Mortgage-Free by 45

Halfway through my resolution to start paying down my $67,000 mortgage on a $40,000 income.

Photo credit: t0nia-B, CC0 Public Domain.

It all started when I was going through my mail and saw a credit card offer from Wells Fargo. I usually toss those away, but this one caught my eye—it offered 5 percent cash back rewards from grocery stores, gas stations and pharmacies, and those rewards could then be redeemed to put towards my mortgage in $25 increments. I read through all the fine print and, satisfied that it wasn’t a scam, put in my application. I was approved.

I started using the card for the things I normally buy anyway; my weekly groceries, pharmacy items and gasoline and surprisingly, the money added up quickly. I was able to start paying my monthly $25 rewards to my mortgage right away, and I got a kick out of seeing that tiny amount make a little dent towards the principal.

The card offered extra incentives if you shopped online at certain stores. Some of the stores I frequent were on the list, so I bought a few things and the card deposited the rewards to my account. One time they offered 5 percent cash back if I shopped online at Lowe’s. We happened to need a garden shed, so I ordered the one my husband wanted and used the card. We received the 5 percent cash back incentive for shopping at Lowe’s and another 5 percent cash back just for using the card. In total, we scored $100 on that transaction alone. Not bad, considering we needed the shed anyway.

The offer on the credit card was only for six months—after that it would go back down to 1 percent—but it got me thinking. Surely I could come up with $25 extra a month for my mortgage on my own, right? That thought led to: well, how much could I reasonably pay per month on my mortgage? It’s such a low mortgage to begin with, and my $488 monthly payment is extremely reasonable for a 1,500 square foot, three bedroom two bath house in a small city. My husband and I make a combined $40,000 a year, choosing to invest in our business rather than pay ourselves a larger salary. So I asked: Was this feasible? Could I do this? Could I prepay my mortgage little by little? When do I want this paid off? 15 years? 10?

After deliberating back and forth, I decided if you’re going to go, go all the way. I set a target date of 5–6 years from now, meaning we’ll have our mortgage paid off when I’m 45. Then I looked up every mortgage prepayment calculator and amortization schedule I could and plugged in the numbers. I was relentlessly trying to figure out how I could pay what amounts to a luxury SUV in 5–6 years.

I bought the house for $67,000 and put 3.5 percent down. With taxes, insurance and the lovely PMI, my note is $488 a month. Now I get that the majority of people, have way bigger mortgage balances than I do. But it’s not about the amount of money owed. It’s about—well, you know that old saying “it’s not how much money you make, but how much you keep”? I’m using that as my mantra.

Before the recession hit, we were in our third house, for which we paid $165,000. Even back then I was putting extra towards the payments. I’ve just always known I’d rather own, truly own something than have it own me. When business plummeted and we lost the house, well… you can see the reasons why I’m gun-shy about long-term debt. We are NEVER truly homeowners unless we have no mortgage.

With a goal in mind, I decided to get angry. No, not the kind of anger where I say life is unfair and rage at the system. I am a practical, reasonable person who knew what I was signing up for. Instead I used anger as motivation. Out of a $488 monthly mortgage payment, only $100 is going to the principal. Who has nearly $400 to throw into the wind? Not me. If we had stayed in the first starter home we bought, we would have been done or nearly done with those payments. But you can’t look back. You can only look forward.

The clincher was reading articles about mortgage payments. There are always HUGE discussions and debates about paying off vs. investing with so-called experts weighing in on what’s best.

Why does it have to be exclusive? Why can’t one invest and also pay their mortgage down at the same time? And why am I listening to them anyway? I am the best expert on my finances! I got angry and fueled that anger into a plan.

Next step: where would I find the extra money? I am not going to be like some of these people that write articles about how they paid off their mortgage “and you can do it too,” and then you find out they had an inheritance, patented an app that made them millions, worked three jobs to the point of exhaustion, or lived in one room of their house and rented all other available square feet to five different strangers. There are also the ones who want you to sign up for their course or buy their books on how to be debt-free. Um, yeah, I know how you paid off your mortgage.

We are just regular people with a regular income and a regular payment doing some irregular, but totally attainable, things to become mortgage-free. First, I decided that every time we get our bi-weekly paychecks, $100 would go towards the mortgage. Boom! $200.00 found right there. My son who’s 19 and works as a server contributes to groceries. Yes! Another $80 to $100.00 a month. Any rebates/rewards that we get from using our credit cards goes straight to the mortgage. My budget for weekly groceries and gas is $115.00. On the (rare) occasions that I can beat that, those savings go towards the payments. Next year when we get our tax return, I will divide it into three equal parts: savings, spending, and mortgage prepayment. Next year, if we can afford to give ourselves a slight raise, we can put that extra money towards the prepayments and savings. We’re already used to living at this income, after all.

And just like that, I find myself halfway through the year with this new program, getting energized every time I see my principal balance go down. I’m constantly looking for ways to pay more without sinking the rest of my finances. Everything in moderation, of course. But this is my new financial purpose. This is the goal I am working towards. I would love the freedom and sense of accomplishment that would come being mortgage free at a young age on a modest income, and I can’t wait to see how much closer I can get to this reality by the end of this year.

MarLeigh is a 39-year-old self-employed Latina who handles both personal and business finances, is teaching herself to play the bass, and loves a quiet evening at home with her family.

This story is part of The Billfold’s Halfway Series.

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