Onto BS7! $245,000 mortgage paid off in 46 months! : DaveRamsey

Onto BS7! $245,000 mortgage paid off in 46 months! : DaveRamsey

Well, this has been one hell of a journey. On Thursday, my wife and I paid off the last bit of our $245,000 mortgage, which took us 46 months (3 years, 10 months). I haven’t walked around in the grass barefoot just yet, and I don’t have any plans to call into the show or visit the studio for a debt-free scream. Not sure why, but probably because I’m just exhausted from the process and it hasn’t really sunk in yet. I’ll share all of the details I can think of that would be important for anyone trying to climb the BS6 mountain because it really is a tremendous undertaking, and well worth the effort of getting there.

We started in December 2016. We made additional principal payments in almost every month. We purchased the house for $300k in 2013. I didn’t find Dave until 2014, and we still had 2 car debts and a riding lawnmower debt. We cash-flowed my wife’s grad school in 2014-2016, which was probably $45k out of pocket. We did not get to BS6 until late December 2016, at which point we refinanced to a 15-year fixed at 2.75% and had a balance of $245k. The house is probably now worth $360k.

Over the life of the loan, we paid a grand total of $13,800 in interest on our loan. (FYI — Had we made zero extra principal payments, we would have paid $54,000 in interest and been done in 2031. Had we selected a 30-year fixed at 3.25% and made no extra payments, we would have paid $139,000 in interest and been done in 2046.)

Our range of income was $135k at the very start of BS6 up to $210k; the income for the past year has been around $180k. The x-factor in all of this was my wife going from being a part-time RN (while she was in grad school) to a full-time Nurse Practitioner (and back to a part-time NP). Her salary basically tripled from her part-time pay of $30k/year (she would have been at $45k/year as a full-time RN, but dropped to part-time to do grad school full-time simultaneously) to $90-95k/year. We did not adjust our lifestyle at all and basically committed to throwing her entire pay bump at the mortgage, on top of what we could normally squeeze out of our budget. Around the 30-month mark (of our 45-month journey), my wife gave birth to our first child, so she dropped down to part-time and has been part-time for the last 15 months of this endeavor.

Mathematically, we averaged an additional $3,800 per month in additional principal paid every month. On our current income, between the mortgage payment and the extra principal, roughly 50% of our take-home pay was going to the house; I believe it was roughly the same percentage before our kid was born and my wife dropped to part-time. We were spending more on traveling and entertainment pre-kid.

As a spreadsheet nerd, I kept a spreadsheet of every mortgage and extra principal payment we made from December 2016 through today’s payoff. You can see an image of it here: https://imgur.com/Sv0pkln

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There were a handful of keys for us to be able to accomplish this goal, which, in no particular order are as follows:

  1. We each had the payoff of this mortgage as a primary goal in our lives. I wouldn’t say that we treated BS6 like BS2, but we had gazelle-ish intensity. We were absolutely on the same team, and neither of us needed convincing each month to throw thousands of dollars at the mortgage. There were a bunch of sacrifices, but certainly not to the level of cutting out trips or restaurants. Nevertheless, we said “no” more often than we said “yes” to big, optional purchases along the way.

  2. We started BS6 at the time when my wife started her new job. Of all of the keys, the ultimate was us continuing to live like she made $33k instead of adjusting our lifestyle upwards for the new $90-95k salary. Had we lived a few years on the new salary and then tried to cut the lifestyle, I think it would have been much, much harder.

  3. We were fortunate enough to avoid big unforeseen life expenses. Our cars held out and no major house repairs were needed. We were mostly healthy and had HSA money to cover medical expenses, which included 3 surgeries for athletic injuries. Thankfully, nothing big slowed us down.

  4. We put off optional upgrades around the house. We have a list of things we want/need to do around the house, but everything that needs to be done still can be done over time (HVAC replacement probably in the next 1-12 months; exterior house painting), and a total backyard overhaul with a new patio, fire pit, grill area, etc. Now, we can do everything we want to do to our specifications as our budget allows instead of doing things on a moderate scale to try to save money.

  5. Tracking, tracking, tracking was so important. We have a general budget, but not one that is zero-based in the sense that we allocate a specific amount towards groceries, entertainment, etc. I know what our expenditures for the month will total up to, with a fair degree of certainty based upon what we have planned for the month, and set our savings goals about 3 months out. Based on bills/expenses, I knew what to do with every single paycheck that came in. Because I was just following what I planned out, there was never any pain associated with transferring $2,000 to the bank as an extra principal payment in a given week or month. Also, since the money was being spent towards paying off our house and achieving our goal, there was never any feelings of “I wish I had more money to spend.” I buy what I need, my wife buys what she needs, and we lived very comfortably during this journey.

