Buying a home is the biggest purchase most Americans will ever make, spending hundreds of thousands of dollars in one chunk. In addition, there are a whole host of associated costs — insurance, maintenance, taxes, furnishings, and on and on that make this a gigantic financial issue for all but the wealthiest of us. The impact buying a home can have on a family’s finances is enormous, so it’s imperative that we get it right.
Conventional wisdom used to say that buying a house was a financial no-brainer. That was when housing prices “always went up” and owning your home was the bedrock of solid money moves.
Then along came 2008 and blew conventional wisdom out of the water.
So the home buying decision is as tough and as important as ever. You want to get it right. You MUST get it right if you want your finances to benefit from a home purchase. And you certainly don’t want it to be a drag on you financially, because the size of the transaction is so large that this one buying decision can sink all your finances if it’s not done properly.
How Most People Buy Homes
Unfortunately, most people don’t get it right. Instead, here’s how they do it (or at least this was the old formula — perhaps the housing bust has changed this a bit, especially with the new bank regulations, which I will write about in a future post):
- The bank looks at your finances (including your income) and tells you how much you can afford to borrow.
- Armed with this information, the home-buyer looks at homes just above this price range, “knowing” he can negotiate the price down when he makes an offer.
- The home-buyer finds a great home that he MUST have. Yeah, it’s 10% over budget and the owner won’t budge, but it’s the buyer’s dream home.
- The buyer finds some sort of creative financing that stretches him to the brink. He puts as little down as possible, makes his payments as long as possible (to lower the monthly payment), and buys based on his best case earning scenario (assuming he earns as much — or more — as he does now well into the future.) In other words, he gives himself no financial margin in case things don’t go as planned.
- He doesn’t give any consideration to the other costs associated with home ownership. He assumes these are negligible and they will somehow take care of themselves.
- Then he spends a lifetime paying interest, selling (sometimes at a loss) and rebuying, and repeating the process again and again.
- And, of course, somewhere along the way, something goes wrong. The buyer has a child and one spouse wants to quit work (lowering their income.) Or someone gets sick. Or someone becomes unemployed. Or someone is down-sized. You get the idea.
As you can imagine, this sends a family’s finances into chaos.
Ok, it’s probably not that bad for most people. But it’s not far from the truth for many Americans. As a society, we do stretch our finances as far as we can to buy our “dream home”, then we spend decades paying hundreds of thousands of dollars in interest. Is this a great way to grow our wealth? I think you know the answer to that.
My Method
Until recently when I needed to take a short-term mortgage until my old home sold (FYI, it was anightmare process), I hadn’t had a mortgage in 18 years (FYI, I don’t have one now either as I paid off the recent mortgage earlier this month.). Yep, we completely paid it off over a decade and a half ago and haven’t looked back for a second (we haven’t had debt of any kind over this time). What do I consider the keys to doing this (and to buying a house in general)? Here are my suggestions:
- Live in (or move to) an inexpensive area of the country. It’s not new news that housing (as well as other living costs) is more expensive in some areas of the country than in others. Live in one of the areas where it’s more affordable and you’ll start off way ahead.
- Buy a house you can easily afford, putting at least 20% down. What’s a house you can afford? It’s one that fits into your budget after you look at all the costs, including both the house itself and the costs associated with home ownership. It’s also a house that leaves a bit of room in your budget for unexpected events and emergencies, not one you have to stretch financially to afford. It’s also a house that allows you to keep on saving for your other needs like retirement and education costs for the kids. Lastly, it’s a number YOU determine, not one that the bank (who wants you to borrow as much as possible) gives you.
- Put extra payments into your budget. As your income grows, don’t increase your cost of living. Instead, keep expenses under control to grow your surplus. Then use that growing surplus to make extra mortgage payments.
- Put bonuses, gifts, second job income and all other “extra” sources of money into paying off the loan. Any extra money you get, apply it to the mortgage. You will literally see payments disappear in multitudes as you do. I remember seeing three or four payments go away simply by making one extra mortgage payment.
