Let's Money That! How We Paid Off Our $670,000 Mortgage in 6 Years!

I moved to the Bay Area of California in the fall of 2009. I had been a nurse for about two years in Texas. Just as I was launching my new career, the financial world and real estate worlds would come crashing down. I remember reading headlines about the stock market crash, bankruptcies, Lehman Brothers going under, mortgage defaults and foreclosures and layoff after layoff. I left my first nursing job in Texas to become a travel nurse and explore the great big United States in order to scope out different areas and find a place to settle down (at least for a little while ; ). My first job was at at a university medical center in the Bay Area. I worked there for a few weeks, worked in Sacramento for a few weeks over the Thanksgiving holiday, then waited for another job at the university medical center to open up, because the Bay Area was a world of adventure, beauty, innovation, academia and so many different varieties of brilliance I had never encountered before being from the desert of West Texas. West Texas has wonderful beauty as well, but, it was time for a change.

    During this time, I met a man, and would fall in love with him while we explored the area on our road bikes, in our hiking boots, and paddling kayaks together. We ended up marrying twenty-three months after our first date and bought our first home in the Bay area in April of 2012. We worked with an agent and found a cute little 1950’s 3/1 in a middle class neighborhood in our desired town, a ten minute commute from the university and hospital (he worked at the university while I worked at the hospital, both on campus). This home was listed for $720,000 in 2012, the price of which left me in shock. In the university town in Texas from which I came, a comparable home would be around $125,000! I couldn’t believe it! We looked for 6 months in our desired area and toured a dozen homes or more, placed an offer on 2, and I could not get over the cost! Our agent would explain to me, regularly, that the Bay Area is a high cost of living area, unlike West Texas. She would also encourage us to “buy as much house as you can afford”. I would respond with, “I want us to buy a house we can pay off early” and I could NOT imagine paying more than that for a house! Nevertheless, in shock and feeling as if we were insane for putting this much money down, we bit the bullet, put $250,000 down, mostly pulled from my husband’s mutual funds, and got the house. We were thrilled to be out of the 700 square foot cottage back-house in San Jose I had been renting for a year and move into a 1,102 square foot 3/1 home closer to our friends, church and work, with a lovely, albeit small backyard with landscaping and a fruitful plum tree. The sellers had done some light rehab, replacing the floors, re-texturing the walls, adding crown moulding, refinishing the fireplace and hearth, replacing the fence in the backyard, and putting in new sod. In the first 2 years or so, we spent around $150k renovating the kitchen, the only bathroom, and building a master suite into the garage, with a lovely large bathroom and adding a bedroom. We also added solar, which did reduce the electric bills dramatically, as well as reduced our carbon footprint, which cost about $25,000 (included in the $150k spent mentioned above). So, all in all, we spent around $870k on this itty bitty shoebox, closely packed in on a small lot. The neighborhood was pleasant and many neighbors had well-manicured yards and gardens and maintained their homes well. This was not a “wealthy” neighborhood, but people cared about the aesthetics of their homes and took pride in maintaining their homes well.

As we began our family, my risk-averse personality reared its head. I felt a strong need to financially prepare for worst-case scenarios. My husband’s father was diagnosed with Parkinson’s and resulting dementia in his late 50’s. My husband was mid-40’s when we married. I felt the need to be able to support our family on my nursing salary, with a paid for home so no one could take our housing should we be saddled with long-term healthcare bills, as I cared for our children. I shared my fears with my husband and asked what he thought about attacking the mortgage with intensity to pay it off in 5 years. He raised his eyebrows, and I could tell he was thinking I’m a little bit looney. He hesitated a bit and asked if the money would be better served in investments. I explained to him my fear and how I wanted to be prepared for the worst-case scenario. After hearing me out,  he said, “Sure. If that will make you feel secure, let’s do it.”

    At some point during this time, my Mom reminded me about their financial journey and that they appreciated Dave Ramsey’s guidance and advice. I read his Total Money Makeover which motivated me to hit preparing with “gazelle-like intensity”. I appreciated his advice to “live like nobody else right now, so you can live like nobody else later”. I saw his advice work for my parents and they were now sitting securely retired after being disciplined with their money for 15-20 years.