  6. We traveled. A lot. From the day we started working on BS6, we took 4 cruises, a 2-week trip to Europe, an all-inclusive week in Mexico, and a couple of week-long trips to FL and SoCal. There was never any discussion about stopping our traveling to pay the house off sooner. Each trip was a way for us to recharge our batteries and talk about our goals for the future. When we traveled we always did so on off-times and on some sort of deal. Traveling was our luxury during this journey.

  7. Conversely, we were never big restaurant spenders or toy/electronics purchasers. That always has allowed us to keep our budget in check. Of course, we love a good meal out. But most places were either local, done with a coupon to keep it under $25, and only occasionally extravagant – such as celebrating a milestone or birthday/anniversary. Being in a Midwest LCOL city helps in this regard. Also, there are some electronics we intend to upgrade now that the house is done.

  8. We absolutely celebrated the milestones. The first $25k paid off, having the balance under $200k, cracking $150k left, under $99k to go, and certainly getting down to $0.00.

  9. We used marbles in a glass vase to visualize our progress. I bought 500 marbles on eBay for like $20 back in early 2017, and had to find a vase that would hold our starting point of 245 so it filled up to the very top. For every $1,000 in principal paid off, we would remove a marble. We did this every month, and I ended up taking a picture of my wife every time she pulled one out every month for the past 3 years. It was an awesome way to visualize our progress. The vase was omnipresent. It was next to where I would put my keys and wallet on a kitchen countertop. Just a subtle reminder, every day, of what we were working towards. The handful of people who asked what the marbles were for were told the story, but most people never asked. Those who knew what it was for would comment on the progress, especially my folks.

  10. We had a handful of cheerleaders – mostly family, and a limited number of friends I talk personal finance with – and the only naysayers I think I encountered were on this sub whenever the question would arise about whether Dave’s advice on BS6 is good. Two weeks ago, I addressed the cost of our decision to pay down the mortgage instead of investing here: https://www.reddit.com/r/DaveRamsey/comments/iphi59/case_study_from_a_bs6er_what_would_the_difference/

  11. Some unsolicited BS6 tips for those of you on the same journey: Don’t adjust your lifestyle upwards when you get a raise. It is easier to maintain the status quo of ground beef and cheaper cuts while mixing in the occasional fillet, but once fillets and ribeyes are the norm, the ground beef seems like a big step down. Also, if you don’t yet have kids, now is the time to put a huge dent in your mortgage. Having a kid slowed us down a bit, but not a ton because we had knocked out 75% of it by the time she was born and already had good saving/spending habits. I had to take a cold shower over some big purchases I wanted to make along the way, all of which I eventually realized were wants and not needs.

  12. This can be done by anyone. But, let’s be clear: This journey sucks. This was not easy. I always hate the people on the debt-free screams who act like paying off a big debt, even with a big shovel, was not that difficult. It is. It is extremely difficult. It is one of the hardest things I’ve ever done because it requires a tremendous amount of discipline over a number of years. Seeing your mortgage balance drop from $238,000 to $233,000 does not produce a rush of endorphins, but seeing your checking account balance go from $6,500 down to $1,500 creates some anxiety; it’s just part of the process. Having a BS3 emergency fund keeps the anxiety in check. Other than the fleeting feelings of reaching a milestone, there is zero part of this mountain I would ever voluntarily travel again. We had a good-sized shovel thanks to my wife’s raise and my salary. She worked 80-hour weeks for 2 solid years to make that raise happen. It came along at the right time, and made a world of difference in our lives. Living on 50% of our take-home pay and throwing the other 50% at the mortgage was what allowed us to do this in such a relatively short amount of time. Living in a Midwest LCOL city helped us save at the level we were able to save. Despite having to just put your head down and plow through this by throwing big chunks to the mortgage company every month, it is doable for anyone with money leftover at the end of the month.

  13. Last tip: Pull up an amortization schedule and see for yourself how many years an additional $500, $1,000 or $2,000 per month in extra principal payments per month will shave off the life of your mortgage and save you in interest. BS6 will literally shave years off your mortgage and literally save you tens of thousands of dollars in interest. That’s a big part of what drove us. If you’re on the fence about whether or not to commit to BS6, I can only speak from our experience that we have no regrets thanks to the magnitude of what the end result has done for us. Not having a mortgage payment gives us a tremendous amount of security, financial peace, and an ability to save and invest like never before. I used the Bankrate amortization calculator probably hundreds of times over the last few years, and it is one of the best tools out there to see the impact of what steady extra payments can do for you: https://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx

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Big thanks to DR. Without his plan, we are ships out there sailing along at sea with no compass, map, destination, or plan. Also, this sub has been so helpful for making me keep my eye on the ball. Just about every webpage and advertisement other than this one is trying to get me to spend my money, and this sub helps remind me to save and invest my money. Thanks for reading, and good luck on your own journey!

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