Our Financial Success – Paying off our Mortgage
This past month, Donny and I accomplished a major financial achievement in our marriage. We paid off our mortgage 14 years and 9 months early. It is a feeling I cannot begin to describe.
We started this journey of home ownership back in 2001, two years after we got married. Our income at that time was nowhere what we are making today. The house we purchased was 20 years old and a starter home. When we purchased our home, we knew what we could afford for a mortgage note with our salary.
Fast forward to Tropical Storm Allison that hit the Houston area with massive flooding in June 2001. We had only made a couple of house payments, which we were able to handle in our budget. But were we in for a surprise. After the flooding on Allison, our homeowner’s insurance skyrocketed when it was up for renewal. The reason for that was the all the flood claims during TS Allison. This one event increased our escrow payment to increase by $400 a month due to the additional cost of homeowner’s insurance. We struggled with making our mortgage payment and paying all the other expenses we had in our budget. This event made us realize we wanted one goal and one goal only, and that was to pay off our mortgage early.
Each year, we tried to pay one additional house note to pay down the mortgage more quickly. But year after year, life seemed to get in the way of our making any headway with this goal.
Fast forward to 2014. Our daughter had graduated high school and was out on her own. My husband and I were empty-nesters, so we focused all our extra funds to pay off the house.
We paid down the principal to within a reasonable amount where we felt we were making progress. Then, this year, we received some extra funds due to severance pay from my being laid off and we combined it with money I had been saving for this one goal. July 2016 was the month we paid off our house.
This is a feeling that we still have a hard time wrapping our heads around, but it is true. We received confirmation from our mortgage company that our account was paid off in full and our account was closed. It does feel different living, eating, and sleeping in a paid‑off house. It is our home.
With this achievement, we are making adjustments to our budget, because we no longer have a mortgage payment. First and foremost is putting funds aside for taxes and insurance that were paid by our escrow with our mortgage. This is an automatic deduction from our checking account that goes into a savings account we will not use except for payment of taxes and homeowner’s and wind insurance. The rest of the amount we used to send to the mortgage company will be used for savings mostly; some will be used to make improvements to our thirty-year‑old house that we own now.
I grew up in a household where my parents were frugal. As I grew older and got married, I tried to incorporate frugal tips into my lifestyle to help us save money. I worked full time in a corporate atmosphere, which means I was on the road and at work for 12 plus hours a day earning a paycheck. During the course of our marriage, I succeeded at some of the tips and failed at others. This list is 8 of my top tips that saved us money while not living the fully frugal life.
8. Brown-Bagging Lunches: I did this most of the time while working because I didn’t want to pay $10-15 for a lunch five days a week. I would, most of the time, take leftovers and heat them up in the microwave at work. Other times I would eat sandwiches or make a salad. This tip can add up over the course of just a month, saving $180-$260.
7. Shopping with a Grocery List and By Yourself: This is an important tip because I will usually only purchase the items on my list and save anywhere from $20 to $100 unless my husband comes along and puts what he wants in the shopping cart. I have gone grocery shopping without my list and end up buying items that I do not need or even use just because I didn’t have a plan and purpose. Save money, shop with a grocery list and go by yourself.
6. Dry Cleaning Clothes: I used to spend $20-$50 dollars a week on dry cleaning my business work wardrobe. Included in this were my husband’s Wrangler jeans and shirts. All it took was one time with my budget being stretched to the max and not having funds to take my dry cleaning to be done that I tried washing several of the articles of clothing myself. I used the delicate cycle of my washing machine and just hung them to dry. I realized what a savings this was to our budget, so I gave away or sold several of my clothing items that could not be washed and replaced them with machine washable pieces. Another frugal tip that adds up over time.
5. Late Fees on Bill Payments: When we first were married 17 years ago, the internet was just becoming a household item and there was no online bill pay or even banking. I would pay all our bills the old fashioned way, by U.S. Mail. But I was one who couldn’t remember and incurred late charges. I have forgotten to pay the electric bill and it was disconnected. Yes, I only did it once and it hasn’t happened again. Then along came the internet and bill paying with online banking. This has saved me anywhere from $40–$80 a month because I have all my bills on auto pay. Yes, I routinely look at all my bills/statements online to review my charges and make sure I am not paying unexpected charges. It saves money, but it also gives me peace of mind.