- Become debt free in 7-10 years. If you follow the steps above and stick with them, you should own your home free and clear in a decade or so.
How We Did It
Here’s how the process played out for us:
- We’ve lived in a number of medium-sized, low cost cities. And no, I haven’t had to sacrifice my career to do so.
- We spent less than we earned starting when we got married in the early 1990’s. We saved quite a bit, combined it with some previous savings and the equity from the sale of our Northeast home, and were able to come up with a down payment of about 35% of our (second) new home’s value.
- We bought a house we could afford. Instead of stretching to buy the biggest house possible, we decided what we needed in a house and what we wanted to pay. Then we purchased a place that met those criteria. In the end, we only borrowed about 60% of what the bank said they’d let us borrow.
- We applied everything we could to retire the mortgage: extra payments (from still spending less than we earned), pay raises, bonuses, income from a side business, my wife’s income, and gifts. If money came in, it usually went to paying down the mortgage. However, we did not sacrifice what we considered to be better investments, such as fully funding my 401k.
- Within five years, we had the house completely paid off. We lived there a few more years, then when we moved to Michigan, we sold the house and paid cash for our new one. We did the same when we moved to Oklahoma a couple years ago.
In the early years, I got the biggest thrill out of paying extra on the mortgage. I’d make an additional payment and wipe out six to eight payments at one time (Quicken would show me the results.) During the first year, I eliminated several years of payments on a 30-year mortgage (something like eight years) and the thrill of making such great progress simply built and built into a snowball of enthusiasm. Each payment I made had a dramatic impact on the total, which fueled more payments, which had more impact, which fueled more payments and so on and so on.
Then there were the big hits — when I got a bonus or when we decided to forego a big vacation to put it against the mortgage. These large impacts to the debt made a huge difference and added fuel to the fire.
As we got close to paying off the entire amount, we were looking for anything we could find to put towards the mortgage. When the day came when we paid off the whole thing, we were thrilled, but I don’t think we realized the comforting feeling that was to come.
It’s been a long time since we’ve had a mortgage, so much of the “newness” and “excitement” has worn off. But it’s been replaced with a very peaceful feeling. You often hear the words “debt freedom” talked about, but can’t really grasp what they mean unless you are free from debt. I can honestly say that there is a great financial peace in knowing you don’t owe anyone anything.
Since we’ve paid off our mortgage, we’ve been able to save a bundle and give more to charitable causes we support. We’re now on track to retire by age 55 with more than enough to live on and no debts outstanding.
Does This Work Today?
Some will say that things are different these days — that you shouldn’t pay off low interest debt (which a mortgage is nowadays) and instead invest those extra dollars. Here’s what I would say to that:
I can see the rationale. And for a disciplined person who really will save (not spend) the extra money, putting it into investments may be a better choice. Unfortunately I’ve found that only a very few are really disciplined enough to carry through with this sort of plan.
As I said above, there’s a true sense of freedom that comes from not owing anyone anything and that personal preference can’t be discounted. If I had a mortgage, I think I’d pay it off asap even if the numbers said it wasn’t the best financial move.
Note that a key part of my plan is not neglecting your basic savings for an emergency fund and retirement. These should come first before you pay off debt.
So, that’s what I have done and what I recommend. Thoughts?
P.S. For those who prefer a video version of this post, see the ESI Money YouTube channel.
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Comments
K D saysWe paid off our house in 2003, after ten years (and an interest rate of 7-5/8%). While our house is not large nor grand it works for us. Any improvements we have made have been paid in cash. It is peaceful and we too are able to save more and give more. I am able to not work and my husband can change jobs (or retire, though he is not ready) at any time.
So many of our peers have little home equity, thanks to home equity loans/lines of credit. I fear many of them are just one disaster away from losing almost everything. These are people with good-to-great incomes but with lifestyles that are greater than their incomes.
