Starting Small: The Power of Rounding Up
Paying off a mortgage can feel overwhelming, especially when you don’t have a large amount of extra money every month. Seeing that 30 year term, you just assume you’ll be paying your mortgage off forever. When we started, we definitely didn’t have a ton of extra money, we were living on one income, so I could be a stay-at-home mom. But one simple habit made a huge difference: rounding up our mortgage payment to the next 100. If our payment was $1243, we made it $1300. Then $1400. Even an extra $20 or $50 chipped away at the principal and reduced the interest we’d pay over time.
Chiseling Away at the Principal Every Month
We didn’t have a big inheritance or bonus to throw towards the loan. Instead we focused on consistently paying extra towards the principal, no matter how small. Eventually I went back to work and over the years our budget loosened up so we increased the amount. Later we were able to put $700 extra or more each month directly towards the principal-and that’s when the balance really started to drop.
Staying Motivated by Watching the Numbers Fall
One of the best motivators was simply checking our mortgage statement regularly. Seeing the principal shrink even by a little made us want to keep going. Progress is addictive, especially when you can see it in real numbers. I couldn’t wait to check the statement after a payment had posted, just to see how much the principal had dropped. I also kept track of the amount of interest we were saving, it was jaw-dropping.
Important Tips Before You Start
I’m not a mortgage expert or a financial planner. I just know what worked for us, and that might look different for someone else in a different situation. I’ve seen many different methods online to pay off your mortgage early. There’s the bi-weekly method or the one extra payment per year method. Some people save up and put a large lump sum towards the principal, or they refinance to a 15 year mortgage. You have to do what works best for you and your budget. The method we used is just one of many different methods to pay off your mortgage early. No matter what method you use, make sure to check a couple of things with your lender first. Always check that your loan doesn’t have an early pre-payment penalty. And make sure that every extra dollar is applied to the principal only, not future interest.
Small Steps Add Up
Not everyone has hundreds of extra dollars each month, and that’s completely okay. What matters is consistency. Even small amounts – even just rounding your payment up to the next hundred can shave years off your mortgage and save you thousands in interest. And when you finally send in that last payment, the feeling is unbelievable. All that extra money you’ve been putting towards the principal becomes yours to keep every single month. Your home is truly yours, free and clear.
Yes, there will always be property taxes and insurance to pay a couple of times per year, but compared to a full mortgage payment, it feels like nothing. This was our very last debt, and now we’re officially living the debt-free lifestyle. It doesn’t mean we’re splurging on everything, it means we’re able to put more into retirement, more into savings, and sleep better at night knowing we don’t owe anything to anyone.
If we could do this, you can too.
Do you need to stretch your budget to find an extra $50 or $100 to put towards your mortgage? These articles may help: Stop Living Paycheck to Paycheck or 10 Frugal Ideas to Keep Your Food Budget Low