4. Using Cash: I am a strong believer in using cash to pay for purchases. This has helped keep me from purchasing extra stuff knowing I only had “X” amount of dollars for this purchase. I notice using the debit card or credit card that those little extras sneak in on the purchase and can be a budget buster.
3. Home Cooked Meals: I will be the first to say after working 12 plus hours a day, the last thing I wanted to do was come home and cook a meal. Being tired, not having prepared for the meal, we would routinely take the easy route and order out, go through the drive-thru, or have pizza delivered. At $20 a meal ($60 for families), this can quickly add up and break your budget. Kathryn (friend and blog partner) and I prepared a week’s worth of slow cooker meals for each of our household freezers. Take the meal out the night before and let it thaw and the next morning, put it in the slow cooker and let it cook all day. Once home, dinner was done and we could eat and enjoy a home cooked meal. In upcoming blog posts, we will be sharing our recipes and freezer meals.
2. Homemade Laundry Detergent: In the Herman household, laundry is something I do every day and the cost of laundry detergent is high on the name brands that I use. I found several recipes to make my own detergent. I experimented with the recipes and made it for our household use. I will share my recipe in an upcoming blog post.
1. Overdraft Banking Fees: This is the number one frugal tip for the Herman household. No matter how diligent I was about checking our account balance online, we would have overdraft fees. This, over the period of several months, could be very expensive. My frugal tip is to put an extra $1000 in the account and do not ever spend that money. I took the money from our emergency fund and padded our checking account. I never used that amount for my budget. It was always excluded. This tip has saved me so much money that I suggest everyone use it. If you spend any amount of this $1000, immediately replace it when funds are available.
These are just a few of my frugal tips for the not-so-frugal household. They can save money in your budget and do not take a lot of time to implement. As I am unemployed, I am tweaking these tips to get more savings in our budget. I will be adding more tips to our blog posts in the future.
Please share with me some of your frugal tips that are successful in your house.
What is one of the most difficult things to handle regarding day to day life? Is it money? Is it budgeting? Is it overall personal finance? As it was with me I could always accomplish meal planning and daily chores but when it came to our own personal finances, I would use the least amount of time to make sure bills were paid and when paychecks hit the bank and hope that we had enough money until the next paycheck. Procrastination was my method. During our nearly 18 years of marriage, I was the nerd in our family who handled all the bills, banking, and budgeting. Sometimes it is a stressful and overwhelming job.
As time went by I knew I had to develop a plan and method that I would stick to and be successful. I read numerous books and read various blogs to motivate myself to change this undesirable habit I had. One of those books that got me to make changes was Dave Ramsey’s Total Money Makeover. I read that book several times from front to back. I worked the “baby steps”. Snowballing debt was a major step for getting out of financial chaos as I called it. But there was one step that I could not accomplish and that was doing a budget.
Doing a budget to this day is still a challenge for me. I have tried so many different online budgets such as @YNAB, Calendar based budgets, Mint and various iPhone/iPad budget apps but the one that I have the most success at is using an Excel spreadsheet and manually putting my information in the spreadsheet based on monthly spending. Sometimes simple is what works for me and this is the method that I have been most successful with while trying to achieve our financial goals. I input all monthly payments we pay each week and month. Usually, I do a column for each week and total all payments and then subtract that from the paycheck that was deposited in the bank. This method has worked the best for me the last few years. But I still have issues with unexpected items and those usually come out of our emergency or contingency fund. I continue to research and look for the budget that would be perfect for our finances.
So, as we launch our blog, look for more posts discussing the various personal finance options and ideas we use for each of our families. We both have different dynamics with husbands, children, grandchildren, jobs and life situations so we have to find what works for us. Living and loving our lives is what is important and we try to find as many ways as possible to make it easier and more fun.
Do you budget? If so, what system to do you use? If not, what is holding you back? What do you need help with? Let us know in the comments below.