So, last month I was celebrating the fact that we are debt free! We are no longer debt free. We made the decision to purchase a house that we fell in love with and we are very happy with our purchase. We only took out a 15 year mortgage, per the math in this article. I personally believe that mortgage debt is different than consumer debt. When you take out a mortgage, you are purchasing something that is an asset that will more than likely increase in value. Homes have always been a stable investment and my wife and I decided that a home was the next step, now that we have no consumer debt.
The 15-year mortgage requires you to pay more monthly. We are able to afford the larger payment, because we have gotten rid of all monthly debt payments. I think that is the key to buying a house. After looking at the numbers, I would not let myself buy a house on a 30-year mortgage. So, I knew that I wanted to be debt free before buying the house. Before we purchased the house, we had paid off all debts, had an emergency fund of 3 months and saved at least a 10% down payment.
The house will for sure be paid off in 15 years, but that would be average. After reading Start by Jon Acuff, I am motivated to be awesome, not average! Jon talked about the importance of goal setting. So, I have decided to share our goal of paying off the house early. Goals are important because they hold you accountable and posting the goal publicly will force us to constantly think about how important it is for us to pay off the house early. They keep you on track. So, here is our goal for paying off our house.
We took out a 15-year mortgage, but we have a goal to pay it all off in 10 years. That will cut off 5 years of payments and allow us to reach financial independence. How will we do this?
Our monthly plan:
- 10% Donations
- 23% Mortgage
- 15% Retirement Investing
- 7% Taxes/Insurance
- 45% Monthly expenses
- 15% Extra Mortgage payments/Furniture Expenses/Vacation Savings
That is our plan, and I think that it is possible, since we have been saving around 50% of our income, then we should be able to pay off the house early and still invest in retirement. This should allow us reach financial freedom in ten years! That's the true goal. My goal each September is to update you on how much has been paid off and to let you know if we are on track to pay off the mortgage in ten years.
Is anyone else trying to pay their mortgage off early? Has it been hard or has it been easy? Comment below or contact me here.