Greetings, financially succeeding friends!! Today we’ve got yet another story from someone who’s achieved debt freedom. Our friend Rob, who blogs over at www.mustardseedmoney.com, shares his powerful story of how he became totally debt free. Enjoy!
How much debt did you start out with and what kind of debt was it?
I was fortunate that the only debt that I carried was from my mortgage. The mortgage debt was $400,000 on a 15-year loan. In order to afford the mortgage, I had to get three other roommates. Even then, it still took over half of my paycheck in order to pay the mortgage bill each month.
What was the “eureka” moment when you knew things had to change?
Initially, I was super excited to own a home. I was 23 and thought I knew everything. In hindsight, I was really fortunate to buy when I did. It was just before the housing market peaked. So even when the housing market cratered, the house was never underwater. I can’t say that was the case with everyone else in my neighborhood as some took bloodbaths.
After about a year, the new home smell wore off. Watching half my paycheck go out the door became a miserable feeling. It was then when I became obsessed with paying off my mortgage. Every bonus that I got and every extra dollar that I had laying around in my bank account started going right towards the mortgage.
I built excel amortization tables to see how adding the extra money towards the mortgage principle would impact the final mortgage due date. There was something so satisfying watching the date creep up each month when I applied new principle. I was running at this new goal with ultimate determination.
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How long did it take you to pay off the debt?
I moved into my house in June of 2004, and I paid off the mortgage in December of 2012. So it took about 7.5 years to pay off my 15-year mortgage loan.
What are the top five things you did to get the debt paid off and how did those five things help you to make permanent changes and stick with your plan?
I learned the power of delayed gratification. While my friends were spending lots of money on items and experiences on a regular basis, I learned to just say “No” if it wasn’t something that I truly valued. For instance, they loved to go camping in the winter. But that camping required a lot of snow gear including a heavy-duty sleeping bag and snowshoes. First, I don’t love camping that much, and second, buying gear that I’d probably only use a handful of times in my life seemed like a waste. So I learned that saying “No” to certain things was okay. Looking back, I really didn’t miss out on much. I just had different priorities at the time, and I don’t regret them.
I was consistent in that I always applied extra principle to my mortgage each month. While it wasn’t always enjoyable, I knew that paying off my mortgage would lead to more freedom down the road. Any bonus I’d receive or any other surprise cash would go directly into the mortgage. I figured since I wasn’t expecting that money, I probably wouldn’t miss using it for other things.
I always bought used cars. Admittedly, when my roommates were driving brand-new BMWs, Lexuses and Jeeps, I was a little embarrassed of my old Honda. Now that I’m out of debt, I have no desire to drive those types of cars. Amazing how your perspective changes over time.
I have only ever bought one new piece of furniture. All the rest of the furniture that I used to furnish the house came from Craigslist. This substantially cut down on my expenses and allowed me to apply the savings towards my mortgage. This habit has carried on today as my wife and I have used Craigslist almost exclusively to find baby-related items in addition to furniture.
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How is life different now that you’re debt free compared to when you were drowning in debt, both from an emotional standpoint and a financial standpoint?
Life is completely different. I feel like a weight has been lifted from my shoulders, and I don’t worry about money at all anymore. I have automated all of my expenses, so I hardly ever check my finances since I have a cushion in my savings and checking accounts. Before I constantly checked my Personal Capital account, but now I log in maybe once every week or two.
On top of not worrying about money, I now take on projects at work that I think are interesting as opposed to trying to climb the corporate ladder to make more money. Funny enough, since I became mortgage-free, I have actually received two promotions at work. I attribute this to pursuing my passions at work and not focusing on the money as much.
What are some of the pivotal things you’ve been able to do now without debt that you could have never done while in debt?
Being debt-free has allowed me to travel the world with my wife and not feel guilty. Before I paid of my debt, I had no desire to travel the world. But, once I went with my wife to Europe, I got bit by the travel bug. It’s probably for the best that I didn’t get bit while paying off my mortgage. We’re hoping to go to Iceland in August.
