Apr 27, 2009

We are debt-free! (Except for the mortgage - here's how we did it)

I sort of slipped the big announcement into a previous post, but we are now debt-free!

Except for the mortgage.

The funny thing is, I've been looking forward to writing about being debt-free for a long time. When I made the final payment on our last non-mortgage debt (a student loan), I had big plans to write about how we accomplished it, and how good it feels to not have any debt. (I was just waiting for the official "congratulations, you've paid off your loan!" letter.)

But after paying off that last loan, I turned my attention to our mortgage. And that's sort of taken away from the accomplishment of paying off all of our other debt – because the simple fact is, we're still in debt.

A big part of why my sense of elation at paying off the last of our non-mortgage debt has been diminished is that I can see how much more freedom we will have when we no longer have the mortgage. So while I'm still excited that we've paid off our other debts, paying off the last non-mortgage debt doesn't feel that different from paying off the debts that we finished off before that.

I'll be really excited when we have paid off the mortgage. Because if all goes according to plan, we'll never need to borrow money again. (Unless we decide to move, in which case we may need another mortgage, or make a big investment, like buying rental property – neither of which is likely to happen, however.)

Here are the steps we've taken to ensure we can pay off our mortgage quickly and hopefully never need another loan again:

We don't just live within our means - we live well beneath them. We are lucky that we can do this, of course, while still maintaining a comfortable lifestyle. But we worked hard in school and after graduation, and made wise choices, to get to this point in our lives.

We pay off our credit cards each month. This goes along with the first point, of course, in that we don't spend more than we can pay off. Some of my favorite bloggers, like No Credit Needed, don't believe in using credit cards at all. Personally, I'm okay with credit cards as long as I'm not spending frivolously and can pay off the balance each month. The convenience and rewards are worth it. (And remember that failed all-cash experiment last year?)

We save money each month. One of the first things we did as a married couple was build a nice emergency fund. It's grown over the years, as our family and obligations have expanded. We continue to add to the fund each month, and this helps to ensure that we won't need to borrow money in the event of a major financial need.

We set aside some money each month for the next car payment. After we paid off our last car loan, I started making monthly deposits for the sole purpose of buying a new car with cash in four to five years. We may need to draw some money out of our savings account to complete the purchase, but we definitely won't need to take out a loan to buy the car.

We use the debt snowball method. I love the debt snowball. Ours has grown a lot over the years, and will now be used to pay off the mortgage. A portion of every regular increase in income (i.e., salary raises) and decrease in expenses (e.g., lower insurance premiums) has gone toward the debt snowball. Our nearly decade-old snowball is now big enough that we will be able to pay off our mortgage in about six years. I can’t wait for that day!

Previously: How I'm paying off my student loans


That One Caveman said...

Congratulations upon congratulations! I'm really happy for you! I can't wait to see where you go next.

We intend to be (non-mortgage) debt-free in a few years. Unfortunately, we've been "forced" to add on some extra debt recently, but intend on paying that off as fast as possible.

Christina said...

Congratulations! We're also debt-free except for the house, and we love it! We're already working on saving up to pay for our next vehicle with cash.

It will be a looooong time before we can get rid of the mortgage, but we keep chipping away at it.

I love reading your blog because it helps me stay focused!

Frugal Coupon Living said...


Kacie said...

Way to go! That really is a big accomplishment. I bet you'll be able to do it faster than 6 years :)

Anonymous said...

Congratulations! What wonderful news.

Don't let your mortgage get in the way of feeling a good sense of accomplishment for this - it's a big deal. (Though I relate, as we are now saving up for a home, and it is feeling harder than paying off the debt was.) As another family with some big student loans from grad school, I have to say you have done a very impressive thing.

Good luck with the mortgage. Chances are it will go faster than planned. :)

Kris said...

Cathy! Way to go and congratulations! What a load off...

Baker @ Man Vs. Debt said...

Awesome job! Your story is inspiring to those of us that still have a while to go before we are in your shoes!

Best of luck in fighting that mortgage. I can't imagine having a paid off house!

Gina @ MoneywiseMoms said...

Congratulations! We are still working on the one student loan (law school, you know how that is) and the mortgage. It's tough to go after that student loan at less than 2%, so we've been sending the snowball to the mortgage instead to get some equity in the house.

Kasey said...

Way to go!! That is awesome. We to, are debt free except our mortgage. We are in the process of refinancing for a better rate.

Clean ClutterFree Simple said...

Huge Congratulations!!!! That's a major accomplishment. Bravo to your diligence and determination!

Suzanne A. Wells said...

Congratulations! That must feel wonderful. I am on the track to join you! Slow and steady wins the race. And if you can't pay cash, don't buy it.

Kelly said...

Try to step back and enjoy the feeling!
You are doing an amazing job.
I hope my story is similar in a few years. :)

The Allen Family said...

Congratulations! I am very jealous. It will be a long a while before we get to that point.

Christy said...

Congratulations! That is exciting news.
We have the same plan, we are tackling the student loans then the mortgage next.

Kim Moldofsky said...

Congratulations- what an accomplishment.

We only have a mortgage debt-wise as well. Aren't there tax advantages to making mortgage payments, though? I feel like I've heard mixed advice about paying it off earlier.

We tend to live below our income. Our emergency fund came in handy when my husband was unemployed for six months. He actually start his job Wednesday. It's only a three month placement (though will hopefully be extended), so we won't be holding any extravagant celebrations. Just work on rebuilding our nest egg. Sigh. At least we had one; right?

Chief Family Officer said...

Thanks for the encouragement and support, everyone! It means so much :)

@Kim M - Hang in there, you're doing great. Many (most?) people could not survive 6 months of unemployment as well as you have.

Tricia said...

Congrats! Congrats! Congrats!!!

So very excited for you :)

P.S. I'm with you on my thoughts about credit cards as well.

Cindy said...

Congratulations! That's a big step and something to be very proud of!

Anonymous said...

I read an article a few years ago about paying off your mortgage early vs. keeping it. At that time, they said you are paying $1.00 on your mortage to save 27 cents on your taxes, so your basically wasting the 73 cents.


Anonymous said...

Way to go! That's a big accomplishment. I can tell you are quite eager to pay off the house (and who wouldn't be), but do be sure to take an evening an celebrate. You deserve it!

mapgirl said...

Cathy that is wonderful news! Congratulations!