What did it feel like to have $86,000 in mortgage debt?
I suppose it didn’t feel bad to have $86,000 in mortgage debt. I certainly could afford my $625 a month mortgage payment. In fact, I had a lot of money to spare at the end of the month. With my savings account earning next to nothing, I chose to prepay the mortgage because I knew it would save me thousands of dollars in interest payments.
How were you able to pay it all off in only 2 years?
My original goal was to pay off my mortgage in 5 years. I was able to speed up the process by earning more and spending less.
First, I made a commitment to work 10 extra hours per week, so 50 hours total. In addition to volunteering for overtime at my full-time job, I waited tables on the weekends and took care of pets around the holidays.
The second component was reducing my spending. I went through every category of my budget to find ways to save. I eliminated cable TV, negotiated a lower car insurance rate and cut my dining out expenses in half by cooking at home more often.
Finally, any extra money that came my way went to the mortgage, including work bonuses, birthday cash and credit card rewards.
Were there resources that you used that were helpful through this process?
Two tools really helped me keep track of my payoff progress. First, I used Mint.com to track how much I was spending in every budget category. I didn’t have the app version at the time, but I now use Mint.com on my smartphone. In addition, I obsessively checked Dave Ramsey’s mortgage calculator to see if I was keeping up the pace.
Did you face any challenges along the way?
Of course, there were challenges. The biggest hurdle was staying motivated. Paying off a mortgage isn’t exactly the most “fun” thing to do with your money. When my motivation began to slip, I took a step back to visualize what life would be like without a mortgage. That kept me going.
What were you doing for a living while you were paying off the debt?
I worked full-time as a journalist at CNN in Atlanta, Georgia.
How did it feel once you paid it all off?
I will never forget how good it felt to send the last payment to Wells Fargo, my mortgage provider. I paid off my loan in December 2012, which made the holiday season even more special that year. The next month I took a trip to Aruba to celebrate. There is an amazing sense of freedom that comes from knowing that you owe the bank absolutely nothing!
What other practical tips do you have for people looking to pay off their debt?
The easy part is finding ways to earn more and spend less. There are plenty of blogs, like mine, with those tips. What people don’t focus on is the psychological factor. I believe I successfully paid off my $86,000 mortgage in 2 years because I had the right attitude.
I made a commitment to work harder than everyone else in the short-term to achieve a long-term benefit. Instead of making excuses for my spending habits, I scrutinized every purchase. I embraced my minimalist lifestyle and didn’t pay attention to all of the “stuff” my family members and friends had. Finally, I rewarded myself along the way. For every $5,000 I paid off the mortgage, I allowed myself $100 to spend on whatever I wanted. If I can do it, you can too!
If you want to connect with Michael, you can reach him on Twitter, Facebook, or at his blog.
Note: This is part of a series called “Debt Success Stories” which features people who were able to pay off a significant amount of debt. If you have a Debt Success Story I would love to hear about it. Please visit the contact page to let me know the details.