What message or words of encouragement do you have for those still struggling with debt who are overwhelmed/in denial regarding their situation?
I always tell people to really think about how they want to live. If debt is wearing you down, you can do something to change that. Even the smallest of actions can have a lasting effect. I knew that I didn’t want to be shackled by debt any longer. So, I got on the track of paying off my debt as quick as possible. While it had its tough moments, my determination and diligence has paid off.
The first step is recognizing where you are and then determining where you want to be. Those are the two hardest steps, but once they are complete, the next part is the best part. This is where you get to build the financial bridge to get to your dreams. It may take some time, but if you stay diligent, you will get there.
My hope is that MSM’s story encouraged and motivated you to create your own path to debt freedom. If you have any questions at all, or if you have your own debt freedom story to share, feel free to contact us.
Congratulations MSM on being debt free, I mean truly debt free without a mortgage. Not carrying any credit card debt or student loans is one thing, by actually paying off your mortgage is quite something special. I’d like to hit this mark in about 15 years as I just financed a 30 year loan with 20% down.
Thanks so much! That is great that you have a goal in mind when you hope to pay off your mortgage and become totally debt-free.
You have an inspiring story, MSM! I love the point you make about having the freedom to follow your passion at work. Debt freedom can definitely give you more choices. Thanks for sharing your journey.
Thanks for your feedback, Amanda! I hope my story does inspire others to pursue financial freedom to enjoy all that that entails.
Holy cow, I can’t imagine a $400,000 mortgage–and especially with three roommates. Ouch. At least that was your only debt though, so that’s pretty rad. I salute you for paying off such a huge mortgage in under 8 years–that’s a fantastic feat, it really is.
Did you still keep roommates while paying off the mortgage? I’m sure that would really help with the payoff as well.
Hi Mrs. Picky Pincher! I had anywhere between 1 to 4 roommates living with me for those 8 years, from the time I moved in until I got married. Then 3 months after I was married, my wife and I were able to completely paid off the mortgage. My roommates provided a crucial stream of income in order to be able to pay it off!
My wife and I have only ever bought one piece of new furniture as well. It really is amazing just how much used (cheap in price, not quality) or free furniture we’ve been able to acquire from family, friends and Craigslist. Congratulations on the mortgage payoff!
Thanks so much for reading! Craigslist is awesome!
Really inspiring stuff MSM. You’re really in a crazy good position to do anything you want. Totally agree with furnishing your house with Craigslist. It’s a great way to basically rent furniture. Once you’re done with it, all you need to do is sell it right back for what you paid for it. Furniture surprisingly doesn’t really depreciate in value except between “new” and “used.” A table that looks nice and has been used for 1 year is basically the same value as that same table that has been used for 5 years or 10 years.
Great story, MSM! When I got a new house, I also purchased most of my furniture on Craigslist. I still have the same sofa from years ago – leather is quite durable 🙂
I did buy a new car out of school. After a few months it lost that new car smell and wasn’t as exciting. I ended up selling it and getting a used Civic. You didn’t miss much sticking with your Honda 😉
Hi Mr. Crazy Kicks,
That is so great about your Craigslist furniture finds. You can really find some great stuff on there! Yeah, my Honda treated me well 🙂 I don’t regret not driving new or fancy cars since I had other goals in mind. Thanks for your feedback!
That is amazing that you were able to make that payoff in such a short time. I thought about getting roommates when I first graduated college and quickly decided against that. It was nice having my two college roommates and we still talk today, but, I could afford privacy.
Hi Josh,
I totally understand wanting privacy. I guess there is a price to pay any way you look at it! Thanks for reading!
I’m impressed you figured this out as early as you did, AND had the drive to push forward until you were done! Well done, sir!
I can’t say it was easy at times but I’m definitely glad that I stuck with it 🙂
Great story, MSM!
It must have felt amazing when you finally paid off your mortgage early!
