We’re back again and this time it’s to share how we paid off our mortgage in 2 years! Yes, WE’RE MORTGAGE FREE!! It feels so good, yet so strange to say that. Hopefully, you guys don’t think we left you hanging with the details of our mortgage payoff. We just recently had a chance to sit down and discuss all the details with each other so that we could get it typed up for you guys. Anyways, we do want to reiterate that when we say we paid off our mortgage in 2 years, that’s 2 years from the start of our mortgage free journey, which started January 1, 2019, and ended January 7, 2021. So let’s get to it!
Just as a reminder, although we paid our mortgage off in 2 years once we started our mortgage free journey, we did buy our house in 2013. Our first mortgage payment was due August 2013. So our total time with a mortgage was 7 years 5 months.
Initial Mortgage Payoff Plan
Our plan was to do a 70/30 split with our leftover money after all of our regularly budgeted expenses. We would put 30% of the leftover money towards the mortgage principal. And the 70% would be used for other things. We did it this way because it was still important to us to be able to live life and do other things even though we were trying to pay off our mortgage.
We also had planned to use RSUs (restricted stock units) to help with paying off the principal. Initially, we were only going to use 50% of them. However, after we cashed out the first set, we quickly changed our minds and ended up cashing out all of them once they vested. Lol. This alone quickly changed our journey from a projected 6 years to a possible 3 or 4 years.
Recap: The Last 2 Years
We started our payoff plan with a mortgage balance of $135,000. At the end of the first year (2019), we paid off a total of $35,732.72.
For the second year, we started with a balance of $99,507.37. We ended the year (2020) with having paid off $45,000, which put us with a mortgage balance of $54,507.37.
So how did we pay off that amount so quickly 7 days into January 2021??? Keep reading!
One More Thing To Share First…
Well, you may recall that I (Kim) have mentioned in the past that my dad passed away some years ago. When he died, I was able to get a portion of his pension. At first, I/we (because Omar and I are a team and we always discuss things) was going to cash out the money because we thought that was the only option. But as I kept thinking about it, I asked Omar, “Hey. Why can’t we just roll that money over into something? Like how people do with their 401k when they change jobs? Because I’m really not trying to have us get hit with the taxes on this, especially because of our income.” And yes my wording was pretty much like that because this was 5 years ago when I didn’t know nearly as much about investing. But anyways, Omar replied, “You might be on to something.”
So we both hopped on google and looked it up. We discovered that it very well could be an option to rollover the money. So I contacted the guy from my dad’s job who was over this matter and asked him about it. Initially he insisted that I could do that and it was an option on the paperwork. But I told him I didn’t see that information. So he and I literally counted the pages together over the phone, and when he got to the missing page number, I was like… “Aht. Aht. Mr. Marcus. That page is missing. I don’t have anything at all that says what you’re saying.” Lol. Of course he was like, “Mrs. Kim. Are you sure?! I’m soooo sorry! Let me get that to you right away!”
So needless to say, I ended up rolling the money into an inherited IRA. So what does this have to do with us paying off the mortgage?
How We Paid Off Our Mortgage Balance In 2 Years
Well, since the money has been invested for several years now, it grew. At the beginning of last year, we were tempted to pull the growth to put towards our mortgage. However, the stock market crashed and we were crushed that we didn’t pull the trigger on it. 😩
But as the market started to recover last year, we started to think about it again. Which luckily we did, because then we came up with a plan that was better for our tax situation. See, if we had pulled 50 something thousand dollars at one time, it would’ve put us in a different tax bracket. And there’s no telling what our tax bill would’ve looked like. And this is even with pulling extra money to try to cover the taxes.
So what we did was pull $32,000 in the Fall of 2020. And then we pulled another $32,000 literally on January 1st. We pulled $32k each time to account for taxes. So this left us with roughly $24k both times. This was all without touching the initial balance of the inherited IRA. And this was all planned around us being able to pay off the mortgage balance before we received our first paycheck of the year. Thus, not having to do our 70/30 split. Haha.
This amount still didn’t cover everything because again, we were trying to avoid taxes. So we pulled money from some of our sinking funds to cover the rest. We pulled a total of $7577 from our sinking funds.
Annnnd that’s basically how we were able to do it so soon into the new year. If we didn’t have this inherited IRA (which a part of me truly wishes we didn’t because then my dad would still be here most likely), then we would’ve for sure figured out how to pay off $54,000+ this year in order to be done with our mortgage by December 31, 2021!
We think that would’ve been possible since we were able to pay off $45,000 last year. It would’ve been tight, but possible. We would’ve likely pulled more money from sinking funds as well as our emergency fund. Basically, whatever it would take for it to be gone!
So that’s it. That’s how we managed to pay it off so quickly into this year.
Some Things Didn’t Go As Planned
We had always said that when we made our final mortgage payment, we were going to go to our local credit union and do it in person even if it wasn’t required. We wanted to do it this way so that maybe our oldest son (who is only 6) would be able to better grasp what we were doing. However, our local credit union was closed until further notice due to corona. So the only option we had was to do it online. Both of our kids were sitting there with us on January 6th when we submitted the request to pay off our mortgage. We tried our best to explain it to the 6-year-old, but even days later he would still ask us questions and talk as if we still had a mortgage. But maybe that was to be expected because of his age. However, at this point, he does realize that “daddy and mommy paid off the mortgage.”
