How to pay off a 30 year mortgage in less than two years. No, really.

My husband and I entered completely debt-free life in March of 2010.  We're going 3 years strong now with no debt and no credit cards and haven't looked back.

Image courtesy of: thetruegeneralist.com

Image courtesy of: thetruegeneralist.com

I promised in this post to explain how we paid off our mortgage (our only debt) in 14 months after committing to pay it off really early (we held the mortgage for 19 months total).  Please know that I understand your life circumstances are not the same as ours, so I'm not saying that anyone should be able to pay off that amount of mortgage in that amount of time.  We had some big blessings land in our lap that we took full advantage of to help get us to zero on our mortgage balance. So here is a rundown of everything we did that I can think of:

  1. Rent out our house.  We were living in a guest house for free in exchange for providing some basic services to the owner. Our plan was to buy a house in anticipation for this great deal to be over and then rent it out until we needed to move in.  (This was the summer of 2008 when housing prices were just at their peak in our area...)  Well, the great deal lasted longer than we expected (for another two years) so we decided to act as though we didn't have this deal and throw all of our rent money at the principal in addition to making our regular mortgage payments.  We entered into the land of lording, learned some lessons that required us to put our big-kid pants on in dealing with tenants, and reaped the rewards of maximizing a beyond huge blessing in our lives.
  2. Cut every variable expense possible.  We had liability coverage only on our cars, a food budget for two of $40 a week (it is possible, my friends), started using StraightTalk for our cell phone service, walked or biked as much as possible, and tried to maximize our cars' fuel efficiency using some hypermiling techniques.  (The hubs is glad I don't ask him to drive 55 any more on highways.)  We cut so much spending out and walked so many places (the longest was a 7 mile trip to dinner at a relative's house) that our families and friends thought we had lost it.
  3. Use a spreadsheet.  I used an amazing spreadsheet* that would show me how fast we would pay off our mortgage based on estimated future monthly payments.  I'm a numbers geek so I would actually think about where we might be able to save or make money in future months, plug it into the spreadsheet, and see the payoff date move closer and closer.  Very motivating stuff.  
  4. Work extra.  I was a full-time grad student or looking for a job for 7 of the 14 months it took us to pay that sucker off.  But I was not just a grad student during that time.  I worked two part-time jobs that equated to about 30 to 40 hours a week of work and an average hourly wage of about $14.  
  5. Live on one salary (not exactly applicable if you don't have a significant other).  We lived on my husband's salary (and lived on less than what he made) and were able to throw everything I made plus some of his salary at that mortgage.  We never raised our lifestyle just because I landed a nice job with benefits.
  6. Sweat the small stuff.  We tracked every. single. dollar.  We had monthly budget meetings where we hovered around the laptop and went through our transactions on our annoying Quicken software (our preferred app is now Mint.com).  I even opened up a high-yield checking account (check out Kasasa.com where we found our account) so that we could use that extra bit of interest for the principal. 
  7. Have a windfall?  Yes, it's true that I received a small inheritance during this process.  But did we spend a dime of it on anything but our mortgage? Nope.  And did we still manage to pay off $79,000 using our own funds in 14 months?  Yup.  
  8. Sell some stuff.  I used eBay to sell some collectible, but non-sentimental items we had.  They didn't bring in much (maybe $100 total), but every dollar mattered.

Oh, did I mention that we also had to cashflow a new roof and flooring at the beginning of this process and that our house's sewer line collapsed and had to be replaced 6 days before we were scheduled to pay off the mortgage?  We had an emergency fund in place that was just able to cover the sewer line (I think we ended up with about $100 in the bank after making our final payment), but I had to do some scrambling to transfer funds between accounts in order to cover everything at the right time.   

Pay off your mortgage. Change the race.