I have to admit it took a couple of months to sink in. But when it did, it was a great feeling 🙂
Nice work MSM! $400,000 in 7.5 years is very impressive! Delayed gratification is the key to financial success, as you mention.
It seems that everyone is going to Iceland lately. It has been on my list for several years now. I hear it’s awesome!
You hit the nail on the head. Delayed gratification is definitely the key to financial success 🙂
Iceland definitely seems like a trendy spot although I have to admit I haven’t met anyone that’s actually gone 🙂
It is an encouraging story! Sometimes, almost all of us need some debts in our life course. The best way is to figure out how and when pay off debts before applying a loan. The life will be totally different after paying off debts. I also hope travel around the world. My family already traveled a few countries.
Thanks for sharing Rich Growth Tips!!! That’s awesome that you’ve been able you and your family have been able to travel. It’s definitely a bug that I’ve been bitten by.
Congrats, congrats, congrats! That was truly an inspirational story. It was funny to hear that you were a little embarrassed of your old Honda when your roommates (who were paying YOU rent, coincidentally) were driving around in luxury cars. My dream, growing up, used to be to have a BMW. I have been a full-fledged adult now for quite a few years and that desire has fizzled. These days, I’m perfectly happy with my Mazda 3. Ha! Zoom Zoom Zoom! Keep up the excellent work and enjoy those trips!
Mrs. Mad Money Monster
I have to admit that now that I can afford a BMW that desire is totally gone. Not that I was ever really a car guy but having a dream type car is no longer the dream. Although from time to time I do look at a 4 door Jeep Wrangler and think that could be fun 🙂
There is always something new that I can learn every time. I think that one of my weaknesses is saying no to people as I don’t like to make excuses nor am I good at it. However if I learn how to say no a bit better, I would probably be a bit more efficient with my money.
Thanks for sharing Leo saying No is really difficult. I didn’t want to come across as the bad guy but there came a point where I decided that by saying yes that I was saying no to my family. That kinda flipped a switch for me and made it much easier 🙂
Congrats on being debt free, MSM! Thanks for sharing your story.
Thanks SRGO!!! It felt like a really long road but in the grand scheme of things it was relatively short 🙂
Congratulations. Not many individuals can boast of that achievement. And boast you should. That is commitment. It really says a lot about you in general.
I’m not surprised that you received 2 promotions. Maybe the reason is because you are pursuing projects that appeal to you, but I believe you are not giving yourself enough credit in other areas.
Thanks for the positive affirmation Joanne. I have a co-worker that thinks I downplay too many of my achievements and should give myself more credit. I’m not normally one to boast and am more along the line of keeping my head down and focusing on the work. Crazy enough I just found out that I was nominated for a mentoring in excellence award. As an introvert I’m pretty proud of that 🙂
“I knew that I didn’t want to be shackled by debt any longer.”
This is key! Debt can be a big stressor and it is not worth it just to have instant gratification.
You are absolutely right. Instant gratification at the hands of debt is a huge stressor and not something that I’m interested in partaking again in 🙂
Yay for your freedom from mortgage. Saying no to your friends must not have been easy, but you did it and it helped you achieve this financial milestone!
“The first step is recognizing where you are and then determining where you want to be.” So simple, but a step I only took very late in the game. As someone who was in denial about my finances for a long time, I can tell you that it can be dreadful to “recognize where you are.” As for “where you want to be”, I settled for impossible daydreams of fabulous luxury – which I know now I don’t even want. Now, I know exactly where I want to be – and I’m getting there. Very interesting that you’ve enjoyed such success at work even though you haven’t been chasing promotion. Freedom is a great thing! Sounds like you’re using it very well : )
Thanks Ruth!!! When I was in debt I had these huge dreams of what life would be like after debt. Most of it revolved around spending money. Now that I’m out of debt, I have no desire to spend money on frivolous things. Amazing how our mindsets have changed 🙂
That is determination, and I admire it as delayed gratification and learning to say NO are hard to do, and it takes really determination and some patience. Congrats! I enjoyed reading your story. Thanks for sharing.