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- Coopersmith says
FYI when my mom and dad first bought there house in 1958 they had a 20 year mortgage. Thirty year mortgages were not around then. So mortages have changed over the years.
I have enjoyed having our house paid off since 2012. It only took 12 years because I was listening to the common belief of not to pay off your mortgage. I started by rounding up to the next full simple amount. Payment $1248 payment made was $1300. Then started jumping by $100 increments to $1400 then $1500. When the economy went into the toilet in 2006 I really pushed up to $2500 as the money in the bank was earning next to nothing and the same in the market.
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It’s so easy to get OFF track during a pay down plan. I got off track for years b/c ‘life got in the way.” But using the refinance opportunity to pay down a good chunk is a catalyst.
I’m envious of your lower cost of living area AND getting much more house to boot!
But, I’m happy with San Francisco’s weather, opportunities, and vibe 🙂
Sam
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- George says
One of my favorite topics. We still make extra payments every month, but last year stopped the “throw everything at it” method now that the interest portion of the payment <$200 /mo, instead using extra funds to invest in a brokerage account and short term savings for 5 year expenses. I have calculated that the money we have saved in interest will easily cover a small addition to our house that we hope to start after the mortgage is done. We should have it all paid off next year, taking us a little over 6 years total! I am looking forward to that feeling of security.
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- Liz says
Great article! I was in the UK from 2000-2005 and was horrified to see my friends get approved for and then buy homes that were 3, then 4, then 5x their annual income. Coming from small-town Canada, the thought of buying any home over $150k was just unreal to me.
When I moved to NZ in 2005, my then-husband and I were pre-approved for an $800k mortgage, on a $120k annual income. I was shocked, and asked the banker how they expected us to be able to pay that pack. Her answer? “Well, the computer thinks you can”. I knew we couldn’t, and we ended up buying a pretty crappy (dirty, smelly, but great bones) house in an ok neighbourhood for $300k.
When I got back to Canada, I was still stuck in the mindset of not paying more than $150k for a home. Yes, it was 10 years later, but it was doable. I bought my pretty crappy (dirty, smelly, but great bones), good neighbourhood home for $90k…and mortgaged at $85k. At the time, it was double my income. Now, it is both rented at a profit and the mortgage is just slightly less than my salary.
The part that I have never connected with, until very recently, was paying the mortgage off early with extra payments. I have set my mortgage payment to be the same amount as if the interest was 5% when it is actually at 2.3%. This will, of course, have the mortgage paid off early. I don’t know why extra payments above the automated payment have never occurred to me. It has now, although the consumer debt is in the cross-hairs currently.
Congratulations on ‘getting it’ much earlier in life, goodness it has paid you well to have the fore-sight!
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- Physician on FIRE says
Geographic arbitrage is a wonderful thing. In the medical field, jobs in LCOL areas tend to come with higher pay, making it a Win Win that doesn’t exist in most other career types.
A year’s pay bought us 2 riverfront lots, 3600 finished square feet, with a detached 3-car garage, fenced in garden, raspberry and rhubarb patches, and an apple tree right in town. We don’t have the San Francisco vibe, but I’ll be flying direct to SFO next month to soak it in.
Cheers!
-PoFReply
- SavvyFinancialLatina says
Great job! We did the same thing when we bought our house. Many people told us just increase your house price point. But I wanted to have a 15 year mortgage with a payment we could afford if I lost my job. Now we are 2 years into our 15 year note and have $94,800 left on the mortgage. I have been thinking about starting to pay it off early but at 3.48% interest, I’m not sure if I should. I have been diverting funds into our brokerage account instead.
See Also3 Reasons Why PMI Saved Me Money—Really!Don't file an insurance claim until you read this5 Things Your Mortgage Lender Wishes You Knew3 important things to keep in mind while renewing your health insuranceReply
- Kurt says
Love your method! Realtors and lenders encourage–explicitly or implicitly–home buyers to buy as much house as they can afford. Unfortunately, their definition of ‘afford’ is the maximum amount the buyer is approved to borrow. As you say, that’s a prescription for a house-poor disaster.
