6 money rules I followed to pay off my mortgage more than 15 years early

Marisa Palmieri Shugrue headshot

Summary List Placement

When my then-boyfriend (now husband) and I bought our home in 2007 at ages 26 and 23, we assumed we’d be paying off our 30-year mortgage until we were in our mid-50s. Even though we put a little extra money toward the principal every month from the get-go, it never occurred to us at the time that we’d be mortgage-free less than a decade and a half later. 

As the years went by, and our expenses increased with marriage and kids, our distaste for debt grew as well. We both experienced our own form of working-parent burnout, and we realized we didn’t want to be tied to full-time jobs until the traditional retirement age. We knew we wanted to retire early or have the option of working flexible schedules sooner rather than later. 

That realization meant we had to find a way to reduce our monthly expenses, the biggest of which was our mortgage. Paying it off would allow us the freedom to be self-employed or work part-time, so we worked toward that goal slowly but surely, eliminating it in 2020. Here are six things we did to get there. 

1. We snowballed other payments into our mortgage payment

Disciples of Dave Ramsey may recognize the term debt snowball. In his parlance, you eliminate debts one by one, rolling payments you’ve eliminated into the others until all your debt is gone. 

We used this method with non-debt expenses we eliminated, like when we said goodbye to our monthly childcare bill. At one time it cost us as much per month as our house payment. When our childcare bill went away in the 2018 school year, due to my husband’s new flexible work schedule, we doubled our mortgage payment and never missed the money. 

2. We cut our mortgage costs — but paid the same amount 

We bought our home just before the Great Recession and associated housing market crash. We had an interest rate over 6% and we put no money down, requiring us to pay private mortgage insurance (PMI). 

When interest rates dropped dramatically a few years into our tenure as homeowners, we refinanced to a much lower interest rate. Our payment lowered, but we continued to pay the same amount we were used to paying, which sent more money towards our principal. Likewise, when we built up enough equity to remove PMI, our monthly cost went down, but we kept our payment the same. Both measures helped chip away at the principal. 

3. We ‘bucket’ our money and stick to the buckets

We don’t follow a traditional budgeting approach where we create expense categories and track our spending within them. Instead, we think of our expenses as buckets. Each bucket is a separate bank account that we fund and spend out of for designated purposes. They include a joint checking that serves as our main account for gas, groceries, and incidentals; a bill pay checking account, similar to an escrow account, that we use …read more

Source:: Business Insider


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