Now that I’ve officially left the “classic” work force, I’m in a position where I need to be really creative with how to contribute to our income. More specifically, how to contribute to our disposable income. One way to do that? Cut out the largest (by far) monthly expenseand pay off the mortgage.
Related article: How to Pay Off the Mortgage Early
I know it sounds crazy. With such a massive loan, it just seems pointless to waste time trying to chip away at it. But none-the-less, my husband and I have gotten ourselves excited enough that we’re endeavoring to have it paid off in 10 years. This will obviously require us to make some pretty large payments here and there, but we also came up with some pretty quick and easy ways to bring it down without even trying. (If you’re interested in everything we’re doing to pay off our mortgage early, check out this post –> 10 Things I’m Doing to Pay Off My Mortgage Early (and the One Thing I Won’t Do)
So here’s what we’re doing and what you can try if you’re up for the same challenge:
Related article: 7 Important Reasons to Pay Off the Mortgage
Sign up for a mortgage-rewarding credit card.
I never knew this existed but when I found out I could barely contain my excitement. If you know me personally, then you probably already know about this because I pretty much talked about it non-stop for a month straight.
Basically, our mortgage lender (Wells Fargo) offers a credit card where 1%-5% of everything we spend is applied to our mortgage’s principal balance (whether it’s 1% or 5% depends on the type of purchase). My husband and I already use a credit card for everything we purchase, so this literally only involved switching out the actual card we use.
In my mind, this ranks up there with company-matching 401K plans – it’s free money! And it literally required no change to our spending or saving habits.
Deposit into your mortgage account instead of ordering delivery..or alcohol…or whatever.
This required a slight lifestyle adjustment for us, but it was honestly so easy that I can’t believe we didn’t start sooner. Basically, we were finding ourselves ordering delivery every week when we were just too tired to make something or even discuss what to eat. We didn’t go overboard, but it cost about $25 each time we ordered out.
So what we decided to do was give up delivery completely – and instead, we would stay stocked with a frozen pizza and on those lazy nights, we’d just throw that in the oven. AND when that happened – we’d transfer $20 into our mortgage account right away (because you can pretty easily find frozen pizzas for $5).
Transferring the money each time makes it really exciting and keeps us motivated, but you can obviously just decide to transfer an extra lump sum each month if you’d prefer to automate the process. And for those that already don’t splurge on delivery, pick your poison! It feels so good to pay down the balance that you won’t even feel like you’re sacrificing something.
Incrementally increase automatic payments.
As I indicated earlier, there’s really no way around making larger payments if we want to get this mortgage out of our way. To make that easier on ourselves, we periodically increase our automatic payments in small increments – small enough that we really don’t feel the money leaving our disposable income pot.
More importantly, anytime our income increases, we quickly increase our automatic payment so that we really don’t feel anything. As long as we keep our current lifestyle in check, then all of that extra money can flow directly towards paying down the mortgage.
Take advantage of lump sum payments.
It’s not like huge sums of money show up on our doorstep very often. But when they do, we always try to put a portion of it straight towards the mortgage. And there’s one lump sum that’s guaranteed to show up each and every year – our tax return. Small amounts of money here and there WILL add up, but nothing beats taking a huge chunk out of your debt in one payment. So take advantage of your tax return! It’s the perfect opportunity to take months, if not years, off of your total payments.
So that’s what I’ve got! Please, please, please share your secrets with me! I need any ideas I can get 🙂
For more ideas on saving, budgeting, and investing check out my Family Finances Pinterest board. I do my best to keep it updated with everything I can find.
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38 Comments on 4 Quick & Easy Ways to Pay Off the Mortgage Early
Thank you for the tips, I also read through your “reasons you should not pay off your mortgage”. I thought that was interesting and something good to consider.. What are your reasons to pay off your mortgage early? What are those incentives? Especially if the home is older and needs a lot of improvements?
One of my tricks to paying things off is that I do not have cable, and I split my internet bill and Netflix with my neighbor. I put the money I save towards my mortgage and I really don’t have to sacrifice anything.