As you suggest, I think the house you can afford is one for which 1) the buyer can put 20% down, thereby avoiding PMI, and 2) the mortgage payment fits with the buyer’s long-term strategic financial plan and goals. For example, if a mortgage payment for an approved loan amount precludes maxing out retirement account contributions and other saving goals, then the house is unaffordable, I would say!
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- Daniel says
Enjoy. Everyone has their own priorities (in my case I am fine with my home equity being at or less than 25% of my net worth, I don’t like to have too much in a non-liquid investment). When you factor in the interest rate deduction and tax deduction (and subtract off the principal reduction) off your top marginal tax rate it is far cheaper for me to just pay down on a somewhat regular basis (basically I am already getting a better deal than I could get if renting, on a somewhat appreciating asset). That said I am tossing a bit of extra money in because I refinanced and I want to draw down to the previous end date, then I will re-evaluate. I also have a 3.25% APR, relatively high tax bracket (between state and federal that comes to almost 31%) and am in a location that keeps my commuting time down to a reasonable level.
There will be a time where the tax advantage drops such that I will probably start to help accelerate the decrease in principal.Reply
- Lake Girl says
I am one of those people who took out way to big of a mortgage and regretted it. Now I am happily renting! I have moved to a less expensive area and am starting to consider buying a multi-family as an investment. Thanks for the tips on paying it off quicker.
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- FinanceSuperhero says
Congratulations! No offense, but you guys are weird. Weird in a very awesome, brilliant kind of way! The kind of weird that Mrs. Superhero and I are stretching ourselves to become.
To retire at 55 without a care in the world will be a great feeling. I am sure knowing that you sacrificed and hustled to reach this goal will make it even more sweet.
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Great post. We are in that stage of throwing everything at it. We live in a HCOL area (in Ausralia) but highly motivated to pay it off ASAP.
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- Your Free Cash Flow says
Great story! Always like to hear folks buying a house well under what the bank says is affordable!. It also proves everyone should have a strategy in place for free cash flow, whether it’s funding for a new car, a house downpayment, starting a business, etc.
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- JJ says
Thanks for adding your very last comment on “the rationale” behind not going with your proposed method and saving/investing the extra money in higher yield vehicles. That is kind of where I am at. I currently have a 30Y mortgage with an IR @ 3.125% which in today’s environment is phenomenal (in my opinion) so If I can find an investment opportunity that gives me a higher return then that’s where I’m going. The other thing to note is that when you put your money in your house you could say you’re “locking” that money there so if you have an emergency then it might be challenging to have that liquidity. Someone might say that before embarking on this approach you should have an emergency fund in place along with funding of 401Ks, etc. In addition, not sure if you guys know that you could also leverage a HELOC to pay off your mortgage quicker. I listened to this fantastic podcast episode of “Listen Money Matters” where the guys interviewed Adam Carroll who explained this in very detail. Natali Morris also mentioned it in one of her posts so totally recommend checking it out. I think If I were to start paying off my mortgage I would only do it using this methodology.
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- ZJ Thorne says
This is a wonderful approach. I’m in a high COL area, but currently keep my housing expenses down with roommates. That is growing untenable for me personally, and I’m getting myself prepared to buy my own home in the next year. I’ve researched the neighborhood I want, and chose it because it is much cheaper than the neighborhood I would truly prefer. Over 100K cheaper. I’m feeling great about that future decision.
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- Henry says
I think there could be a benefit to younger higher income people investing heavier in the early days of their mortgage when they can invest in 100% equities and then paying down the mortgage later instead of buying bonds.
But can’t argue that people should be buying less house it’s crazy how much people spend now on homes.
