Largest Monthly Expense is Gone

20 Jul 2018 14:23
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I just got back from the bank and signed the papers that will authorize the use of my escrow balance to pay off my mortgage. After 23 years my wife and I are finally waving goodbye to the largest debt load we have ever taken on and accomplished this by the age of 50!

How we got here

We did not do anything crazy to get where we are today and just followed a simple plan of keeping one house and we never refinanced to extend the loan. Back in 1995 when me and my newlywed were house hunting I had only one rule for the purchase; to buy a home we can afford on one income. That August we bought our home for $100K. For the first 5 years we had dual incomes (life was good then) and did make some extra payments to reduce the loan term (we paid an additional $100/month). But, in 2000 things changed dramatically with our income.

In 2000, my wife decided to leave the workforce to focus on raising our children and remained a stay at home mom for the next 17 years. At the time that was a 50% drop in income but things were manageable because we bought a house I could afford on my salary alone. Of course with the big drop in salary we could not afford to pay extra on the mortgage after that. It is amazing how paying just a few extra dollars in the first 5 years shaved off 7 full years on the mortgage.

Lower Expenses and Found Money

It is kind of surreal paying off the mortgage and the reduced expense hasn’t settled in yet. I am sure when we pay next month’s bills it will finally settle in that our monthly expenses have gone down $700 a month and we will have less financial stress throughout the year.

Of course the big question is now that we have an extra $700 what are we going to do with it? I can already imagine most readers screaming at their screens “save it you fool”, heck I'd do the same thing. However, life doesn’t always work out that way. As much as I would love to invest all of the money we do have other needs. Most important is my wife’s 10 year old minivan which probably has 2 more years left in it before it starts to become a money trap. So we agreed to split the difference and will set aside $350/month towards a new car in the next 2 years and to invest the other $350/month into the market.

Luckily this couldn’t come at a better time. Over the next 9 years the possible risk of me losing my job would devastate our plans to retire at age 60. Saving and investing an additional $350/month into dividend growth stocks will ease that risk and combined with my wife’s recent return to the workforce I can finally breathe again. It has been a long time having to watch every penny. Now that I don’t have to maybe it is time to start enjoying life just a bit more.

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