On October 21st, 2021, USPS.com displayed that my certified mail had been delivered to US Bank's mortgage payment center in Kentucky. The next morning, I checked my mortgage balance online: $0.00. Tetelestai!
Our journey to becoming mortgage free. We bought our home in December 2004 for $259,900 with an adjustable rate mortgage. In 2010, we refinanced into a thirty year mortgage fixed at what was then a historically low rate. Subsequently, I mindlessly made the payments month after month, year after year.
Fast forward to a beautiful day in the desert Southwest in 2015. I was hiking with a friend. As we put one foot in front of the other and conversed, he shared with me that he was about to pay off his mortgage. He was in his forties. Wow! At that point, my mortgage still had twenty-five years left, and I was in my late thirties. The notion of paying the house off in my forties was intriguing. I asked him how he did it, and the answer was simple. He refinanced from a thirty to a fifteen year mortgage with a low, fixed rate, lived in a modest home, and generally lived below his means. A seed was planted in my mind, but it needed time and nurture to sprout and grow.
Over the next few years, I occasionally read articles about the pros and cons of paying off the mortgage early. Also, I’d listen to YouTube videos on the subject. Further, I reflected on the housing crisis that culminated in 2008, when so many people lost their homes in foreclosure. My desire to rid myself and my family of the mortgage increased. In August 2018, I wrote my first blogpost “Merry Christmas 2024!” about a plan to pay off the mortgage by December 2024.
I commenced extra payments on my mortgage in January 2019 and posted about it: “Mortgage Free“. At that time, our mortgage had approximately two decades of payments and a $210,000 balance remaining. I opted not to refinance to a fifteen year loan as my friend had done because my interest rate already was competitive, and I liked the downside protection of a lower monthly payment if needed.
I continued with extra payments until March 2020 when COVID reared its ugly head in the United States. The economy ground virtually to a halt. Not knowing what lay ahead, I decided to preserve cash and reverted to making only the minimum required monthly payments. “Extra Mortgage Payments Suspended“. After gaining some comfort with the world as it had become, I resumed extra payments a few months later. “Extra Mortgage Payments Resumed“. However, the COVID crisis brought vulnerability under the microscope and thus ignited a fire within me to pay off the mortgage even more quickly. I increased what I was throwing at the mortgage.
In December 2020, having substantially reduced my mortgage balance, I refinanced my loan at a lower rate and a twenty year amortization. In effect, I recast the mortgage. What mattered most to me was that my required minimum payment dropped below that of an average car payment. I wanted the downside protection of a low payment. “Refi“. I continued to pay far more than the required minimum as I moved toward my goal of becoming mortgage free by Christmas 2024.
Within only a few months, however, the temptation to drop my goal insinuated itself into my mind. I rationalized that with such a low required payment, I virtually had eliminated doomsday concerns of not being able to pay the mortgage. What was the point of this exercise, anymore? Also, I felt smart having locked in a low interest rate. Between my low rate and inflation, the mantra of “invest the difference” grew louder in my head.
I stopped making extra payments. I told myself that I’d make them up later. Then I began spending free cash flow unwisely. I wasn’t investing the difference; I was burning it. I even entertained the idea of buying a more expensive house or a vacation home. The siren song was on full blast.
Ultimately, rereading my blog and considering Warren Buffett and Maslow’s Hierarchy of Needs got me back on track. “Never risk what you have and need for what you don’t have and don’t need,” Buffett has preached in some form or another over the years, and Maslow effectively illustrates that shelter is a core, foundational need. “Maslow Wants you to be Free and Clear!” As long as I had a mortgage, I was risking what I had and needed for things I didn’t have and didn’t need. It was time to FINISH THIS!
I ordered the payoff quote and mailed a large and FINAL mortgage payment. Now we are mortgage free! Our shelter is secure. I’m forty-five, and this mission has been accomplished ahead of schedule. I am grateful.
With Love,
P. Gustav Mueller, author of The Present
Relevant Links
33 Year Old Pays Off House in 3 Months