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- Param says
We took a different approach to avoid bank loan in the first place. We generated enough savings while we were deciding on whether to settle down in our town for the long term. Finally, we got a developer who was expecting staggered payments after the initial deposit. Thankfully, the recurring savings from a frugal life for almost 3 years and interim dilution of investments at right prices allowed us to pay the last cheque from our savings account. I still think that the 3 years of hardship was far more than worth it, as the resulting peace of mind is priceless…
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- Xyz says
We got a good-sized house in a LCOL area and saved a ton compared to moving in the city. Also, being able to skip PMI is a great plus!
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- jc says
Nice to see some are still advocating paying off mortgage fast. Others in the PF space think they are so smart earning the float, (indeed investment returns probably will be better than mortgage rates over long stretches), but as you mentioned, behavior gets in the way. How many people actually have the discipline to invest the amount they would have prepaid? There is too much temptation to spend it. Best advice is just to keep it simple and pay down your mortgage. Heck, don’t even buy a house until you can pay mostly cash for it – don’t have a mortgage to begin with. That’s what we did. I live in SoCal and median home prices in my hood is close to $1 mil. Yes, we rented and lived like paupers for many years saving to buy, but when we finally did buy, we only carried a small mortgage that will be paid off in 3 yrs. It can be done even in very HCOL areas like SF and SoCal.
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- ESI says
Good stuff! And congrats!!! Paying off a mortgage in 3 years is quite an accomplishment!
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Love to see others doing exactly what we are aiming to achieve.
We bought our house in February of 2014 and with extra payments have killed 84 months worth of payments, while only 31 months into the loan. Based on our 7 year payoff plan we have 53 months left before our $355,000 mortgage is completely paid off.
We set it up to systematically pay an additional $800/month in principal per month in year 1, then each year we add an additional $800/month…so year 2 is $1,600/month extra, year 3 is $2,400/month extra…ect.
Like you guys, we bought a house that was only about 40% of what the bank approved us for. Besides buying a house that was much less than we could afford, we have set this up in a way that it creates no change in lifestyle for us.
It is built on the premise that we can increase our income by at least $9,600/year after taxes, which is what we use to apply towards the mortgage. It is getting close to 3 years since we set the goal, and our income has actually increased significantly more than that amount each year.
As I write this, I realize it may be time to re-evaluate a quicker payoff. We could probably do it in another 3 years.
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- ESI says
Thanks for stopping by.
Love your site, BTW. You are making bank!!!!!
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- JD says
do you have any advice for a potential first time home buyer? My wife and I are early 30’s with 2 kids and making ~125K (I transitioned from athletics to academic recently and my wife went back to work after 3-4 years stay at home with kids and we somehow got by on my single salary as a coach)
we’ve paid about 40 grand in debt during 2016 (first full year of dual employment in decent paying jobs), including all credit card debt, one of our cars and bout 75% of the second car we purchased so we both could work. We still have about 60K in student loans (each have master degrees) mainly at 4.5% interest rates.
We would love to buy the house we rent and landlord could be into selling (it’s old, he owns a multi-million dollar construction company and mentioned interest in selling when he showed us the property but said he would need to remodel the kitch). I think we could realistically buy the house for ~150K assuming he would sell (recent house two doors down sold for 185K is similiar but has more attractive perks primarily a kitchen that doesnt look like its from the 70s).
I think we could get a very low down payment loan that would keep mortgage around current rent ($975/month) but everything ive read about finances says you need to do 20% down have a full funded emergency fund..and some people say be maxing out all retirement accounts.. and while I’d love to do that, it will take time and if we live here 3-4 more years I feel like we will have essentially paid for the house in rent.
Thank you for any advice !
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- Jef says
Love your mindset here ESI and 100% agree with you on your own home!
Congrats on the ability to pay this off and appreciate you sharingReply
- JimK says
I’ve just retired at 59 and have 13 months left on a 4.875% 15-year mortgage that we refinanced out of a 30-year at the time. I’m inclined to write a check for the $16K and be done with it. We never subscribed to using the house as a funding vehicle for toys and vacations that ran so rampant in the 2000’s.
