Mortgage Payoff and The Road to Debt Freedom

charlie_imageVery rarely will I share some of my personal financial position on our blog, but today our family just made it over a significant hurdle. Our family is on the final stretch of paying off our home mortgage, and becoming debt free! We are now below $100k on our home loan, and on the final leg of our financial marathon.

In marathon terms, it's like we've reached mile marker 20, and we've only got 6.2 miles left. We can see the finish line, and the dream of finishing seems possible. 

For me, my motivation has come from both watching my father go through financial troubles with debt, and reading Dave Ramsey's Total Money Makeover. After seeing my dad go through bankruptcy I clearly heard the Lord speak to me, and say “No one can foreclose on you, Charlie, if you owe no man nothing.” As obvious as that truth may be for most folks, we often fail to realize it when we are choosing to go into debt. Secondly, Ramsey's book gave our family the steps to put faith into action in terms of our finances. Through reading his book and listening to his radio show it's become clear that personal finances isn't about numbers, but about modification of behavior. If it was all about numbers and percentages, then all mathematicians would probably be millionaires.

So our family sits at mile 20 of our debt freedom marathon I have a vision of taking a trip. I'd someday like to take a trip with my wife Road to Financial Peace Plazaand three kids to Financial Peace Plaza. Pack up our paid off van, and take a 759 mile road trip to visit Dave Ramsey. It'd be awesome to yell into a microphone with my wife and kids, and yell FREEEEEEDOOOOOOMMMMM!!! For all the pain and sacrifice our family has made collectively, then it'd be our 10 seconds to enjoy the fruits of our family's labor! Boy would that be awesome!

So along the way and going forward here are a few of the keys that have helped us get to this point, and will help us get that much closer to debt freedom.

  1. Put a little extra towards your principal each month – no matter if it's $5, $10, or $50 extra per month at the beginning of your mortgage, it's extremely important to start putting a little more towards your principal. The small chunks at the beginning will have the biggest impact long term.
  2. Refinance to a 15 year mortgage – in 2011 our family decided to refinance from a 30 year to 15 year, and knock off more thank 1% on our mortgage interest. In doing the math this would shave about 5 years off our mortgage, and save us about $40,000 in interest. While going through the refinance process I was overwhelmed with how much paperwork was involved. I thought and said to my wife, “I can understand how some people would choose not to refinance, and can become stagnent in their finances.” This big process can have huge long term positive effects on your road to debt freedom, so don't become lazy!
  3. Make one extra payment per year (bi-weekly payments) – it sounds simple doesn't it. If you can save up one extra payment or make bi-weekly payments, then these steps can save about 7 years off a 30 years mortgages. Again it's a small step, but will have long term effects.
  4. Don't pay someone else to make bi-weekly payments for you – if you are like me, then more than likely you've received on of those letters from your mortgage company offering a “Bi-weekly Mortgage Payoff Program”. For a small, $499 fee your mortgage company will automatically take 1/2 your payment out every two weeks. Don't pay someone to do this for you! Do it yourself, and either pay one extra payment per year or add an extra 1/12 to your payment each month. Also make sure you make this automatic, so that won't involve any emotion or thought, but automatic behavior modification.
  5. Snowball debt payments – at the beginning of our debt we had about five debts, and each one felt like a shackle. A bondage to another lender and commitment that needed to be met each month. Through reading Ramsey's book, we started by paying off the smallest debt first, and rolling those payments to the next larger debt.

So these are a few of the things we are doing to become financially free. I'd love to hear from our readers on how it feels to be debt free (be descriptive), and any other tips that may have helped you! I think that I and other readers might benefit from others stories as well and provide some motivation.

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  1. Yeah, I have had a house with a 15 year loan before and it really helped us out on our move to Austin. We lived in the house for about 10 of the 15 years that we had it and had quite a bit of equity in the house at the time we decided to sell. The money came in very handy when we moved from the Houston area to the Austin area. If it had been a 30 year loan, we would have had almost no equity in the house to work with.

  2. Thanks for all the kind comments! We’ll continue to push on towards the finish!

    @Allison – bi-weekly payments aren’t the same as refinancing. Refinancing, most often, is a reduction in the amount of interest you are paying and pays more towards principal.

  3. Once you are debt free you are truly free in life. Free to travel, free to work a job that you want to work. Congrats on getting this far and start sprinting now you are getting close to the finish line!


  4. I don’t know what debt free feels like because I still have debt but I think about it all the time.

    I think about what to do with my pay cheque when it is my own and not just owed. I read about finances and use online interest calculators to see what sorts of return I can expect when I can finally invest in my future instead of paying off my past.

  5. Charlie, congratulations! My wife and I have been debt free (except for the house) since about 2009. Now it’s about making decisions on where our money is going instead of wondering where it went. It’s awesome….

  6. CONGRATULATIONS Charlie…keep up the good work! Has to be a great feeling to be on the home stretch.

  7. Congrats Charlie! Being debt free feels great! Even though we’re not there yet either, we have taken steps to get closer and each step feels good!

  8. Charlie,
    Congrats! I wanted to ask if you make bi-weekly payment wouldn’t it be the same as refinancing? without the extra paper work and fees? Since essentially if you pay if off early then the loan would not take 30 yrs to pay off.

  9. I can’t begin to imagine what freedom from debt will feel like, but I’m sure it will be great. Glad to hear you’ll be experiencing it soon. Congrats!

  10. Yea, Charlie!!!!!!!!!!! We are SO happy for you guys. :-) Can’t wait to hear you yell into that microphone too – what a great day that will be! I totally agree about not having someone else make your bi-weekly payments for you – it’s usually a huge rip off and totally scams the customer. BIG congrats to you guys for making it this far in the journey.

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