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Marriage Kids and Money

Are you looking to improve your family's financial wellness and create a life of true wealth and happiness? The Marriage Kids and Money Podcast is dedicated to helping you do just that. Each week, Andy Hill interviews millionaire parents, couples who have reached financial independence, and financial industry experts like Jill Schlesinger, Chris Hogan, Paula Pant, JL Collins and Rachel Cruze (the daughter of Dave Ramsey). These interviews are meant to provide you with easy-to-understand information and actionable takeaways you can use to give your family the life they deserve. With over 250 episodes and counting, Marriage Kids and Money has been the recipient of multiple awards such as "Best Family Finance Content" by Plutus and has been featured in major media outlets like US News and World Report, CNBC and Kiplingers. Show topics include everything from how to pay off your mortgage early to how to help your kids become future millionaires (who are generous). Join the family wealth-building conversation by listening to this 5-star rated family empowering podcast today!
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Now displaying: Category: Pay Off Mortgage

Are you looking to improve your family's financial wellness and create a life of true wealth and happiness?

The Marriage, Kids and Money Podcast is dedicated to helping you do just that. Each week, Andy Hill interviews millionaire parents, couples who have reached financial independence, and financial industry experts like Chris Hogan, Paula Pant, JL Collins and Rachel Cruze (the daughter of Dave Ramsey).

These interviews are meant to provide you with easy-to-understand information and actionable takeaways you can use to give your family the life they deserve.

With over 200 episodes and counting, Marriage, Kids and Money has been nominated as “Best Podcast of the Year” and been awarded “Best Family Finance Blog” by Plutus. Show topics include everything from how to pay off your mortgage early to how to help your kids become future millionaires (who are generous).

Join the family wealth-building conversation by listening to this 5-star rated family empowering podcast today!

Jul 26, 2021

Brian Preston from The Money Guy Show cautions young investors not to pay off the mortgage too early.

Here’s why he feels passionate about not rushing to have that paid-off house.

SHOW RESOURCES

Tello:  http://www.marriagekidsandmoney.com/tello

Firstly:  http://www.marriagekidsandmoney.com/firstly

The Money Guy Show:  https://www.moneyguy.com/ 

Mar 15, 2021

Paying off your mortgage early is an idea that I absolutely love!

But I know it's not for everyone ...

I decided to look at the disadvantages of paying off your mortgage so people can see both sides of the argument and make the best decision for them.

Also, we hear from Juan from Michigan whose simple term life insurance policy changed the course of his family's life. 

Aug 17, 2020

Are you wondering if it's better to pay off your mortgage, save or invest your extra cash right now?

So is Samme from Chicago!

I have some thoughts that I share with Samme on what to do with her money now that she's debt-free and starting to build wealth.

Mar 30, 2020

Keith Robinson shares his journey to becoming mortgage-free and offers tips for anyone who wants to pay off their mortgage early. We also discuss how complete debt freedom gives his family security during a financial crisis.

Feb 3, 2020

 

Our question of the month comes in from Mike:


Andy,

I saw the Business Insider article about you paying off your mortgage early.

We’re in a similar situation. With $228,000 left on our mortgage, our plan is to pay it off in 6 years. We’re looking for advice and shortcuts!


That’s awesome to hear you want to pay off your mortgage early, Mike!

You’re looking for steps, shortcuts, and advice on how to pay off your $228,000 mortgage in 6 years … Let’s do this!



1. Make a Goal

This is something that you have already started! Nice work. 

Let’s make it a SMART Goal. That's a goal that is Specific, Measurable, Achievable, Relevant and Time-Based.

  • Specific: You're not saying, “My goal is to be more financially fit.” You're saying “I want to be mortgage-free!” That's specific.
  • Measurable: You have $228,000 left on your mortgage and it’s easily measured by the number decreasing to $0 overtime. 
  • Achievable: That is something you'll have to answer, Mike. Do you have enough money, time and will-power to make this happen in 6 years?
  • Relevant: These are good questions to ask before you move forward because it’s going to be a lot of work. Does this pair up with your overall financial goals? Does becoming mortgage-free help you to get where you want to go in life?
  • Time-Based: You have determined that 6 years is a good time-frame for your mortgage-free date. Your goal is time-based.

2. Use a Mortgage Payoff Calculator

Take some time playing around with this mortgage payoff calculator.

