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Throwback: My Mortgage Payoff Hustle

In the spirit of Throwback Thursday, I’m taking a trip down memory lane to share details about how I paid off my $86,000 mortgage in 2 years. 

It all began in October 2010. After touring dozens of condos, I settled on a one-bedroom, 700 square foot unit in the middle of the city. At first, I dismissed the building I live in. My real estate agent showed me a one-bedroom unit that cost $75,000 more. It wasn’t until I did research on my own that I realized there were less expensive units for sale in the building.

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I got a 15-year mortgage at 3.75% because the payment was only $625 a month. That was below the $1,100 a month I had been paying in rent. After a few months of sending my monthly payment to my loan provider, I grew frustrated with the amount of money that was going to interest instead of principal.

Example from July 2011:

Principal $387.61 + Interest $237.80 = Payment $625.41

Out of that frustration, I made a goal to pay off my mortgage by March 2015, my 30th birthday. I was already earning more than I spent, so I knew I was on the right track. I immediately began seeking ways to cut my expenses and earn more money. In the summer of 2011, I started a part-time job as a restaurant and banquet server.

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For this throwback, let’s take a closer look at September 2011. I had lived in my condo for less than a year and I had only been aggressively paying down my $86,000 mortgage for about 6 months. I’ve selected a few balances to share with you from back then:

  • Mortgage Balance: $69,799.00
  • Checking/Savings Accounts: $1,754.21
  • Roth IRA: $6,434.57

As you can see, I had already reduced the mortgage balance by $16,000. It was a good start, but I had a long way to go.

You’ll also notice my bank balances were extremely low. I intentionally kept less than $2,000 in my checking and savings accounts. This was 100% psychological. I had to trick myself into thinking I was broke in order to avoid spending.

I used the $6,000 in my Roth IRA as a secondary emergency fund. Yes, you can do that. It’s possible to take out any contributions (but not earnings) to your Roth IRA without a penalty. This is a tip I learned years ago from Suze Orman.

I didn’t list my other retirement account, my 401k. Throughout my mortgage payoff, I contributed 13% of my salary to that retirement account. I never slowed down or stopped retirement savings in order to reach my goal.

Let’s recap what I’ve shared. In September 2011, I was 6 months into my goal to pay off my mortgage by March 2015. I focused on earning more and spending less. This is when I broke up with fast food, cable TV and department stores. I spent a few hours a week waiting tables and I was a banquet server for the fall wedding season.

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By this time, I had made the switch from spending to saving. When new money came in, I quickly redirected it to my loan provider, Wells Fargo. With every payday, I knew I was closer to my goal of mortgage freedom. In December 2012, I reached my goal a few years ahead of schedule, at age 27. I’ve been living mortgage-free ever since.

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