When we moved to our current school district two years ago, we bought a house there, without selling the previous one. This meant we ended up with two mortgages – one humongous and the other on a 10-year track to payoff. This necessitated the serious need for a budget.
We’ve always considered ourselves pretty frugal – almost always eating at home and buying our school clothes at high-end garage sales. We never carry credit-card debt – unless it’s a short-term, zero-percent offer at Menards. We’re big on getting a great deal – and usually that means buying pre-owned. But over the years expenses got away from us. When when we had low monthly expenses and almost no mortgage, our budget could handle the kind of discretionary purchases and travel we’d become accustomed to. But that’s all different now.
MAKING THE PLAN
A year ago, I started taking a careful look at our budget. I set up an Excel document and added the real charges we paid throughout the prior 12 months. This gave me a realistic look at utilities, seasonal expenses, gas, groceries, travel costs, and our sneaky credit card bill. The Excel program allowed me to create columns that automatically add themselves, so as I replace budgeted amounts with “real” figures, it recalculates it for me to see if we’re still on track.
It feels strange to talk about our family’s finances, and many of our “numbers” I won’t share, but I think it’s important to explain the areas in our life we’ve identified as “belts that could tighten.” If you’re from a similar middle-class life, you might find that cutting down on these areas in the budget could help you as well. I will add the disclaimer that we’re fortunate in that beyond the two mortgages, we don’t have any debt.
BELIEVING IT
Before setting these budget changes, our family had no idea we could pay the second mortgage down quickly. The act of making the pay-down a priority is what made the difference. Now 12 months after implementing our new monthly money goals, the progress we’ve made shows we could possibly pay off our second mortgage a year from now. It would take continued focus, but I truly believe it is possible.
In this series of articles, I’ll address the ways we changed our budget – and with any luck, in one year we’ll be celebrating the payoff of our second mortgage. Please read on in the weeks to come – I hope our efforts help others as well!
MORTGAGE PAYOFF 101 SERIES:
Getting Started
Monthly Charges
The Credit Card
Sell Your Stuff
Lessons Learned
Tags: budget, money management, mortgage
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9:56 am
We are doing the same thing at our house. We used Quicken (the free online version) since it automatically downloads all your bank and credit card transactions. Then you can put them in categories–groceries, mortgage, utilities etc.
We thought we were pretty frugal, too, so it was enlightening to see where all our money was going. Now we are taking steps to cut down on some of the extraneous costs.
We couldn’t pay off a mortgage with what we bring in (I only work 30 hours a week and my husband is starting a new business, plus our 1 and 2.5 year-olds are kind of pricey for such small people;) )
Looking forward to reading the rest of the posts.
12:49 pm
Little people are expensive, aren’t they?
Good for you to be taking control of your finances as well. I hope this series sparks some ideas for you! Glad to have you aboard – thanks for your comment:)
1:04 pm
I admit that I don’t even want to look at a budget. But since I’m not working full time (currently on call with school district as tutor) – so I should probably get with the program.
11:59 am
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[...] If you’ve been reading this series, you know our goal is to have our second mortgage paid off within a year. Part One in this series is here. [...]