We cut our cable too and that saved us sooo much! It’s also such an easy switch these days with Netflix, Amazon Prime, etc. The absolute biggest reason for us to pay off the mortgage early is to free up all that cash flow. It would give us so much more flexibility and security, not to mention that we could then use that money for other things. I’m not going to say I don’t have doubts at times, but I think that’s mostly because it’s just such a huge endeavor. It’s so much money! But my hope is that we’ll thank ourselves once it’s done. 🙂
Our “paying off our mortgage early” plan is basically this: we live as simply as possible while purchasing only our basic needs. Everything else goes to the mortgage. We challenge ourselves to see how much extra we can pay towards it each month. Our income is very limited and inconsistent, but it has been amazing to see the results. It hasn’t been easy, but the reward will definitely pay off in the end.
Wishing you the very best on your journey!
I love that you challenge yourselves each month! My husband and I definitely have a competitive spirit, so that would definitely work for us 🙂 I’m going to have to incorporate that into our plan. Thanks!
These are great tips! We are saving up to buy another house and would love to pay it off early.
Thanks for linking up with my Share the Wealth Sunday link up. I’m going to share this on my Facebook page this week.
Very great ideas! Pinning and sharing. Thanks for sharing this at Totally Terrific Tuesday last week! I can’t wait to see what you have lined up for this week! Our party is live right now!
Sharon
Her Organized ChaosWe paid our house off early and extra payments at the BEGINNING give chemist bang for the buck. We loved looking at our amortization table to see how much our extra payments would save. $20 can save hundreds. Keep it up
Give the most, not chemist. Sorry!
I am visiting from Thrifty Thursday and I am loving what I see on your site so far! Great thoughts (and discipline!!) for paying off your mortgage early. Good luck!! Also, I love your blog title and tag 🙂
Thank you!! That’s great to hear 🙂
What great tips! I am actively working at paying off all my debt as well. Student loans are first and then the mortgage! Always looking for new ideas to make the long journey a little smoother! Thanks!
I’m visiting from the Pretty Pintastic Link-Up! I love these suggestions and so many of them can be used to getting out of any kind of debt…I love the idea of immediately spending the $20 just like you would if you were ordering pizza! And that credit card? AWESOME!
I have to agree with you and the others, great advice that pays off for sure! Well done 🙂
Thank you! 🙂
Awesome tips! I found you on Ladies Collective. Following you on G+ now. 🙂
awesome! I will follow you back 🙂
I found you at Thrifty Thursday, I loved this! Thank you so much for posting! We live in The DC Suburbs of Northern Virginia and I pretty much hate our mortgage:)
OK. My mortgage is with WellsFargo and I had no idea this credit card existed. I’m going to look into this. Such good info! I actually just recommended your site to a friend who wants to quit her job, but will still need to contribute income to the household. I told her that you have tons of posts on how to make extra money. 🙂
awwww, thank you!!! 😀 Hopefully you get the credit card! I was so excited, I couldn’t believe it 🙂
Hi Nikki! It’s your old friend Karen Biasella (now Clever). Love the blog! I read all your tips. I’m sure you’ve already considered this, but one thing my husband & I are doing to pay off our mortgage early is putting the money we get back our tax return towards the mortgage instead of spending it. It’s amazing how many payments a large lump sum payment can take off the mortgage in the long run!
Hi Karen!!!! 😀 😀 That’s a fabulous idea and we’re definitely doing that this year! It will be hard to part with the tax return, but I keep telling myself that in 10 years I will be thanking myself 🙂 So good to hear from you!! I hope life is good for you 🙂 We need to catch up!
Instead of making one payment each month, divide your payment into two payments. You can call your lender and they will approve this and even automate it if you wish. It saves you a bunch on interest and typically at the end of the year you’ve ended up making an extra payment each year but never feel the payment. The savings on interest and the extra payment over the course of the loan will take 8 years off the life of your mortgage. This also works great if you get paid twice a month. I know I am not doing an awesome job of explaining this, so here is a link for more info. http://www.mortgagecalculator.org/helpful-advice/bi-weekly-payments.php
I used this method and it really helped me.