Those who leveraged their homes to the hilt in those days will be paying them off forever, or, now renting, with each scenario requiring a check every month. We decided early on that the roof over our head was not a risk-related part of our portfolio. Bless our depression-era parents’ guidance that “if you can’t pay cash [for cars and toys and vacations], you can’t afford them.”
I’m now excited about our having a $750K non-performing but slowly appreciating asset that I can live in through thick and thin until I need or want to downsize, and then walk away with a large tax-free capital gain.
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- Kannan says
I love this article. I have been following a similar approach for many years until recently. In 2013, my wife and I moved to Cleveland and bought a home that was about 1.5 times one of our salaries. We did take out a 15-year mortgage at a very low rate as I could invest my money and get a better return in the market. Recently we moved to St. Pete, Florida, where prices can be steep if you want to live near the water. We did buy a larger home this time and with a bigger mortgage. While I am not working any more (early retirement), the mortgage is about 2 times my wife’s annual salary as our down payment was 28% of the purchase price. I am still paranoid about having the mortgage and will start to pay down the principal once we can establish an accurate cash flow of monthly expenses. Also my mortgage rate is 3.09% for the next 5 years. So my intention is to put aside additional monies in a separate investment that will return over 6% on average and pay off the loan when my 5-year mortgage rate expires.
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- Kevin@39months says
Our method wasn’t the same, but it was close. Purchased the house in 1993 with a 30 year loan @8%. Refinanced 6 years later into a 20 year loan at 6%. Inherited some money and remodeled the home in 2005, and got a 15 year loan at 4.5% (but added principal back for about 1/2 of remodel). After the market crashed, we got a new loan in 2009 at 3.25% for 10 years. Then in 2016, we paid off the last of it and are debt free.
I know, odd way to do it, but it worked for us. We are now in our early 50s and 39 months from Financial Independence.
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- Laura says
What are your thoughts on this topic if one doesn’t plan on staying in the home “forever”?
I bought a home almost two years ago on 30 year fixed. The difference in a 30 year vs. 15 year was about $1000/mo. I am taking that $1000/mo and auto depositing it in a taxable brokerage account. My thought is that I prefer to have a more liquid account hopefully making at least 6% per year than paying down mortgage since I’m going to sell in 10-15 years anyway.
I live in HCOL area, but got fortunate and found a great deal, put some money in to it and am now sitting on $200k+ equity after less than two years of owning. Of course, this can change quickly, as I painfully experienced in 2008.
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- ESI says
Things are a bit different these days than when I paid off my mortgage. My interest rate was 8% or 9%, so getting rid of the debt was a no-brainer.
For a discussion on paying off debt versus investing these days, see this link:
https://esimoney.com/pay-off-debt-invest/
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- Laura says
Thanks for the reply and the link. It makes sense for interest rate to play a big role in the pay-it-off or not decision.
I found your site recently and really enjoy the content and your approach! Great stuff.
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- Mr. FWP says
This is exactly the plan we’re executing today. We max our automated savings and stick with our budget, adjusting it semi-annually, but we then plow all excess funds into the mortgage. We can’t really stash those as easily, and it’s motivational anyway to plow them onto the mortgage. We also bought a lot less house than we could have, one consistent with our budget and savings goals.
As a result, I anticipate we’ll have ours paid off in less than 10 years as well; we’re already on our way.
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- Brad says
I’m curious how you view having a mortgage on investment property? Is that similar to your personal residence position? Of course one of the most important aspects of RE is the use of leverage. Personally for me to pay off my (home) mortgage I will simply be moving nuts under the shells around…..ie. taking equity from an apartment bldg. and applying it to my primary residence.
Of course it would be great to “do it all”…….lol
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- ESI says
I was able to do it all. 🙂
In other words, I didn’t need to take a loan to buy my properties.