Once we submitted our request online, Omar kept checking the account to see if it was updated. Lol. Twenty-four hours later when it still didn’t reflect our request, he called the credit union! I laughed and told him that he always tells me that I should give businesses 24-48 hours to respond. Yet, here he was barely giving them 24 hours. Haha. Ultimately the response of that call was the lady saying, “Congratulations Mr. Omar! You have a paid off mortgage! I’m excited for you and jealous too!” Lol. Annnd literally after that phone call when we went to check our account, the mortgage wasn’t showing anymore!!
On another note, we really wanted to be able to tell our parents face-to-face that we had paid off our mortgage. But in true 2020 form, we had to settle for doing it via a Zoom call. It was one of the best (if not the best) Zoom calls we’ve been on this year. They were all very happy for us and proud of us.
Lastly, we were thinking that we would have a mini celebration of paying off the mortgage that same weekend. But as corona would have it, that didn’t happen either.
Now for the sentimental part…
Now that we are here what I feel most is gratitude and the weight of this responsibility.
I feel gratitude because of the sacrifices our parents and grandparents made in order for us to accomplish this. Their sacrifices opened up the doors to opportunities they didn’t get a chance to experience themselves. Thank you!!
The weight of this responsibility comes in two sides. With paying off the mortgage at such an early age we’ll be able to build wealth at an incredible pace. The kind of wealth that could destroy our kids if we don’t prepare them for that responsibility. This is one side of that responsibility I feel.
The other side is even heavier. We didn’t earn the money to pay off this mortgage. Kim’s dad worked his entire life and never got to enjoy the use of his money. It came to us as a gift and we vowed to use that money in ways that would honor him as a show of respect. We’ve stayed true to that since he passed and will do so going forward.
Lastly, now that the mortgage is gone the security of my family, which is the most important thing for me, is ensured. Now it’s time to travel and enjoy life on a level we haven’t experienced before. Once COVID is gone that is! 😣😆
If I’m being honest, my feelings were all over the place leading up to paying off the mortgage and even afterwards. It was hard for me to be completely excited about it when all I could think about was not being able to share it with my dad. And also my mom wasn’t feeling well at the time (she’s better now). So my mind was completely pre-occupied. It was to the point where Omar had even asked me if I wanted to wait to pay off the mortgage. Part of me did, but he was so happy and excited about it that I didn’t want to take that away from him. Instead, I let his happiness carry me through that time until I could be in a better place mentally to be excited about what we accomplished.
And plus, one of Omar’s Christmas gifts was a card where I basically told him that I was in agreement with using the rest of the growth on my dad’s money. When we originally discussed using any of the money a while back, I wasn’t interested. I felt like it was cheating because we didn’t earn that money. And I wanted to be able to say that we 100% paid the house off on our own. However, I obviously had a change of heart, especially once I realized we could use the growth from it being invested and not even touch the original amount.
Something else that showed me that we were on the right track with our decision is that Omar had shared a letter with me that he wrote on Christmas Eve (although I was always planning to tell him yes before he even wrote the letter).
In case you’re wondering what Omar said in the letter, it went as follows (shared by his request):
“As I sit here on the edge of paying our home off I understand that it isn’t completely about us. Our job is to set the next generation up to do better than us, which makes me think of the generation before me. This final payment would not be possible without [Kim’s dad]. He spent his life working for this money and passed away before he got to use it for himself. We agreed to use that money in a way that would always honor him. So for the past 6 years it has funded our oldest son’s 529 [via the minimum required distribution]. Today, that money has grown enough to pay off our mortgage without touching the initial principal. Today we sever ties to debt forever. Today, we say thank you to [Kim’s dad] for the sacrifices he made and the foundation he laid that made it possible. THANK YOU!!”
Needless to say, I was crying by the end of the letter. 🥺😭 I had no idea Omar went to write that when he said he had to go work on something. Sometimes I feel like I still struggle to find the words to express how I feel on the inside, but Omar did a damn good job in his letter. It’s deeper than just paying off the mortgage and now having “extra” money. It always has been for us.
At the end of the day, when I make decisions, especially “big” ones, I always strive to make my parents proud. And I likely always will because I feel like that’s one of the guaranteed ways that I can show them how thankful and appreciative I am to be their daughter and for all they’ve done for me. My mom told me she was proud via our Zoom call. It would be great if I could hear it from my dad too. But regardless, in my heart I know he would be proud of me… of us. So it’s a little bittersweet for me, but we made it! WE’RE MORTGAGE FREE!! 🥳 And I’m happy, excited and 100% have no regrets in regards to deciding to pay off our mortgage the way we did and when we did it!
What a journey it has been! While everything didn’t go as planned or hoped for in regards to paying off our mortgage, it’s great to have reached the end of this journey. Does being mortgage free feel any different for us? Yes and no. Overall, it’s still sinking in for us. It likely will for some time. But there has been a certain peace of mind that has come with not having a mortgage. It’s like a breath of fresh air… pre corona. 😷
We still haven’t celebrated or colored in the last “bricks” on our mortgage payoff chart. Maybe we’ll do that once we get the deed to our house from the county. Whenever that is, we’ll come back and share the last leg of our mortgage free journey!!
Feature Image: Unsplash