I Paid Off My Mortgage Early: These 4 Money Moves Made the Biggest Difference
Mortgage is the biggest bill most households will ever have and the one that feels the hardest to imagine ever going away. For many average Americans, owning a house outright takes anywhere between 15 and 30 years.
However, Sandra Park, engineer and financial coach for women in STEM, paid off her 15-year mortgage in 41 months and as of January 2024, she was completely debt-free. Here are the money moves she made to achieve this goal.
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Buying Below Her Means
When Park switched jobs, she had a reason to move and opted for a house in a cheaper suburb instead of a more expensive one closer to the city. She put 46% down, which she says comes from years of smart real estate decisions, not a one-time windfall.
“I didn't really downsize in square feet. My former house and my current house right now are very similar in square feet, but because of the area, that made a huge difference in the cost that I paid for the house,” she said. “Also, it wasn't as nice of a build, so I did take a little downturn in lifestyle.”
Entering the Mortgage Debt-Free
When Park purchased the house, she didn't have any consumer debt — credit cards, student loans or car debt — and had been running a monthly budget for years.
“In addition to putting that 46% down, I had a fully funded emergency fund and for me at that time it was about $20,000 that I didn't touch for anything unless it was an emergency,” she said.
That foundation meant that just about every dollar of the extra money could go directly to the house instead of having to compete against other payments.
Following a Zero-Based Budget
Park used zero-based budgeting to determine how she spent her money each month. She also regularly tracked her spending to ensure her actual expenses were in line with the plan using the EveryDollar app. “Budgets are not restrictive; they’re just helping you become a more intentional spender,” she added.
Sending Extra Money Straight to Principal
Park didn’t just count on her regular paycheck to speed up her mortgage payment. Sometimes she used the extra money to make bigger principal payments. Three-paycheck months, tax refunds and other windfalls gave her chances to make extra payments.
Her extra payments varied significantly. Some months she added only $1,000. More often she added about $2,000 to her regular mortgage payment of $1,325. At the end of Jan. 17, 2024, she paid the largest extra payment of $8,697.56. That was her last mortgage payment.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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