Mortgagelessness.

Joel: On July 20th 2015, we submitted our last payment for student loans. We paid off $150,000 in 35 months. Within a year of that, a mouse ate food out of the pantry in our rented duplex. That was the final straw for Emily. She said it was time to buy a house. 

Emily: I am a details person. Let me fill in some blanks in the story so far. The mouse ate its way through the boys’ stored Easter baskets, pooing in the leftover plastic grass while trying to find the always forgotten jelly bean. It also ate through the pantry dry items on the other side of the kitchen. I was pregnant with Sinead at the time so the thought of our food being tainted and unsafe had me pretty distraught. There were other issues preceding this last straw moment: holes in the foundation that light was coming through, the window had rain pouring in (literally a stream like a faucet when it rained hard), and the insulation in general was never great to name a few. It was a great location - across the street from our parish, kiddy corner to a school playground, a block away from a common walking/running spot, and a block from a place we lovingly renamed “Muffin Man” where we got the best egg sandwiches and cinnamon rolls of all time nearly every Sunday after mass. But, it was time to start looking for a home. 

Joel: OK, so we had about $20,000 saved up for a downpayment, a far cry from Dave Ramsey’s recommendation of a 20% downpayment. We looked at 12 houses, but it was the first house we went through that we kept comparing all the others to, so we bought it!

Emily: We had it in our plan to buy a “forever home,” not a starter home. We rented during our “starter” years and planned to buy a home with the things we wanted for the long run. So yes - I had a gut feeling the first house was the one, but I wanted the experience of looking at homes. I’ve never been a “love at first sight” emotional person - I like to take my time and analyze. I think we actually looked at about 6 homes, and left each one of them talking about and comparing them to the first one - our current family home. That is when we knew this house was the one for us. It ticked all the boxes and was within our budget. 

Joel: She shot me down for a year. Yes I will date you, no I will not. Yes, no. Yes, no. No love at first sight for her. But, I am like novacaine. Give it time. 

Regardless, we bought a $290,000 house. Put $20,000 down and had a loan for $270,000 at 2.75%. In hindsight, we probably should not have gone so crazy on our mortgage. At the same time, we were putting every spare penny towards the mortgage, the stock market averaged 12%. Hindsight is 20/20 and we didn't know much about investing back then. 

Emily: At the time, we were investing the employer match amount at my job and Joel was not contributing anything from his income. 

Joel: We paid off our “forever home” in less time than it takes most people to pay off their car. After not contributing extra in the first year towards our $2200 a month payment, we went gangbusters and finished paying our house off in 55 months. 

Emily: The reason we didn’t go more aggressive the first year was because I wanted to be cautious. This was uncharted territory. We had spent our early adult years calling landlords to fix things, and now this expense would be on us. I wanted to ensure we did not overextend ourselves. Although this was 3.5 years into our marriage, I did not want to be back in the financial situation (and emotional situation) we were in those first few months of our marriage. I wanted to be sure we had enough money each month to buy the necessities and have some fun without being overly worried about the bank balance. Also, I wanted to be sure we could maintain our current lifestyle with myself working part time, a goal of mine since having Declan, but something we agreed to hold off on until our student loan debt was repaid. 

Joel: How did we do it? Is this heaven? No, it's Iowa. Well, first, we live in a low cost of living area! $290,000 bought us a 3000 square foot home on a 1.5 acre lot with a pool. Also, remember the lessons of the student loan article. We continued living off of one income. The second income went straight to the mortgage. In fact, during this time, my side hustle started producing and all the money we earned from that went towards the house, too. So, it was kind of like having a second and third income going towards the house and we never inflated our lifestyle. 

The day we closed on our “forever home.” August, 2016.

Emily: By this time, our spending habits were pretty solidified. Living on one income was second nature. Having kids did lead to a little more spending, but we were still very easily living within the one income. We don’t really have money rules, more so principles. We are both very intentional with purchases and always talk to each other if there is a major purchase in either of our minds. That said, I guess our idea of a major purchase is anything over $100 beyond the day to day necessities. That is our frugality speaking. This may be different from other people’s ideas of major purchases. 

Joel: Having two incomes in the family is a super power, especially if you have your spending under control.  A dollar saved is more valuable than a dollar earned. Another dollar earned means you need to pay taxes but a dollar saved is 100% yours. In our article, "You graduate! Here's your bill." I explained the three biggest categories Americans spend their money on: housing, cars and food. If you can “hack” your expense in these categories you will have the biggest bang for your buck. We will talk about this in a later article. What we did to hack these three costs: live in a low cost area, buy $5000 vehicles, cook your food at home that you buy almost exclusively from ALDI. Most follow that up with, “No Way!” For us it's normal and we have a paid-for home because of it. 

Emily: I’d also say, through all this, we maintained the passion for and priority of experiencing life whether it be in our home, close to home, or far away with our little family unit, extended family, and close friends. I’d imagine people hear how we did all this and think we did so at the expense of experiencing life. It is actually the opposite. We control our expenses so we have the ability to experience life more fully. We also maintained our fully funded emergency fund throughout all of this: about 3 months worth of expenses, which is one of the baby steps in Dave Ramsey’s book, Total Money Makeover. 

Joel: Short term sacrifice equals long term freedom. Do you know what you can do when your house is paid off? Whatever you want!

Key Takeaways:

1. Where you live matters… move if you can’t afford it (geoarbitrage).

2. Live off of one income. Use the rest to get out of debt or invest it!

3. Control your expenses in the big 3!