It’s the middle of July 2013 and I’m taking stock of our location. We’ve come quite a ways as a family in the last 4 years, including adding 2 kids and subtracting my wife’s income. However, we are enjoying life more than ever, and our journey is moving in a direction that we’re both extremely excited about.
Current Journey Status
- Gross annual household income: $75k
- 401k value: $60k
- Mortgage remaining: $35k
- Annual budget (without mortgage): $28k
- Months remaining to pay off house: 24
- Other debts outstanding: $0
- Other savings: $0
As you can see, we are neither sitting pretty or upside down, but we are plowing our way towards the former as quickly as possible. Four years ago we were trying to pay off the first of two mortgages that we owed on a $150k house that needed repairs. We were about to have our first child and with my wife set to stay home as a mom, we were going to have to stop paying any extra on our mortgage. No savings, no extra income, and 25 more years of mortgage payments to look forward to. Something had to change.
What We Decided To Do
We had originally moved into our large(ish) house with the long term plan of growing a family there. We had put several years of TLC into the place, making it our home. I had just finished building a pantry for my wife as a Valentine’s day present, and we had already demolished the master bathroom in anticipation of a major overhaul.
After many honest conversations with my wife and lots of prayer, we decided to make a move. We weren’t sure where to yet, but we recognized that our desire for “stuff” and our desire to provide the “american dream” for our kids was not the way we wanted to live our lives. We drew up a plan for finishing our house renovations and putting the place up for sale. The renovations took 9 months (and lots of elbow grease), during which time the housing market was absolutely tanking. When we finally consulted with a realtor in the spring of 2011, we decided that our asking price on the house would be $150k, just a few thousand more than what we’d originally paid, and we’d have to eat $15k in renovations. We sold the house in a month, when houses in our neighborhood had been for sale for a year, much to our surprise! We ended up having to fork over another $10k in HVAC and structural repairs, but we were out.
So How Did That Help Us?
Good question! With the housing market down we knew there were plenty of good deals on small houses out there. We found a nice 1300 sq ft home in a small, friendly neighborhood for $75k total. We spent about $4k on new carpet and hardwood floors, interior paint and some plumbing work. We dropped our remaining savings from our last house $17k into the mortgage and have been paying it off aggressively since then. In the last 21 months we’ve reduced the mortgage by another$23k and, as seen above, only have 24 more months until it’s finished.
Barriers That Had To Be Overcome
Expectations. We all have them, and everyone’s are different. The expectations my wife and I had previously were based mostly on a lifestyle that our parents tried to give us. Solid, secure house, safe neighborhood, a park within walking distance, nice furniture, a large yard filled with grass… these are things that most Americans take for granted because so many people have them. It took a lot of thinking, talking, and understanding between my wife and I in order to arrive at the plan we chose, because the only way this plan will work is if we are both fully on board. She has been amazing at giving up some of her expectations in order to understand my vision, encourage me, and follow my lead in this area.
We life in a society that raises our material expectations every day. Gadgets, comforts, conveniences, a fast-paced lifestyle, a slow retirement… getting past some of these things is critical, and once they are not the priority in your life you are free to make all kinds of decisions you never considered before.
I plan to update you with our status quarterly so you can see how things are going for us. I’d love to know what you all think about the changes we’ve made, as well as any changes you’ve made along these lines.