Monday, April 1, 2013

From Daytime TV to a Full Thermometer

Last year J and I were sorting through some tough decisions regarding the financial investment that is our home. Like many others, we bought our home near the peak of the bubble hoping to get in before we couldn't afford to, and then, as we all know, the bubble popped, leaving us with a mortgage that was very disproportional to the market.

But we have a home. We can afford to pay our mortgage and put food on the table and clothes on our backs and still have wiggle room for fun luxuries like eating out and traveling. We are abundantly blessed, especially when we maintain a whole world perspective. However, we also wanted to be financially wise, and from an investment standpoint, we were aboard a sinking ship - "underwater" is the popular term. So in the interest of good stewardship and proactivity in our finances, we evaluated our options. We had to do something. We had to do something. We didn't want to keep paying this crazy mortgage into nowhere anymore. What if we ever want to move? That wasn't an option because there was no way we could sell, and we could never rent to cover our payment. After a lot of thought, prayer, and wise counsel, we decided to go with a hare-brained scheme I cooked up after watching a talk show.

No joke.

Anna Newell Jones was the guest on the talk show - she writes the blog And Then We Saved, all about how she went on a spending fast in order to pay off her overwhelming debt. Her initial goal was just to pay off $6,000 in a year, but once she got going she was able to pay off over $17,000 of debt in the first year. And her complete debt of over $23,000 was paid off in 15 months!  And I know, if she could pay off $17,000 of debt by herself in a year, together we should be able to too.

I was inspired.

Our mortgage was actually two loans - it was an 80%/15%/5% loan, the 5% being our down payment.  Thanks to the HARP 2.0 program, we were finally rewarded for paying our mortgage on time every month and we were able to refinance the 80% loan, giving us a much better interest rate and lower monthly payment on that loan. But we were not able to do that for our 15% instead, I came up with the crazy idea that we should pay it off.

It seemed like a huge, intimidating number. But we had some wiggle room in our budget already, and, thanks to the refinance, we were about to have the extra money we were saving from our newly lowered monthly payment. And so I started thinking about what else we could cut from our budget so that we could pour that money into paying off our 15% loan instead. And the more I thought about it, the more I realized that now is the perfect time for this kind of project. The boys are young and won't notice less gifts, less vacations, less extras.  Paying off the small loan would lead to a lower monthly mortgage payment, and would bring our payment down into a range where we could possibly rent the house for that price, if we ever decided to move. So I punched in the numbers, presented the idea to J, and we decided to go for...not broke, exactly, but a streamlined budget.

I thought it would probably take us 18 months - optimistically, maybe we could cut it down to 15 months - but I guessed there would probably be some unexpected hiccups along the way.

I knew this would only work if we stayed motivated and excited about this project, especially when we were missing a luxury item we had cut out, and I didn't want to dump most of our savings account (we did keep an emergency fund in our savings) into this mortgage if we weren't going to finish the job, so I made us a little thermometer to fill in each month to track our progress. Nothing fancy - in fact, it looked grade-school caliber, but I hung it behind our computer where we would see it every day. I did not expect that little thermometer to be as motivating as it was - the thermometer helped us keep track of exactly how much we owed at all times, and every time we colored more red and saw our progress we got excited about new ways that we could get to the top faster.

On Saturday, J paid our last payment on our small loan.

We accomplished our goal in 10 months.

And I got to do the honors of coloring in the thermometer all the way to the top.

I still cannot believe we were able to accomplish this goal in such a short time frame. Initially we used a chunk of savings and our tax return, and this year's tax return went in too, and J took extra side jobs which also really moved things along. We had also cut out or cut down on various luxury items. And we did it!!!

Now, between the refinance of the larger loan and paying off this loan, our mortgage is cut down by 1/3!

Now that I know what we are capable of, I am already coming up with more crazy saving schemes - but first, J and I are going to celebrate this summer. We are going to my niece's high school graduation in Washington, are planning on a family beach trip (a yearly tradition we have missed the last two summers), some camping with the boys, I'm getting a new pair of running shoes
......and J and I booked a Hawaii trip!!

Work hard, play hard, right?

And that's the story of how daytime TV transformed my life...or, at least, my budget. :)


  1. Ahhhhhhh! CONGRATS friend! So proud of you!! And friggin Hawaii?? Are you kidding me?? That's AWESOME! You're giving me ideas for, oh, I don't know, our 15th wedding anniversary...that gives us 6 years to save up ;)

    Seriously friend. So happy for you guys!

  2. Congratulations! I know you did this while still being extremely generous to others with your money, even as you cut out from your own spending. Enjoy your travels this summer!