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It’s official, guys. Mr. FAF and I have officially paid off our mortgage to the bank.
In our plan, we would make the last payment to the bank in December 2018.
Sometimes we seriously doubted if it would happen.
We were determined but also nervous about a possible emergency that would eat up most of our disposable income that we wanted to put towards our house.
However, things went relatively smoothly.
And in a moment of excitement (or desperation?), we decided to use $8,000 from our emergency fund of four-month expenses to pay off the remaining mortgage in November 2018.
Mr. FAF and I were beyond excited and happy to get rid of the one and only debt that we had.
It took us 2 years and 10 months. It will take us 6 more months to pay off the loans from family. It’s a total of 3 years and 4 months.
We drove to the bank to make the transfer on November 23, 2018.
The bank teller made a mistake in the process, and her supervisor decided to waive the $30 fee.
But eventually, we finally got the letter from our mortgage lender stating that we no longer had anything to do with them. Yay!
Please note that I mentioned “the bank” since we still owe Mr. FAF’s side of the family $36,000. They want us to keep the money until the US-China trade war subsides and the yuan starts to appreciate. We will save up that amount and consider it untouchable since Mr. FAF’s family might want it back anytime.
Now some of you might wonder how much money we actually paid off. I’ve decided not to share the number for the following reasons. If the number is big, some might think it’s not that difficult for us since our household income is about $200,000/year.
If the number is small, some might think it’s easy and downplay our mortgage payoff. And honestly, I just want some privacy for our family. Just know that the mortgage amount was six figures. 😉
I wish I had a magical method with all the fancy ways to attack that mortgage. But really, it all comes down to living under our means, not making unnecessary purchases, and trying to save as much as possible.
Here are the specific steps you can take to tackle your biggest debt.
1. Reach an agreement with your spouse
I know there are two different camps of thoughts when it comes to paying off the mortgage: those who want to pay it off and those who don’t. Even in the personal finance community, the divide can be stark.
Before starting to put most if not all of that disposable income towards your mortgage, you need to sit down and discuss with your spouse/partner why you want to pay off the mortgage and convince them to do the same.
Once you reach an agreement, any time either of you want to make an expensive purchase or even buy something for $1, you can remind yourself that the money can be put towards owning your home out right instead. At least, it worked for Mr. FAF and me.
Related: How To Save On Furniture
2. Compare the interest before and after you make an extra payment
In the beginning, we paid about $800 in interest rate, which then went down to $650, $600 and one day only $70. Seeing that huge difference made us happy that we were indeed saving money by bringing the mortgage principal down.
Instead of having to pay the lender hundreds of dollars each month, now we can keep it and “earn” a consistent 4% return to our cash for decades to come. When the stock market is plummeting, and people are fretting over the decline, Mr. FAF and I feel at peace knowing that nothing will happen to our house now that it’s paid off.
At some point in the journey, you will get tired of saving and seeing your savings “disappear” all the time. However, seeing those interest payments going down will keep you motivated and remind you that you are indeed building equity in your home.
3. Eat at home
Mr. FAF and I love eating out. However, with a toddler and an infant, eating out is not so much fun anymore. We have to make sure our son does eat something, which takes a lot of convincing and patience in a public place. He knows he can get his way when we’re not at home.
It’s not to mention us eating in fear that our baby will wake up anytime and start screaming at the top of her lungs in the restaurant. Now that my father-in-law is living with us to help with the baby, eating out is also much more expensive.
What I also found interesting (or weird) is that when hubby and I didn’t have much money, I craved everything in the world, especially dim sum and steak. However, after we started making more money, I am not so crazy about restaurants anymore. If we eat out, that’s great. If not, I don’t really feel the need to.
Mr. FAF and I pack our lunch to work almost every day. We eat dinner at home every day. Mr. FAF does go to lunch with his friend every week, which usually costs $17. He doesn’t go to a bar or a club or have any expensive hobbies, so I will let the $17/week slide and consider it his entertainment allowance, which we can cut if money is tight.
I go to lunch with my colleague probably once a month at most. We sometimes have free food in the office. It could be Thai food, Mediterranean food, wraps, sandwiches, or pizza. I consider it eating out without me having to pay for it. And I don’t feel deprived in anyway. It’s actually one perk I love about working in an office.
Our monthly expenses for groceries, eating out, drinks, and everything else that goes into our bellies is about $900 a month. It’s for three adults, one toddler, and one infant in Washington DC. I tried to shave it down to $500 as a 2018 New Year resolutions, but I failed miserably.
We usually shop at Costco and Good Fortune (a Vietnamese grocery store).
Related: 10 Simple Things We Do To Save Money
2. Try to cut costs on necessities
I know the word “necessity” can mean different things for a lot of people. For us, it means enough food, clothes, housing, and utilities. Those are the expenses we can control every day.
I discussed how Mr. FAF and I eat at home most of the time. When it comes to clothing, hubby and I rarely buy clothes. Mr. FAF wears jeans that are more than 5 years told. One pair had holes in them, and Mr. FAF patched them up and continue to wear them despite the color fading.
I didn’t buy any new clothes at all in 2018 (I did buy a pair of Nine West boots for $106). I don’t follow any fashion trends or feel the need to do so. As long as my clothes are not torn, I will wear them.
And even when they are, I will try to mend them to stretch their life span. We get hand-me-downs for our kids. I mean, it’s less money gone from our bank account and less trash in the landfill.
We also try to reduce our electricity bill by setting the thermostat at 76 in the summer and 69 in the winter. We tried to cut our housing costs by doing exactly what I’m writing about: paying off the mortgage.
3. Not taking expensive vacations
I know some of you value experience and prioritize traveling over other goals. That’s totally fine as long as it makes you happy. But for hubby and I, nothing makes us happier than seeing the mortgage number go down from six figures to five and then four figures.
We did go on some road trips, but it wasn’t as expensive as going to Europe or on a cruise. Plus, we just enjoyed time together and had fun planning our trip after the mortgage payoff.
There are a lot of different ways we try to save money and pay off our mortgage early. You can see more tips below:
Some might wonder if we feel any different about our house now that we don’t owe anything on it. The answer is no. We’ve always loved our house although it has its own quirks.
We just feel relieved knowing that even if the stock market collapses or if both of us get laid off tomorrow, we won’t have to worry about losing our house to the bank and ending up on the street.
Our house is where we build our family and raise our kids. It is stability and certainty about having a place for all of us to stay that really matters to us.
I know some of you might think differently. And that’s ok. It’s all about different preferences. And I do hope and believe that your mortgage will be paid off early if you decide to take action to make it happen.