By using this calculator, you can insert:

  • Original loan amount
  • Loan term (15-year, 30-year, etc)
  • Interest rate
  • Additional principal payments you'd make each month

Let’s plug in some fictitious numbers for Mike:

  • Original loan amount: $250,000
  • Loan term: 15-year mortgage
  • Interest rate: 3.5%
  • Additional principal payments: $1,000 on average each month

That will reduce your 15-year mortgage to around a 9-year mortgage. And you’ll save around $31,000 in interest

Now those numbers may not match your situation but see what you can do, by using the calculator, to get close to your 6-year goal. And if it seems a bit crazy to pay it all off in 6 years, maybe look at 7 or 8 years instead.

Have fun with the calculator and adjust your plan accordingly. 

3. Reduce Expenses

Let’s say, you’ve played around with that calculator and it doesn’t seem like 6 years is feasible but you still want to make it happen. The first thing you can do is look into reducing your expenses so you have available cash to throw at your mortgage principal. 

Here are 5 areas to consider when it comes to reducing your expenses:

Negotiate recurring bills

It's amazing how much you can save by calling up your cable, cell phone, and insurance providers and asking for a deal. There is high competition within these industries and they are looking to retain their customers.

If they don't make it easy for you to save, find competitiv offers and ask your current provider to match the offer.

Look into MVNO cell phone plans

By pre-paying your bill you can save quite a bit more money. We recently did this with Verizon and saved around $30 per month.

Shop at a lower cost grocery store

We're big fans of Aldi in our house. They helped us to save around $300/month when we switched over from Kroger.

Eating out at restaurants less

All the dinners, drinks and lunches start to add up. See if you can cut back and save by packing your lunch for work and making more meals at home. This could be a much healthier choice as well!

Look into high deductible insurance options

If you're able to take on more of the risk today with a higher deductible, you could pay much lower premiums today. Make sure you have adequate savings to cover the deductibles before switching.

If you do, signing up for a high deductible health plan with an HSA would be a great way to save for your future health care expenses and save you money today.

4. Increase Income

Perhaps you’ve reduced your expenses as low as you can but you still want to crush that mortgage early and hit your 6-year goal. The other place to find more money is by increasing your income. 

This requires time, dedication and teamwork with your partner. Consider these 5 ways to increase your income to pay off your mortgage early:

Ask for a raise

If you’ve been working hard at your job and exceeding expectations, start a conversation with your employer about increasing your salary or hourly rate. If it’s not possible today, get them to help you outline steps to help you get there in the near future. 

Have your spouse ask for a raise 

If you’re married, your partner may be working as well. Consider what a raise in your partner’s income would do for your family.

Work overtime 

If putting in extra hours at your job is an option, consider doing it for a season. Your overtime may just help you become mortgage-free by your goal date. 

Start a side hustle

Finding a side hustle is a great way to earn extra cash. If you’re able to make money through a hobby or passion of yours, that’s even better. 

Sell Things Around Your House 

A lot of us have things lying around our house that have value. They can be sold on Facebook Marketplace for extra mortgage principal crushing money and the person buying them at a discount becomes happy too!

5. Live on a Budget 

When we craft and live on a budget we are telling ourselves that we are in control of our money. We are telling our money what to do. 

With a goal of paying off your mortgage early, a budget is crucial. 

There are dozens of online budget tools that make this process easy. Nicole and I have used Mint for almost a decade and it’s helped us do some incredible things for our family. 

If you don’t want to use an online tool, you can easily craft a budget using a spreadsheet. Just set your typical income at the top and then start lining up your expenses. 

Here's a snapshot of our budget from May 2016 (one random month in the midst of our mortgage payoff).

Income Total Percent
Andy's Paycheck $7,900 99%
Craigslist/eBay Sales $100 1%
     
Total Income $8,000  
     
Expenses (Rounded to nearest $50)    
Home    
Mortgage (includes taxes and insurance) $1,900  
Additional Principal $500  
Home Improvement $500  
Lawn Maintenence (Cutting and mulch) $200  
Cleaning Lady $100  
     
Total "Home" Expenses $3,200 40%
     
Food    
Groceries $800  
Weekday Eats $100  
     
Total "Food" Expenses $900 11%
     
Transportation    
Fuel (for 2 cars) $300  
Service & Parts $50  
     
Total "Transportation" Expenses $350 4%
     
Financial    
Roth IRA Contribution $200  
529 College Savings $500  
     
Total "Financial" Expenses $700 9%
     
Bills & Utilities    
Water Bill (quarterly) $200  
Cell Phones $200  
Natural Gas $150  
Electricity Bill $100  
     
Total "Bills & Utilities" Expenses $650 8%
     
Gifts & Donations    
Church $100  
Charity $50  
Wedding Gift $400  
Birthday Gifts $50  
     
Total "Gifts & Donations" Expenses $600 8%
     
Kids    
Kids Camps & Field Trips $300  
Swimming Lessons $150  
Baby Supplies $50  
     
Total "Kids" Expenses $500 6%
     
Entertainment    
Weekend Fun (Eating Out, Movies, Drinks, etc) $350  
Travel $350  
Subscriptions $50  
     
Total "Entertainment" Expenses $750 9%
     
Shopping    
Clothing $300  
Toiletries / Home Misc $50  
     
Total "Shopping" Expenses $350 4%
     
     
Total Expenses $8,000  

Your goal is to have all of your dollars accounted for in the month. This way you’re making your money work hard for you.

