WE’RE DEBT FREE

On Saturday morning, I pressed the Submit button on a wire transfer to pay off the mortgage.

Reader, I cried.

Friday night was the seventh anniversary of when my husband woke up from his medically induced coma, after falling into septic shock. Facebook had been reminding me all week of what happened seven years ago, from the initial surgery through the emergency surgery, to the ICU and through the coma.

Today on Facebook my husband shared his post from seven years ago, when he woke up and was able to come off the ventilator.

It’s a great day to celebrate being alive! 🎉 🎈 🎊 🍷 pic.twitter.com/XhxJnwa1Ga

— Liz @ Chief Mom Officer (@LizOfficer) March 22, 2019

Over the past seven years, my husband hasn’t held a full-time job. In fact, he hasn’t worked full time in ten years since his factory closed in the Great Recession. For much of this time, he hasn’t worked, and when he has, it’s been part-time. He’s alternated between recovery from surgery and sepsis and being a stay at home dad.

So while he worked on the saving money side of our families equation – cleaning the house, doing the laundry, caring for the kids, shopping for groceries – the income side was up to me.

Paying off the mortgage has long been a goal of ours. Back when we first bought this house, in 2006, it seemed impossible. To finally achieve it was glorious, and frankly unbelievable. I don’t think it will hit me until the payment comes due…but it’s not.

So how did we, ages 38 and 44, with three kids, living on mom’s income, become totally debt free? It’s been a long journey, and it started well before seven years ago. And honestly, it’s been a combination of luck, hard work, and sacrifice.

Putting 20% Down – Luck

We purchased this home in 2006 and were able to put 20% down (avoiding private mortgage insurance, or PMI) due to pure dumb luck.

How so? When I was 20, back in the year 2000, I wanted to move out on my own. Most kids my age who were moving out moved into apartments. But I had read The Wealthy Barber and other financial books, and I knew that owning (not renting) was a smart move if you weren’t planning to move for at least five years.

I wasn’t planning to make an amazing real estate deal, or buy a condo and flip it. It was much simpler than that. I bought a condo assuming it would have little or no appreciation. Frankly, I was going to be happy to get back what I spent on principal back. I figured it would be better than renting and losing all the money.

I just happened to buy at the start of a large real estate bubble. When I sold in 2006, I had made enough between appreciation and principal pay-down to put 20% down on a house. A solid house, that we wouldn’t have to move away from forever.

Buying For The Long Term – Strategy

Shopping for homes in 2005/2006 was hard. Why? Everything was overpriced. Plus I live in Connecticut, which tends to be a high cost of living state general.

It was a nightmare, filled with real estate horror stories. From a naked guy sleeping in a bedroom during a showing (luckily just my husband was on that one), to houses overlooking steep cliffs (not good for toddlers), to houses that were updated in a few rooms and trash in the rest of the house (flippers who had run out of money), we saw dozens of homes before the one we purchased.

You see, we wanted to buy for the long term. That meant, even though at the time we were a young family of three (Me – 26, husband – 31, oldest son – 2) we wanted a good number of bedrooms. We wanted enough room to have 2-3 total children. Ideally we wanted a chunk of land around the house. A two-car garage. And we didn’t care about the cosmetic look of the home, because we were in it for the long term. We figured we had many years to update it.

Even though we were buying for the long term, we weren’t going to spend the amount the bank had approved us for. It’s crazy how much money they would have lent us. Looking back now, it’s easy to see just how the housing bubble burst.

After looking at dozens and dozens of options, we finally landed on this house. It was older – built in the 60’s – but solid. It had four bedrooms and a two car garage, and it was UGLY. The house had three different types of wood siding, all olive green, some rotting. The rooms were covered in ugly wallpaper and no one had touched the carpets since… well, in a long time.

So we bought this home and closed in 2006. Our moving truck caught fire, in what I took to be a sign we should never move again. We had a 30-year mortgage at the time because everyone did, right? Plus we couldn’t have afforded a 15 year, not with our incomes at the time. Interest rates were over 6%. We felt fortunate to just be able to make the minimum payment.

In the first six years we lived here, from 2006 until my husband’s illness in 2012, we paid the mortgage on time as agreed. We also saved and invested, although not a huge amount, putting some money aside for college and retirement. In 2007 we welcomed our second son.

