end the debt will still be there, and the amount of interest that I am paying will only continue to grow. We don’t have a mortgage, only student loans. Sometimes I wonder if I had a mortgage, would I be more okay with my debt. At least I was contibuting to sometime that I would own in the end. I feel like the money paid of my student loans is just going nowhere and disappears into thin air every time I pay towards it. In my generation right now, everyone is getting married and buying a house, but we know that’s just not possible for us until this debt is way less or even gone. We feel the pressure from the Joneses to join suburbia. I can’t even imagine what it’s like to be in it.
That’s a really interesting point, Rebecca. If I actually go back in my blog, I talked about being debt free for a while. Because I didn’t even realize my mortgage was debt. That sounds *so* weird to say now, but I definitely think a mortgage feels different for a lot of people.
Since I have started following you I have found more pennies lying on the ground. Parking lots, in front of my mailbox by the street, etc. I just keep finding them! Can you plz change your name to” finding paper money or gold”? LOL
Ha, Paula! I *wish* Maybe I should upgrade to quarters first?! 😉
Revanche @ A Gai Shan Life
I despise our mortgage too, financially and emotionally, but we are much more than ten years away from being able to pay it off so I’m having to take a new view of the whole thing.
We meant to retire here and age in place when we bought, but there are so many variables to that future that I have to admit something I hate admitting. I don’t know if that will still be the plan eighteen years from now! It might not be. And in that case, I think we have to pivot to a different approach. I might have to consider something like Done by Forty’s swoop method, though I’d be looking for a very simplified one.
Through that lens, I will be viewing our investing income as future debt payments and work almost solely on growing that instead.
Thomas A Waffle
My goal to pay off our mortgage was when I’m 42 and that’s because that’s how old my dad was when he paid off their mortgage. His goal was based on when he retired from the military and mine is just using my dad as a role model. I wasn’t sure we were going to hit that goal but we probably will. If we pay our regular schedule we will be done in just over two years – we’re really close to the end.
I’ll be 42 in two years and we’ve decided that all “bonuses” go to extra principal payments. We also have more money in our emergency fund than we have on our mortgage balance so it’s hard some days to not hit transfer on those funds to get us to $0 debt. My spouse recently got an updated contract that phases in a 14% pay raise over the next 18 months so we could also designate some of that toward the principal but we’ll have to discuss after.
We definitely don’t keep up with the Joneses and we have several outstanding home renovations that need to be completed but don’t involve removing any load bearing walls (I like those walls!). We’ve saved for our renovations but the budget would be laughable for most peoples it’s so small – that’s why they’re not done yet though. DIY takes time and really I just haven’t been in the mood to do any plumbing yet. I should probably make it my goal to finish the renovations by the time we pay off the house. I know it will feel so good to not only have a paid off house but also a “done” house.
What a cool idea to tie your number to his. I bet that’s incredibly motivating!
I also have a mortgage I hate, and just came up with a plan to pay the debt off in 10 years. Hoping it will be possible to decrease that time. Five years would be wonderful but just don’t know how, today. Working on it though. Would love to follow along on your path.
10 years is amazing! Congrats to you. I can’t wait to hear more.
I had a student loan debt @ $40K and it’s one thing to have it in the first place but’s another thing to drag it out as long as I did. If I prioritized it on the top of my list I would have paid it off in 2-3 years but I didn’t have extended to almost 6 years. For those first 4 years, I only paid the minimum and that wasn’t the smartest way to approach it.
Although it was a bad financial experience it really taught me to make it a goal to pay it off as fast as you can. I will do exactly that when we have a mortgage. We have been debt free since paying off those student loans and enjoying maximizing the saving and investing right now. And when that mortgage comes, I will continue to save and invest.
Gary @ Super Saving Tips
My mortgage is my only outstanding debt now, and having a mortgage in retirement just sucks (no matter how low the interest rate is). I’m making additional payments to principal every month, but not nearly as much as what you are doing. Next year my annuity starts paying out and I think that will be the key to really accelerating the payoff of my mortgage. Still, it’s going to take awhile. I really admire your commitment to getting rid of your mortgage!
We paid off our mortgage on our first place (a Condo) and then super saved for a house bought with cash. We sold the condo for a profit and bought our fixer-upper for cash. We scrimped and saved, no big wedding, no honeymoon, no trips for 10 years. I still drive a beater car and my kid is graduating from a State University debt free. Living without debt and saving/investing is my sanity. There are no guarantees in life, but living without debt will bring a level of security that is unmatched when times are tough.
Keep up the fierceness!
Mortgage free by 40 is a good goal, I can vouch for that! https://nicoleandmaggie.wordpress.com/2019/02/11/two-years-without-a-mortgage/
I love your perspective. I’m struggling with what to do about our mortgage. I’ve got a massive post schedule in a few weeks that go through the specifics of our scenario with where we are leaning.
One element that I think is worth mentioning is that if you choose to invest and not make extra payments towards your mortgage, that does not mean you can’t pay off your mortgage in full in the same time frame. So choosing to invest or prepay your mortgage is really not about whether or not you want to pay off your mortgage…unless of course, you want to go with the lowest risk option that guarantees you will pay off that mortgage in that time frame.
It is a very personal choice, and I think what is most important is which option excites you the most. Either option is not a bad decision. Thanks for sharing!
First of all, you are doing amazing! Paying off our mortgage is not the top priority. We are focusing on other debts and building our savings back up.
Mortgage-free by 40 isn’t in the cards for me – I bought my house at 35 and my plan has been to pay off the mortgage in 10 years. I’m just over 18 months from my target and still on track to be debt-free by mid 2020
In the interim, I bought a new car – that car loan finishes this August. And last week I was in a position where I needed to put 24k on my home equity line of credit – that was tough – I did NOT want to do anything that would extend my timeline for debt free. Thankfully I figured out a way to make sure that 24k is paid off before the mortgage – so I’m STILL on track and will be SO EXCITED by the end of the summer 2020.
My parents never had any debt in my lifetime – they had no mortgage and no car loans. So owing money (even if my car loan is 0% interest) just feels wrong to me – and I cannot wait until I am debt free!