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- Brad says
But in essence you bought less investment properties then, right. How ever much home equity you have (80%) could always be a 25% down payment on “another” apartment complex.
I could sell one of my rental properties and pay off my home mortgage but that goes back to what is going to grow my wealth faster/bigger…..And that gets into the leverage no leverage debate…..Whether one has a couple million in equity or 10 million in equity if all properties aren’t free and clear than it’s simply moving money around……
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- ESI says
Not really as I couldn’t find any more properties that met my criteria. If I had, I would have either waited until cash built up, sell index funds, or take a mortgage. But it would have probably been one of the first two as my wife wants zero debt.
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- Brad says
I definitely agree on not being able to find property deals that make financial sense in today’s market! Terribly low Cap’s.
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- Debor Ah says
I have saved this article with relish and for inspiration for four years as I, too, made the push…..I am on the last week and it is killing me: the joy, the pins and needles, the interminableness of time, which is actually short…. February 14, 2020, I too, will be debt-free with the mortgage paid off, as a single mother to one now teenager.
I bought a condo in a plumb neighborhood in the Northeast in 2013 for a low price, putting 20% down (never any PMI) with a 3.75% interest rate, and have paid it off in under 7 years (6 years and 11 months, to be exact!). (First and only home purchase late in life after living most of my life in the indignity of renter’s hell. It gets old when you’re past 40). If my teen-aged daughter had not wanted iphones, laptops, so many clothes, sports, travel, and school needs, it could have been paid off sooner, but those were necessary expenses in this pressure cooker environment of status we live in. She thinks we are “poor” compared to the other kids from her school (she might be right, but even if we are lesser income, we are more financially stable).
The one mistake I made was being “house poor” because when I had the cushion of savings ($20,000) earlier after purchase in 2013, I tended to spend too much. So I whittled it all down into the house, put all bonuses and overtime (I’m a nurse) into the house, and have “lived on the edge” with JUST enough for “life gets in the way” expenses–new tires, car repairs, cavities at the dentist, plumbing fiascos….which I have always paid for with cash ( I have no credit cards)….I just lucked out that it always worked out, which rarely happens for so many people….I also did small repairs that I could myself around the house, such as installing a new garbage disposal, re-grouting the moldy bathtub (took me hours, but what a difference it makes!), un-jamming a backed up toilet with dish soap and a large bucket of warm water (Thanks, YouTube!), and installing new Tiffany-inspired overhead lighting myself. I’m also diligent about replacing the HVAC air filters every 3 months, since I needed a new $5,000 HVAC and heat pump system within 4 months of moving in….
I drive a 14-year-old car, and have contributed the whole time enough to receive my employer match on my 401k. We have a state-sponsored college savings plan we paid a lump sum(small inheritance) into 18 years ago that guaratees her four years of pre-paid tuition and fees (not room and board).
The overtime won’t necessarily end for me as I build back up some true savings, increase my contributions to my retirement plan, and prepare for room and board expenses in two more years. But the reversal of fortune I have experienced in a mere 7 years shows that while the American dream is harder to find these days, it can still be done. I hope others reading this will continue on their debt freedom journey too….
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- ESI says
Congrats! That’s awesome!
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- Debor Ah says
“You often hear the words “debt freedom” talked about, but can’t really grasp what they mean unless you are free from debt. I can honestly say that there is a great financial peace in knowing you don’t owe anyone anything.”
I have felt lighter and lighter throughout this process. Thank you for so beautifully articulating these feelings…There are not many blogs advocating early pay-off, and I was grateful to stumble across the eminent good sense of yours.
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- Debor Ah says
P.S. I saved $112,784 in interest I will never have to pay, and only payed a grand total of $35,337 in interest on the house! 🙂
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- Sandy says
So glad I came across this article/blog. Best personal finance advice ever! Thank you ESI!
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- Sal says
Very encouraging personal stories!
I hate debt now than ever before.
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