In 2009, right after I got a new car and started my MBA, my husband was laid off. We were able to continue paying on the mortgage. It wasn’t always easy, and we had friends that weren’t as fortunate.

Then, in 2012, everything changed.

Getting Serious

Going through what we went through, you really feel the weight of debt. You feel in a visceral way how having a large amount of fixed expenses hurts. And in our case, rather than adopting a YOLO attitude, we decided to get serious about getting out of debt.

The non-mortgage debt was gone shortly after we had financially stabilized (here’s where you can read Part 1 and Part 2 of that journey). Then, there was the mortgage.

The mortgage seemed impossible. And yet, we wanted it gone.

So we developed a multi-pronged strategy for getting rid of it. First, we refinanced in July 2013 into a 15-year mortgage at 2.75%. Now, instead of most of each payment going to interest and only a few hundred to the principal – most of the payment went to the principal.

This cut our payoff timeframe down from having it paid off when I was in my late 50’s, to it being paid off in my late 40’s. A decade sooner. But we were determined to do better than that.

I finished my MBA in June 2013, right before refinancing. In 2015, our youngest son was born, and my husband had to have a major reconstructive surgery.

Through it all, we kept increasing our savings rate. Lifestyle deflation and income inflation compounded over the years. Some people, upon getting an MBA and increasing their income, might get a new car. I kept that same car I bought right before starting my MBA, and that car is now ten years old with 125k miles on it. When my husband needed a new car, we bought an inexpensive one with cash.

Every windfall, both small and large, went into our financial goals. Tax refunds, bonuses, extra paychecks, etc. etc.

As my income went up, we didn’t trade up to a newer, bigger, “better” house. We had bought for the long run, and this house had plenty of room for a family of five. We’ve stuck mostly to minor cosmetic improvements, like tearing down wallpaper and painting rooms, as well as must-have repairs in the house, rather than extensive (read: expensive) renovations.

We saw no need to inflate our lifestyle. Going through what we went through showed us in the most black and white way possible what was really important.

Family. Spending time together. Fun. Supporting each other. Those were all important.

And so was setting a solid foundation under our family.

What wasn’t important? Stuff. A fancy house. A new car. An SUV.

We know this isn’t the path to the most money possible. And frankly, we don’t care. Now we own this house. Our kids have seen how a family can work together to achieve huge financial goals.

Our youngest son will never remember us having a mortgage.

Now that this huge financial goal is heading to the rearview mirror of our lives, we can focus on other goals and dreams. We want to set aside more for college for the boys, so we can give them a solid educational start in their adult lives.

We also want to start a scholarship at my old community college, to help give kids there a solid educational start. In fact, my husband has already reached out to get the information on how we can do this.

I’m so excited to close the chapter of debt, and start the next chapter in our financial lives.

What I Hope You Take Away

Our story is just that…our story.

We had downfalls and lucky breaks that you probably won’t. I’m going to go out on a limb and assume you can’t go back in time to 2013 and secure a 2.75%, 15-year mortgage. You also can’t take your time machine back to 2000 and buy real estate, selling it near the top of the bubble. Although, if you can, please let me know and I’ll go in on your time-travelling business. You probably weren’t in the middle of an MBA when your spouse almost died. And so on.

Our story, like those of most families who have paid off debt, is a combination of luck, dedication, determination, hard work, and time.

Without any of those components, we would have failed.

Some of these factors you can replicate, and some you probably can’t. Even if you can’t, I hope our story will help inspire you to continue to pursue your own personal goals and dreams. When we bought this house, it would have been a struggle to pay an extra few hundred dollars a month. And now, it’s ours.

No matter where you are in your financial journey, or your life, I hope you will achieve everything you’ve dreamed. One step at a time, one small goal at a time, will compound into something amazing.

It was the stories of financially successful people that motivated me when I was younger. And those kept me motivated throughout the years when things got tough.

Back when I was in community college and working full time while going to school full time, making $22k per year, I would read about people with similar starts in their adult life and be inspired by their success.

When I had my oldest son at 23, two months after finishing my last college class, I would read about other young moms who eventually found corporate careers. They helped show me that it was possible.

The whole reason I have this website is to share what I know, our personal story, and the stories of others, in hopes of inspiring you to reach financial freedom.

I hope you’ll join us in celebrating this huge milestone for our family.

WE’RE DEBT FREE!!!!!