Good luck!That is awesome! I know of people that do this, but I always thought you had to have it set up before you start the mortgage – I never thought of calling the bank! Ironically, we already have them withdraw twice from our account just to make budgeting easier, but that money is not credited immediately to the account, so we don’t save on any interest. I will DEFINITELY try calling them!! Thank you!! I”m so excited!
This is super-old (just browsing here!) so maybe you’ve already discovered this–but you don’t save a lot in interest from paying two weeks early–you save the interest because you end up paying an extra payment over the course of the year (because there are 12 months which we think of as 4 weeks each, but there are actually 52 weeks in a year–so if you pay biweekly, you make the equivalent of 13 monthly mortgage payments each year). So it’s not a magic trick–just another way of tricking yourself into paying more 🙂 I round up my mortgage payment to the nearest $100, which pays an extra about $75 a month, just for the psychological boost of it–but as much as I’d love to pay off my mortgage early, the fact is my interest rate is only 3.875–and I should be making at least 5% on my investments if I do it right, so I’m resisting the temptation to throw a lot of money at the mortgage, instead continuing to pay it off slow and steady and investing. (You can read interesting comparisons of paying off the house vs. investing at, for example, fool.com–>basically they acknowledge that paying off the house is guaranteed and feels more secure, but that if you can handle the risk, investing is financially smarter.)
These are great, I will safe for when my husband and I buy a house.. hopefully within the next few years! I love the deposit instead of delivery tip!
These are great tips! Totally saving this post, we’re look to buy a home now.
Awesome tips! I’m not a homeowner yet… so I’m definitely keeping this in mind for the future. 🙂
You’re on a great path! Someday when we get in our forever home I want to either slowly increase the payment as you mentioned, or make an extra payment those months that have a third paycheck (every other Friday means a few times a year).
Good luck!
This is such a great goal. I agree that it feels overwhelming! I applaud your efforts…I do love the deposit instead of delivery! You will be saving lots of calories too!! I think refinancing can be a great tool…depending on your interest when you bought. We refinanced 2 years ago and saved a lot of money in interest…you could also just set up your new mortgage on a 15 year note!
We definitely need to look into refinancing. If we’re serious about paying it off in 10 years, we’re basically doing that anyways! So why not see if we can save on interest :-\ Thanks for the advice!! This is getting me so excited!
Check to see if you can refinance your mortgage for a lower term by 5 years. With interest rates still pretty low, it may not increase your monthly payment by all that much. By shortening the life of the loan, you also get a lower rate, which helps offset the increase. We did that 2 1/2 yrs ago & it only went up $24/mo. It can’t hurt to at least check into it.
Dining Tip: whenever you DO eat out (not fast food) order water instead of a beverage, & you’ll save about $5+ off your dining bill! Although some places do charge for water, it’s not typical, so always ask…a little water in your diet can’t hurt.
That’s a great idea!! And the refinancing is definitely something I think we should consider. We were lucky enough to purchase our home with a really low interest rate, so it will be interesting to see if we can get lower (I think ours may have been as low as 3.75%!) But if we’re already committed to doing this, then it just makes the most sense. Great advice 🙂 Thanks!
Very interesting tips. We should give sth. in order to pay the mortgage
Great ideas! I have a cash back credit card that is nice to have. I think cutting expenses wherever you can is key!
Totally agree! Cash back is just as exciting 🙂
deposit instead of delivery sounds so difficult– lots of self control– but worth it!
I love your deposit instead of delivery idea! I love learning about new and creative ideas to save. Sometimes I feel so out of control, and this is a great way to take back control. I am tires a lot and tend to just get take out on those days, but now when I think of that I will be thinking, lets deposit instead. 🙂
I feel the same way…delivery is rarely about the food, lol – just the convenience! What you say about control is very true as well. I feel the same way 🙂 Thanks for stopping by!
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