Sunday, 6 September 2015

How I paid off my mortgage! (Post #1)


Yes it is true, the title is no lie. There was effort and a lot of mistakes involved, don't get me wrong but to be honest it just happened and it happened before I turned 37!

Background


I always hated the idea of renting my living space. I grew up in a home and for me something that I was renting did not feel like a home!

My wife and I moved in together in October of 2000 when we were both 23. It was a small 900 sq ft rental. It was a conforming duplex with a nice yard and at the time the rent was very cheap. We had nothing for furniture other than what we borrowed and received from our families.

We lived there for about 9 months when we decided we were not happy renting. We both had a very small RRSP account but at the time the combined totals were enough to come up with the down payment of a small starter style home in Edmonton.  We had a total of around $5000.00 and decided to go look for a duplex. Our thought was that we wanted a fixer upper that we could live in one side a and rent the other to help supplement the mortgage and property tax payments. After a couple weeks we couldn't find anything in our price range that was workable enough so we decide to wait a year and save some more money. This was mistake #1. Of all the success I have had with my personal finances, I still see this as my biggest regret in my financial life. We should have spent the extra $50,000 and bought a duplex.

The First Property


We remained unhappy in the rental but saved a little more cash and come January 2002 found a property 25 minutes outside of Edmonton that we could afford. This was mistake #2.


 The property was 3 acres with a 1200 sq ft bungalow on it. It didn't even have municipal water or a well! We paid someone to truck water in! We paid $147 000.00 and the down payment of 5% was $7350.00. This is where I learned about CMHC (Canadian Mortgage and Housing Corporation insurance) fees which were 5% on the balance equalling $6983.00. In reality only $387.00 of my original $7350.00 down payment actually paid down the house. Doesn't that make you furious it sure made me mad.

After a year of saving money and working on the property we decided to try and drill a well because everybody in Canada can find water under their feet right? Wrong? We threw another $7500.00 away to 2 different drilling companies.

Changing the rules


Let's get back on track and talk about mortgage payments. As much as we hated renting we hate being in debt, seeing those yearly mortgage statements with the amount of interest and the amount of principal paid made my stomach turn. We decided that we should concentrate on paying down the mortgage immediately and from the outset doubled the minimum payment. Over the next 4 years we paid down nearly $47 000.00 of principal by raising the minimum payment 20% and lump summing as much as we could up to 20% of the principal.

Different priorities came into play in 2006. Well not different but extra priorities. Children!


Continue the
journey How I paid off my mortgage! (Part #2), keep coming back or subscribe..


Do you have a story you want to tell, leave me a comment, I would love to hear about it!




4 comments:

  1. Awesome. Yea, paying rent is no fun. We just picked up our "forever" home and are excited to move in.

    That first house you bought would of made a great little homestead, even without a well. I'm sure if you where to buy that today with everything you know now about sustainability, things would be different. If only we could go back in time.

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    1. Absolutely, as they say hindsight is 20/20 and these mistakes were some of the greatest lessons that I have ever been taught.
      Congrats on your "forever home" purchase.

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  2. Congrats on paying off the mortgage!

    That's a dream of mine, too but still a fair way off. Like you (and every other human on the planet) I've made choices that probably weren't in my best interest in the longer term... but that's life. So, instead, I plan to have the mortgage gone within 10 years.

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    1. Thanks Diane,
      That is great that you set a 10 year goal. I find that setting goals for myself has always been the most important step. In the long run you will find many ways to help yourself to reach your goal. We originally set our goal to pay off our mortgage by 40, but with perserverance and to be honest a little luck we made it by 37. Stick with it and I am sure you will make it happen.

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