Setting a Mortgage Payoff Goal

Mortgage Payoff Goal

Writing down goals is powerful and sharing those goals creates accountability.

We’ve been pretty open about our finances because we want to encourage others that it is possible to live well on one income.

We recently set some new financial goals with our big one being to pay our mortgage off early.

In March of 2011, we purchased our home. We put 20% down and financed the rest with a 30 year mortgage. We started making extra principal payments soon after we moved in, with the hope of paying off the mortgage earlier than 30 years.

We refinanced in early 2013 to a 15 year loan with a 3.25% interest rate. The monthly mortgage payment only went up $80 by doing this.

We strategically started paying $300 extra towards our principal each month because we didn’t want to be saddled with a mortgage for 15 years.

In late 2013, we stopped making extra principal payments and started saving the money because we wanted to make some improvements in our kitchen and laundry area. Thankfully we had that money saved because in early 2014, we had to replace our septic field lines (the joys of home ownership, our kitchen and laundry still haven’t been updated!)

Then in April 2014, we put our home on the market and continued saving the money that was budgeted as extra principal money.

Once we decided selling our home wasn’t the best move for our family, we stopped making the extra principal payments – we saved most of it but we also started dipping into that money for other things.

We started to have the attitude that since we’re living in a very affordable home, we can live a little and spend our money a little more freely. We lost sight of the goal of paying off our mortgage early.

In May 2015, we attended a Financial Learning Experience at our church led by Joe Sangl of I Was Broke, Now I’m Not.  We left the event ‘fired up’ again about our personal finances!

We took some time and wrote down some personal and financial goals for our family at the end of that weekend.

The big goal that we set was to pay our mortgage off in 5 years.

This is a bit of a stretch goal but we’re excited about the challenge and focused on achieving our goal.

To be honest, our 5 year goal looks impossible on paper but we know with a little creativity, frugality and focus we can reach our goal.

In the coming months, I’ll be updating you on our progress for accountability, sharing details on how we’re planning on paying off our mortgage in 5 years and posting about different ways we’re saving money to help us reach this goal.

*We’re sharing our story and this goal in a hope to encourage you in your quest for debt free living! We all have different circumstances due to consumer debts, student loans, mortgage amounts and income levels but we all can take steps to improve our finances. Setting financial goals is a great way to motivate you to work towards paying off debts, living within your means and inspiring you to set big goals, like paying your mortgage off early. No matter the state of your personal finances, you can take steps to turn things around!

responses to “Setting a Mortgage Payoff Goal” 7

  1. What great timing for this post! Just yesterday I was calculating how much we would have to put aside to finish rebuilding our emergency fund (we used it when a big flood came through our house 1.5 years ago). And then, how much that would shorten the life of our mortgage if, once the emergency fund is back at our target level, I start putting that money toward our mortgage principle.

    Yes, savings goals are great!

    1. So glad you had an emergency fund in place to help with flood repairs. Best wishes building your emergency fund back up and then attacking your mortgage!

  2. Loved this post, Rachel! We also refinanced our home (earlier this year) to get a lower interest rate, but ended up going with a 20-year, because it made more sense for us. Of course we are planning to pay it off early. Once the med school debt is paid off in hopefully 5 years, that will be a HUGE amount per month we can snowball toward it. We also have a hefty car payment that will be gone in about 5 years, and another loan that will be gone in about 3 (that loan was a loan we had to take from retirement in order to put a down payment on our home, since the down payment wasn't optional). Add to that another car payment that we are currently tackling with gusto-this one will be paid off before the end of this year and then we can REALLY focus on knocking out the med school debt. I'm excited that as each of these debts gets paid off, it will really help add traction to our BHAG which is the med school debt. But after this car is paid off, every extra cent will go toward the BHAG. The other loans (hefty car payment and loan from retirement) will just eventually mature during the next 5 years and will be icing on the cake when they do. Thanks again for sharing your goals…can't wait to read more about it and start seeing your progress! That will be huge motivation for the rest of us!

    1. Sounds like y'all are on the right track with your goals and payment plans! It's fun knowing others are walking a similar path and that we can encourage one another on the journey!

  3. Rachel, would you be willing to share with us if you have an emergency fund and if so, how much you keep in it? If not, totally understandable…I'm just always going back and forth with how much we should keep in ours and always looking for other people's line of thinking…

    1. We do have an emergency fund. We keep 3 months living expenses in our emergency fund. This is enough to cover all of our bills and monthly budgeted expenses but does not include the amount that we have budgeted for savings and extra principal payments. We also have a car maintenance savings that we use for car repairs. Since we drive 10+ year old vehicles, we know our maintenance expenses are a bit more so we go ahead and set aside money each month for this purpose so we don't have to dip into the emergency fund for car repairs! This is the amount we feel comfortable with at this stage of life.

  4. Way to go getting "fired up" again toward paying off debt quickly! We also have that goal. Some seasons of life allow for more savings and some require more spending, but we always try to get back on the saving plan as soon as possible. Thanks for sharing your excitement and experiences!

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