6. Set Recurring Additional Principal Payments

To keep yourself on pace for your mortgage payoff goal, set up a recurring payment toward your mortgage principal. You can do this directly with your mortgage company through their website. 

Be sure to specify that this money is for additional principal payments and not for interest. Sometimes the mortgage companies make the mistake of applying it to next month’s interest payment instead of your principal. Convenient for them and not for you. 

If you prefer to write checks with your payments, make sure to specify on the memo line and with a note that this money should go toward the principal balance only. 

7. Use New Found Money to Make Big Payments

There will be times throughout the year when you might get some new-found money and you’re going to have to make a decision on what to do with it. This can be from:

  • Tax return
  • Bonus
  • Sales commission
  • Inheritance
  • Family gifts

It’s important to have a plan before this money arrives so it doesn’t magically disappear. Decide with your partner how you want to use new-found money. 

During your mortgage payoff period, 100% of new-found money can go toward the mortgage principal. Or you can decide to only use 75% for the mortgage principal and 25% is for family vacations. 

Or you could do 70% mortgage principal, 20% fun and 10% charitable giving

Find the percentage that works for you and plan ahead because this extra money can make a huge impact on your mortgage payoff process. 

8. Meet Monthly to Review Your Progress

If you’re working with your spouse on this goal, make sure you’re meeting up at least once per month to stay on top of your budget and review your progress. Having someone to hold you accountable is so important. If you’re both on the same page with the goal, it can be more fun and enjoyable. 

When you hit a special milestone, make sure to celebrate that as well. For example, if your mortgage is at $228,000 right now, set up a memorable celebration when you hit the $200,000 mark! 

Maybe there’s an ice cream place you love to go to or maybe this night calls for investing in a babysitter for a night out. You’ve worked hard. Celebrate. 

Champagne

9. Include the Kids in the Fun

If you have kids, include them in on the fun as well. When I interviewed the McCoy Family who paid off $250,000 of debt, they used a coloring sheet that tracked their mortgage payoff process. This helped them to include the kids in on the fun!

Each time the family would pay off a certain amount of the mortgage principal, the kids would color in a brick on the house. Eventually, the kids were able to color in the entire house and they were mortgage-free. 

https://youtu.be/MG01snQhL5Q

The kids had fun and the parents had fun too. This experience is something that the McCoy kids will never forget. And you know they will be shooting to be mortgage-free when they get older as well. 

10. Celebrate (And Plan Your New Life)

When you finally get to that big day when you’re mortgage-free, make sure to celebrate. You have just done something incredible that not a lot of people do. 

Here are some celebratory ideas to think about:

  • Go on a family vacation (Disney World, go to the beach)
  • Host a nice dinner celebration with your family (and the people that supported you along the way)
  • Have a mortgage burning party with your close friends
  • Develop a pinata out of the mortgage and let your kids destroy it
  • Enjoy a nice dinner out with your spouse and toast with champagne

This moment is important and needs to be commemorated. 

Afterward, take some time to keep dreaming with your spouse about what’s next in your life. What will you do with the extra money?

This could be thousands of extra dollars per month!

How could this money change your life?

These are the questions that help us to start living out our dreams. Without a mortgage, your options start to open up. Your eyes start to see a little wider and the future doesn’t seem so far away. 

I hope these 10 steps help crush your mortgage this year Mike. $228,000 is a lot of money, but with enough planning, determination, and partnership from your spouse, you’ll get there.


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I’d love to hear from you!

If you’d like your question featured on the show, reach out and let me know. It would be my honor to support you in your journey toward financial freedom.

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Carpe Diem Quote

A life spent making mistakes is not only more honorable, but more useful than a life spent doing nothing.

George Bernard Shaw


What would you do if you had no mortgage payment?

PLEASE LET US KNOW IN THE COMMENTS BELOW.


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Jan 6, 2020

Christie recently paid off her mortgage and reached Dave Ramsey's Baby Step 7. She owns a paid-for rental property but is considering selling it and investing in the stock market instead. I share my investment options after you pay off your mortgage.

Dec 15, 2019

After finding our dream home, we became worried about paying a big mortgage for decades. So we decided to pay off our 15-year mortgage in 5 years instead.

1