One Year House-iversary!

Memorial Day weekend marked the end of our first year as homeowners.  As Courtney wrote in our very first post, we are working hard to make extra mortgage payments each month to pay off our home in 5 years or less.  I’ll give you the punch line right up front:  As of our last payment, in just 12 months we have paid almost 8 years off of our mortgage.

Why are we doing it?  The mortgage is our only debt.  With that last payment gone, the need to spend so much of our lives making money goes away.  We’ll be able to decide what we do with our time, and to pursue the work we love regardless of how much money it brings in.  We’ll have time for family and friends, and to make life our number one priority.

The goal, simply, is freedom.

I thought I’d wrap the year with a Hater’s Ball review of the opposition.  We’ve heard it all; “Don’t pay your mortgage off, you’ll lose the tax deduction on the interest!” or “At the rate on your loan, you can get a better return investing any extra money!” or “That’s fine, but I couldn’t live like a monk to do it!”

  • Tax Disadvantage – Deducting the Ability to Add:  It’s true; at tax time you are allowed to deduct interest paid on your primary residence.  But the bang to buck ratio doesn’t add up.  Let’s say you pay $10,000 in interest on your home in a given year and are in the 25% tax bracket.  That means you get to avoid paying taxes on that $10,000 for a tax savings of $2,500.  See the flaw?  You’re paying the bank $10,000 to avoid paying the IRS $2,500.  Without the mortgage, you would save $7,500.  This isn’t calculus folks; it’s more like counting with Bert and Ernie.  But if you just gotta feel like you’re sticking it to the guv’mint, pay off your house and donate $10,000 to your favorite charity – you’ll get the same deduction without having to give your bank a dime.
  • Investus – For the Rest of Us:  I covered this one in our tips for homebuyers article, but it bears repeating.  True, the interest rate on our mortgage is low (4.99%) and we could certainly expect to get better returns investing in the stock market or mutual funds.  But as anyone who lost their shirt in the most recent crash will tell you, past performance does not predict future returns.  Think of it in reverse – would you go to your bank, borrow money at 5% against your house, and then go invest in the stock market hoping to beat that rate?  By putting money into investments instead of paying off a mortgage, that’s just what you’d be doing.  And don’t discount the risk; if you miss making a few deposits into your IRA, no one is going to foreclose on you.
  • Deprivation – It’s What’s For Dinner:  There’s no doubt, we are a frugal couple.  But deprived?  Quite the contrary.  From our $900 honeymoon to cashing in on our media clutter, we definitely live what one friend of ours calls a ‘radical’ lifestyle.  But it’s a rich life, all the more so because it is a life free of stress and fights about money.  Not because we have a ton of it, but because we need so little of it.  We get raised eyebrows and pitying smiles when we talk about getting rid of cell phones, cancelling cable, or our ‘cheapskate date nights’.  But many of those same skeptics are stressed to the breaking point by debt, living paycheck to paycheck because they have no savings, and soothing their anxiety by buying more stuff. 

What’s it all mean?  For us, time and the freedom to use it is more important than money and the freedom to spend it.

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About dreamingthepossible

What began as individual hopes and dreams has rapidly become a radical dream of our own as we start our almost married life together. Follow us as we make some big changes in our lives to spend less money, produce less waste, nurse our planet back to health, and even attempt to pay our brand new mortgage in 5 years or less.
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4 Responses to One Year House-iversary!

  1. Peter says:

    I love this. You two are doing it totally right. I admire your vision and applaud your frugality. This should be mandatory reading for every homeowner.

    Oh, and congrats on the one-year anniversary! The place is beautiful, and it suits you both perfectly.

  2. Tahsia Friedman says:

    You two are our role models! 🙂

  3. Congrats, guys, on the great work toward paying off your mortgage – definitely inspiring! Jen and I are in the invest now camp, but I do see the appeal of your approach, especially since you’re looking to pay it off in so few years. Keep on rockin’ it!

  4. HI Courtney! I found your blog tonight after trying VERY hard to upload tonights video, lol! Ended up on facebook and then here! Hopefully Kris will help me tomorrow 🙂 Anyway, I am LOVING reading your blog ( I have one too) and I wanted to say BRAVO to you and your husbands thrifty way of living! I have always liked you and I’m literally laughing out loud while reading because we have so very much in common! You are VERY smart to save your money and pay of your mortgage and don’t listen to ANY of the nay-sayers! John and I did the SAME as what you are both doing. We lived with my parents for 16 months both working full time jobs and had our own business. We paid ridiculous taxes those two years, but the money we saved was PRICELESS! We are like you, no debt (thank GOD). Well besides NY taxes, that’s another story for another day! I almost exclusively shop consignment and thrift stores. There isn’t much that is “new” in our house, our mattresses, that’s about it, lol. I paint, reupholster, repurpose A LOT! I gave up my cell phone contract for a “trac phone” for emergencies. We use our Ipods (on our wireless router) to text. Our next item of business is to cancel cable. I hate tv, lol. I have used cloth napkins for about 5 yrs now. I HATE being a slave to any item…. Boy I could go on all day long! Anyway, I just wanted to cheer you both on and say THANK YOU for being such a wonderful, positive force in our ( especially Kris) lives! Anyway, glad I found you here! Keep up the great work!
    Kristi (Kris’s mom) 🙂

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