Friday, March 12, 2021

We did it! 2021 Goal Achieved

 It's been a long standing goal to pay off half of our mortgage. Given we live in a very high cost of living area, this was a significant undertaking. 

The details:

  • We bought our house in February of 2017. We took out a mortgage for 75% of the purchase price. We paid cash for the down payment (25%). The down payment required all of our existing cash (I don't recommend this approach), and when we closed, we had less than $1k in all of our combined cash accounts. Again, I don't recommend this. 
  • As of yesterday, we've paid off 69% of the house purchase price, & ~60% of the mortgage! We crushed our goal of 50%. 
  • The market has continued to increase here, so we are now at 75% paid off for the estimated value of our house. (We've not had our home assessed for value, but given the upgrades we've done, it's worth more than that. We don't really factor in estimated value, other than as a directional signal, because unless you're planning to sell right away, it's simply a signal & can change at any time.)
  • The amount we've paid off represents ~53% of our gross income over that same time period. So, when we ask ourselves where all of our money goes... we have the answer!
  • During that time, we also completed some major house projects with cash:
    • A full kitchen remodel
    • Installing air conditioning
    • Solar panels 
    • Painted the exterior
    • New tankless hot water heater
    • Replaced the garage door
    • Trimmed the roof line of the house, & then added gutters
    • Replaced all of the fencing
    • Replaced all of the interior doors
    • Rebuilt the cabinetry in our living room
    • Rebuilt all sheds (pool pump, garbage, yard tool shed)
    • Installed lighting in the ceilings of each room (previous only lamp light?)
    • Removed an interior bamboo garden (?), speaker system (?), and shower planter box (?)
Our mortgage balance is now below our gross combined annual income, which makes me feel really happy. 

How did we do it? 
  • A lot of the basics, that apply regardless of the amount of your mortgage & income. We put as much "extra" money as we could each month towards the mortgage. Rebate on a $20 item? Directed towards the mortgage. Unexpected $50 check? Towards the mortgage
  • We also tried to live on our salaries (our total compensation is made up of salary, bonus & stock equity) as much as possible, using our bonus & equity to pay down the mortgage as aggressively as possible.
  • As you can see from the above, we put over 50% of our gross income into the house. It represents a huge amount of our budget, and we made cuts to all other categories to afford it. 
  • I used all of my side hustle money to make payments. Each time a payment would come in, I'd round up & make payments. I often make 20+ small payments per month to the mortgage company, but seeing the balance tick down, even if by small amounts, keeps me motivated. 
  • We are very blessed, and make a high income together. That means we have a big "shovel", as it were, to pay down our mortgage, and still have money left over for other things. While we worked hard to prioritize this goal & live below our income, we are blessed & could also afford travel, & other expenses. We made intentional tradeoffs & prioritized the budget items we cared the most about.
What comes next?
  • We keep paying down the mortgage! Although we are at a much lower, more comfortable mortgage, having a mortgage of this size still blocks our flexibility. I want to be able to quit my job at some point. We will likely either refinance or recast our mortgage, so that it can be comfortably paid by M's salary at that point. 
  • I'm hoping to set some new goals related to our mortgage, and get to the 75% paid off amount soon. That's still a huge chunk of change. I need to build a new model & forecast, but I'm thinking it will take us another 12-18 months to get to the 75% paid off amount, with a lot of dedication & focus.
I'm so happy & excited to have hit this milestone. When we bought this house, it was a very big stretch for us, and the total mortgage made me very uncomfortable. I now feel much more relaxed/secure about our mortgage. Yay for financial security!

What about you - any big goal progress to share for 2021? 