We completed Dave’s Baby Steps and now, we decided to throw any surplus at the principal of the house. I had a nurse’s salary and my husband was also working for the University with a similar salary to mine. He had previously written a few books regarding his research, so royalties started to come in, somewhat unexpectedly for me and I believe the sales surprised him as well. As a result, he began to be asked, without any publicity, to speak at various conferences and for different organizations, so this added to our overall income. I was working 3x 12 hour days a week before we had our first child. After she was born, I cut back to 1-2 10 hour days per week to then stay home with her. Meanwhile, my husband’s consulting work increased and he would travel 1-3 times a month for 1-2 nights a trip. This was turning into a more lucrative gig than his university work. 

    Our lifestyle was not one of extreme frugality (though my husband is known to be extremely frugal—that’s another post). I have a coffee bar and cafe habit, frequenting them 3 or 4 times a week. We have to travel to see family 4-6 times a year, as both our families live out of state; we enjoy Hawaii every couple of years, and Europe before children. We enjoy skiing/snowboarding 1-2 times per year, though not yet since we’ve had children. I have a bicycle addiction, and have bought a nice road bike (when we were dating), a decent mountain bike, a cute cafe bike, and a e-bike when my girls became too heavy for me to pull up our hill to our house from downtown. While the bikes are not cheap, the gas saved is mentionable, as is maintenance costs on vehicles, since we have commuted by bike to work and downtown for events and dining out. So, though we are conscientious spenders, we are not extremely frugal. 

I set our goal initially to put $100k/year toward the principle of our mortgage. My husband, again, raised his eyebrows at me, shocked at such a lofty goal. I thought, “Why not shoot for the stars? We might land on the moon!”, just as the old adage says. We hit it that year. And the next. Then, our next goal was $150k. We hit that. Anytime I would see extra sitting our checking, I asked my husband if we could throw it toward the principle; he agreed, and we did it. We made sure to meet the goal by the end of the year. He even did it several days in a row (we’re still not sure if it was a mistake, if he forgot he made principal payments previously, or just thought we might as well since the surplus was there! ). When we started to see the principle go down, it became a game; then we became addicted to seeing it decrease. We would smile at each other as we saw the balance drop. It was amazing. And we were doing it together, which made it even more fun as we bonded and worked together.

We paid it off in six years. While my husband was away on a consulting trip, my two daughters and I dropped the pay-off check in the mail drop on a corner near our house and snagged a photo, all smiles. I didn’t even tell my husband I was going to do it. I think we had something like $30k left to pay. We had the money in our accounts and I just decided it was time. We bought the house in April of 2012 and dropped that check in April of 2018!
I know many contend that the money will be better served in the stock market, especially with such low interest rates currently. We are thrilled, THRILLED to never have to worry about having a place to live again. No bank will ever foreclose on us, and to have that reassurance, even during the hardest of times, we will have a home, is priceless. 

    At the beginning of this financial journey, we did not have the investing knowledge to know what to do with that money that was coming in from my husband’s consulting business. He knew about mutual funds and I had my 403b plans. But, we would not have been so intentional, setting goals and going after them, if we did not have a mortgage to pay off with a sense of urgency. It was an action, a persistent action, we could take at that time and see very real results. We would not have had the knowledge or perhaps the discipline to put that money in the market at the time. 

    This is also not to be missed: We bought in 2012, just as the Bay Area real estate market was rebounding from the 2009 crash. Our home’s value doubled in about 7-8 years. It was a similar return as the stock market and better than any real estate market in the US. We have no regrets. We always said we would apply the same discipline to the market after we paid it off, and we have, which has also had excellent returns, until the pandemic. Those years of intentionality developed a habit of saving and investing, of growing our net worth and paying attention to where our money is going. It was six years of training and now looking back at it, it flew by.

    What about you? Would paying off your mortgage bring peace of mind and security? Or are you investing your surplus in other ways?