Tuesday, April 16, 2013

I Paid Off My Mortgage - You Can Too! (Or Credit Card, Car or Other Debt.) :)

We paid off our modest 3 bedroom, 1 bath ranch home today. I bought this house just before I turned 21 (and single) back in 2003. It is definitely cheap living here in Iowa, but I still think it’s a great accomplishment.
You can do this too. How? Live below your means. This is a huge step. 

• Budget, budget, budget. If you want a new $50 purse and you’ve got $1500 in credit card debit, you can’t afford the purse. Use Mint.com to track your money. Also work towards getting an emergency fund valued at 3-6 months of bills in case of job loss/accidents/heater trouble, etc.

• I think you should pay off the highest interest rates first (credit cards, car, other loans) before you start paying down the mortgage. Every little bit helps. Have an extra $200? Put it on there.

• Stay out of the retail stores when you’re bored. Stay home and organize your house, exercise, or cook some meals for the week. Organizing what you’ve got will help you realize that you don’t need new things. Donate what you no longer use. If it’s something you think nobody will take for donation, try putting it on Freecycle – they’ll take anything!

• Go to the thrift shops for anything you “need”. Clothing, household items, furniture, etc. I get probably 90% of my stuff from thrift shops. I am too “cheap” to shop at the regular stores, but when I do I make sure it’s something I definitely need. Last Christmas, I did a lot of thrift shopping for my family and they were okay with it. The other bit of shopping was done at super low costs (think the $10 crock pot deal we posted a while back). Also, with the thrift shop idea, check out Craigslist, Kijiji, Facebook swap pages and local consignment shops.

• Save at the grocery store by buying weekly sale items and basing your weekly menu on those items. Use coupons. Check clearance bins for bent and dent items or produce that’s getting a bit past due. Brown bananas make great baked goods. Salad that expires today is still good for a few days! Don’t worry so much about expiration dates. I scored 10 bags of flat sandwich wraps for 1/3 of the price and put them in the freezer.

• Limit social outings. So much money is wasted, whether it be $5 lattes, $8 movies, $20 dinners or just the gas getting around. If you’re looking to save some money, limit the amount of times you go out. If you eat out every day for lunch while at work, try eating out just twice a week. The savings will add up and you may improve your waistline if you’re eating homemade stuff instead. We all want to go out and have fun with our friends and family, and that’s fine, but be sure to stick to your budget. If you budget $50 to $100 a month for social engagements through the month, that’s great! If you like your beer, have friends over for a BYOB BBQ. My lifestyle is based upon being frugal, but still enjoying life. I still hang out with friends when my schedule allows and just last weekend I blew $30 at the bar (ouch!) for delicious martinis.

• Do your own nails, hair and waxing. These expenses really add up at the salon. I like to use pedicures as a “treat” rather than a “necessity”. If I pay something off earlier than expected, I get a treat day!

 • Learn to fix stuff. I am honestly not very good at this myself, but my father is great at it and it’s a wonderful family activity. Together, with me (and sometimes others) as his assistant, we’ve put siding and windows on the house, fixed plumbing, put in a new toilet, sink, refinished floors (and a new kitchen floor with the help of my husband), etc. Dad didn’t like my initial painting of the interior when I moved in, so he took that over as well. Haha. Remember that if you don’t own a house, but want to buy in the future, a fixer may be more frugal in the long run than a newer home. It just takes a little elbow grease to fix it up. Check out the Habitat Resale shop for items like paint, cabinets, doors, windows and even furniture to help you with your home.

Why did we pay it off so early? 

• Why not? Haha. One less thing to worry about.

• With my job as a medical transcriptionist, there is always the possibility that my job may be outsourced. Since I was working full time and already living under my means, plus had the addition of my husband’s income, I decided paying the mortgage off while we had the money would be a good idea. Before I got married, I had done a few extra payments here and there when I had the money, so that already brought me down. Plus, refinancing saved a ton of interest!

• Saving on interest feels great! I refinanced in 2011 and saved like 8 years on the initial 30 year loan and boatloads of interest. I saved interest by paying my car off early, and before that I paid off my credit card debt early (this was before I was uber-frugal). What are we going to do now that the house is paid off? • Contribute more to retirement and savings accounts and continue to live under our means.

• Re-remodel the kitchen and bathroom (first time wasn’t superb, but it did the job).

• Save up for our dream farm home and newer cars down the road.

What are some great resources? 

• When I felt the impulse to buy new, one blogger helped me keep on track. The Non-Consumer Advocate. I highly recommend reading her blog in addition to ours. She’s more about using what you’ve got, as her motto states “Use it up, wear it out, make it do or do without”. She went an entire year six years (and counting) only shopping used items (except groceries and undies). She’s a fun blogger and posts exciting blogs, like her quirky Goodwill finds.

• I have a friend with two kids who is trying to pay her house off 15 years early by using the concepts by Dave Ramsey, on 1 full time and 1 part time income. Her house is double the value of mine and I can’t wait to see her reach her goal! She’s doing great! Did you read about the family who lives off of $14K per year? It is doable!  Go the library and check out Dave Ramsey's book.

• Another great resource to utilize to learn how to save for retirement – and retire early, at that – is Mr. Money Mustache. I haven’t gotten too far into this yet, but now that the house is paid off, I am definitely going to try harder to work towards the goal of early retirement. We all have issues that arise in life that may put our goals on hold, but pushing through and working hard really pays off. Good luck to you all! Pin It


Jasmin Harstad said...

Love it!!! Way to go Jess!

Katy @ The Non-Consumer Advocate said...

Congrats on paying off your mortgage, that is an incredible accomplishment!

And BTW, I have spent the last SIX years not buying new.

Thanks for the nice words!

Katy Wolk-Stanley
"Use it up, wear it out, make it do or do without"

Jess said...

@Katy - noted and edited. LOL. Thank you!