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My husband and I do not have any debt besides our mortgage, so we are using these 6 tips to pay off our mortgage. If you have other debt or loans I suggest that you pay those off first. They will likely be easier to pay off and will cost you more money in the long run.
These suggestions can be applied to other debts as well. My husband and I are just using these to pay down our mortgage right now. We actually have two mortgages so we are working on paying one off. We purchased a fixer upper, lived there for two years and now we rent it out.
Our goal is to just pay off our mortgage sooner than the 30 years. We would LOVE to pay it off in 5 years, but that would require a LOT of focus and dedication. If we pay it off in 25 years instead of 30 we save at least five years of interest payments and gain financial freedom 5 years early.
Think About The Future
Do you really want to be tied into a mortgage for 30 years? The faster you pay off the mortgage, the faster you will reach financial freedom. If you are paying $1000 a month for mortgage payments, once your mortgage is gone, that’s an extra $1000 in your pocket EACH MONTH! That’s $12000 a year. You could pay for a semester of college or a car with that.
It’s one less thing to worry about and you will have a lot more cash in hand to have for emergencies or to put toward future goals. To wait 30 years to gain that financial freedom is crazy. If you really buckle down and focus you could cut that time down tremendously and set your future up well.
Put Any Extra Money Towards the Mortgage
If you want to learn about some easy ways to earn a little extra money, you can read one of my previous posts:
My husband and I are always trying to find little things to do to help us either save or earn extra money, most of which we try to put in our emergency fund or put towards the mortgage.
Here are a few things that you can get/consider “extra” or above and beyond you regularly planned income.
Cashback from Credit Cards and Reward Apps
I use Ibotta and Rakuten consistently. I’ve made $202 with Ibotta as of today and $118 with Rakuten. I also have $112 cash back with my credit card right now. That’s $432 towards the principal on my mortgage.
Bonuses from Work
My husband is eligible for bonuses quarterly and I get one once a year. That is money that we haven’t put into our budget, so it’s extra money to be used for whatever. We put this toward the mortgage since it’s money we haven’t been relying on.
Tax Returns
Each year it seems like we get less back, but it’s still something and can be a nice principal payment.
Anything Outside of Expected Income
Any money that you get that you weren’t expecting could go towards your mortgage, such as gifts. It’s money that you haven’t accounted for in your budget. You could spend it on something that will give you gratification now for a day or you could put it towards your bigger financial goals.
Make Overpayments Every Month (even if its only $20)
My husband and I have set up an auto payment for the payment each month and we have rounded the amount up to an even dollar amount. If your payment is $937, try rounding up to $950 or even an even $1000. Even the extra $50 will add up over time and cut time off the time it takes to pay back your mortgage. We rounded up and were paying an extra $40 per month and have shaved three years off already with just the extra $40.
Make Bi Weekly Payments Instead of One Monthly Payment
If your lender allows you to make bi monthly payments instead of one monthly payment, you should consider doing it. The first payment should be applied to the loan before the second payment is applied. This results in principal payments going in more often which helps reduce interest payments more often. After one year if you make bimonthly payments instead of monthly payments, you will have paid 13 months of principal payments.
You basically get an extra month of payments out of one year’s worth of payment because of the payments being applied more often.
Cut Expenses
I have several posts about how we have cut expenses and saved money. We put that extra money we save each month toward the mortgage. We also stick to a strict budget and don’t overspend on things we don’t need.
- 7 Ways to Save Money on Your Electricity Bill
- 6 Ways to Save Money on Your Grocery Bill
- 25 Things We Don’t Buy to Save Money
Start a Side Hustle
If you are really serious, you could get a second job or a side hustle and put 100% of the income from that towards payments. I started a blog because I love to write and needed to find a hobby, but it worked out awesome because I can also make money from it.
My husband builds and sells wood projects/furniture. There are a lot of different things you can do to make extra money, whether it’s a part time job or something more creative and more flexible.
It Will be Tough, but Worth It
Paying off your mortgage is a HUGE undertaking. It will take a significant amount of time. I think that’s what makes it so difficult for me sometimes. I see progress but it’s not fast and it’s not always satisfying. When I’m feeling unmotivated and thinking about how we will owe money for 20+ years, I think about how satisfying it will be to pay it off. I can’t WAIT for the day that we make our final payment.
Making that final payment will give my husband and I so much financial freedom that I think the work and sacrifice will be worth it. We will have extra money in our pockets every month, but we will also own 100% of our house. When we do choose to sell that will help us tremendously because we will get so much back in our pockets.
