Visited my family for Christmas and was shocked to hear they paid off their house just earlier in the year. 4 years ago I remember he showed me how much he owed and it was a little over $212k. Of course I asked how he did it. First he said they lived extremely frugally, like buying food from the clearance section, couponing, stocking up at sales. No vacations, no new cars, no new phones, no eating out. They used my step moms paychecks as their bill and spending money, and everything my dad earned went straight towards the house. Now they are both teachers so they don’t make a lot. But he said he figured out if he paid extra each time he made a mortgage payment it would knock money off his principal and would lower his amount of payments and since he was cutting his principal payments down he was also cutting down the interest he would pay over time. But he said he had to make very large extra payments at the beginning because the more you do it apparently the less your extra payment will go towards the actual principal. The crazy part is they said the economy has gotten so bad that even with paying off their house they are still struggling a lot of months because of how expensive things have become and wouldnt know if they would be able to survive if they had to make mortgage payments.
EDIT* omg so I don’t have to keep responding to people. No I don’t actually think they are struggling financially. He’s just the type of frugal where every month is a tight month for them regardless of how much money they made. He’ll be frugal until the day he retires cause everyday will be a financially tight day until that day comes.
Found out my dad and step mom paid off their $212k mortgage in the last 4 years by being extremely frugal!
byu/Business-Split-2099 inFrugal
Posted by Business-Split-2099
13 Comments
if his mortgage rate was low, that was financially a mistake.
Congratulations to your parents on being mortgage free!!! What an amazing accomplishment!
I do something similar when my credit card bill gets too high. I pay extra but split it into 2 payments. I pay at least the minimum but usually more right after receiving monthly statement. If that were the only payment, I wouldn’t see much of a drop before the next statement arrived. About 2 weeks after the 1st payment, I make another payment. The 2nd payment really makes a difference.
How are they struggling some months if they had an average of $4k extra per month for the last 4 years on top of their mortgage?
Groceries are more expensive by like 30% which should be only around $150 more per month for a frugal couple. I’m wracking my brain trying to figure out what expenses they have magically incurred in the last year that could lead you to make such a statement.
The main cost that’s been a massive burden of inflation on most is housing, which they have hedged by being mortgage free.
If they are still struggling even without a mortgage, some unexpected big expense definitely has come up. There is no way they are now spending the equivalent of their mortgage right now on groceries and the same bills.
Agh I’m basically there but still eat out a few times a week sadly
You can also send principal only payments as a second separate check or payment labeled for that.
My older son pays his actual mortgage first of month and sends a principal only payment mid month.
Absolutely can be done. I started with a 30 year mortgage after five years. I refinance to a five-year mortgage and then three years later paid it off so it took me eight years to pay off a 30 year mortgage of course I have a husband and no kids and my cars were paid for.
My APR is 3.25%. Right now my money works harder in a savings account or a putting into a index fund.
Super inspiring! I’m on board… leggggo
The “still struggling” bit is a mindset where people don’t think of themselves as having “extra”’money. They may be struggling to achieve their financial goals, not paying for the fundamentals.
That mindset says there is always more money they should be saving. they work to minimize their expenditures by getting the best deal possible. They don’t necessarily avoid spending money but make damn sure they spend only what they have to fulfill their want or need. A lot of really rich people get rich and stay rich with this mindset.
Make sure they get some kind of title alert set up for their house. Common fraud now is to steal peoples paid off house titles and sell them to other folks.
Good for them but extreme frugality sometimes also sometimes sounds a little like not living your life. Buying clearance food, no vacations, no eating out sounds pretty boring.
And for what? We don’t know how long we’re going to be around, we have to live while we’re alive instead of putting every penny toward ensuring zero (likely low interest) debt.
That’s just my take and I’m sure a lot of you will disagree.