In July 2013, I gave an update to our readers on where our family was at in our road to financial freedom. At the time we owed $100k on our mortgage, and were on the final 6.2 miles of our marathon debt pay down journey. Today, as I sit here and write this I'm proud to say that we've chipped away another $30k off our mortgage and are now below $70k that we have left. That means that we have successfully paid off $1,111 every month for the last 27 months.
This active pursuit of purging debt has taken a lot of sacrifices along the way. I still stand by my original premises of: Put a little extra towards your principal each month, Refinance to a 15 year mortgage, Make one extra payment per year (bi-weekly payments), Don’t pay someone else to make bi-weekly payments for you, and Snowball debt payments. These principals have continued to help our family squeeze out every last penny of the $1,111 each month.
In addition, in the last 27 months, I've also picked up a few new tips that have contributed to our mortgage debt pay off acceleration. Some of these ideas are:
- Breakout fixed expenses – in the last two years I've worked out a system where I divert a portion of my primary income into one checking account. From that account all my fixed expenses are paid. So this account status stays pretty stagnant and all the debits and credits are pretty even. This has allowed us to automate all of our fixed expenses and ensure that we don't have any overdrafts. Also it's motivated us to reduce fixed expenses in order to divert income towards other causes, like paying off our mortgage. It has been a win-win and required very little effort.
- Continue to develop side income streams – as we've continued to focus on reducing our expenses, we've also balanced it out with trying to continue to increase our income. This has been outside of my primary income source. It has included blog income, selling chicken coops, selling backyard chicken eggs, starting a pension distribution, and starting backyardchickenguide.com.
- Refuse to take on any new debts – as obvious as it may seem, refusing to take on debt has been a struggle. With all the wants that pull at us when we go shopping or even see some good deal on the internet, it is helpful to remind yourself to “owe no man nothing.” By our family not taking on any credit card or loan debt this has allowed us to continue our focus on mortgage pay-off.
- Use cash to pay for everything – this past summer my wife and I completed Dave Ramsey's Financial Peace University. In going through the course we really saw how Dave explained the benefits of paying for everything with cash. Primarily, he emphasized that paying with cash makes you feel that pain of departing with your money. Swiping a debit or credit card separates the emotion. In addition, by using cash we are able to help our family save 30-40%, because consumers are less likely to spend if they are to use cash.
Well, over the last two years I was really hesitant about sharing personal financial information, but I find there is a sense of accountability in sharing where we are at in our road to financial freedom. Also, I find that so many people are encouraging, and their encouragement only helps even more!
As I said in 2013, I'd love to hear from our readers on other ideas you are using to aggressively pay down your debt. Feel free to leave a comment so I and others can benefit!