22 comments:

  1. Very similar goals. We are building another house. When it is finished, we plan on selling this one and our current rental one. Once we do, our plan is to use that as our sinking fund for living expenses and college, touching nothing else. I hadn't meant to do build so soon after finishing this home, but a combination of the fact that we designed this house when we had loads of littles running around, the market, and the fact that I had the lot just sitting there made us make the jump. If all goes as planned, it will be our "forever home," and the design has taken that into account. Our little enclave is a hot market, and will stay that way for a good time, simply because demand far outweighs supply. I should add that we made the decision to be mortgage free a long time ago, and have been for almost two decades. The decision to become so was a HUGE factor in establishing our financial security. Every extra penny went towards that goal. Once we paid off that mortgage, we vowed never to have another one. Like you, I was lucky in that both DH and I are highly educated, and we made a fairly decent income. Moreover, DH earned several licensures unrelated to his field long before the term "side hustle" was in vogue. That certainly helped when I left the work force.
    The thing that sticks out in your post to me is "we made intentional tradeoffs and prioritized the budget items we cared most about." No matter one's financial goals, THAT is the key to achieving them.

    ReplyDelete
    Replies
    1. I agree - being intentional about your goals & prioritizing what you care about is where it's all at, regardless of your goal.

      Love that you've been mortgage free for 20 years - that is amazing! A big congrats to you & your family.

      We keep having the "forever" house discussion, and I think what I've realized is that our view of that is going to evolve a lot over the next 4-6 years, with the kids graduating & moving on, etc. We'd like this house to be paid off (or, close to it), when Nick graduates from high school, which will be 8 years from when we purchased it.

      Delete
  2. This is wonderful news! Congratulations! I have no doubt that you will get to the 75% paid off goal in your time frame of 12 to 18 months. Way to go.

    ReplyDelete
    Replies
    1. Thank you! We are super happy to hit this milestone.

      Delete
  3. Very well done! Congrats to you on meeting your goals so fast!

    ReplyDelete
    Replies
    1. Thanks! We're having champagne tonight to celebrate ;-)

      Delete
  4. Well done! You are right-prioritize the important things to reach goals. For us ow, as our mortgage has been paid a long time, a good 17 years I think, it was college for kids, travel, and now, money towards more travel and cash savings so we can retire 5-6 years before eligible to draw full pension and SS.

    ReplyDelete
    Replies
    1. Awesome work getting your mortgage paid off early on. I'm sure that's given you a lot of flexibility to pay for other priorities.

      Delete
  5. That is fantastic!! I love your dedication to reaching your goal. Well done!

    ReplyDelete
    Replies
    1. Thank you! I find focusing on goals to be the only thing standing between me & complete sloth. I apparently only have two modes I operate between :-)

      Delete
  6. Congratulations - you've worked hard and made hundreds or thousands of choices to get where you are today!

    ReplyDelete
    Replies
    1. Thank you! It's true - many, many small & large decisions along the way.

      Delete
  7. Congratulations! What a tremendous accomplishment to have achieved so quickly, and in one of the wackiest housing price markets in the US no less. So impressive and such a good example of the power of self discipline.

    We paid off our mortgage at year 17 of our 30 year mortgage. What it left me with is a determination to never have debt again. As in never, ever. Once you get the monkey of owing money off your back, even for a home (i.e., 'good' debt), it's freeing in a way that is difficult to describe. It opens up so many possibilities, all of them liberating.

    Well done, and I predict you'll easily beat your timeline for paying off the remainder!

    ReplyDelete
    Replies
    1. That's such great news that you were able to pay off your mortgage so quickly. And you are right, it's such a liberating feeling. Well done!

      Delete
  8. I am so happy for you and you have worked very hard at this. Living where you do is so expensive, especially for housing. Your dedication is an inspiration to me.

    ReplyDelete
    Replies
    1. Oh, so expensive! We had no idea what we were getting ourselves into when we moved here. But, here we are, and we're making it work.

      Delete
  9. Good for you! That's a huge accomplishment! Way to stay focused.

    ReplyDelete
    Replies
    1. Thank you! It feels so good to have achieved this goal.

      Delete
  10. Congrats! What a huge huge achievement, esp hereabouts! I am fighting all my instincts to do the same because we really need to beef up our investments first. That's our big goal - to build up a good stash of investments and then pay down the mortgage after.

    ReplyDelete
    Replies
    1. Agreed- you want both & I'd also prioritize investments. I find it hard not to drain them & put the money towards the mortgage, though.

      Delete