A mom of 3 explains how she and her husband paid off their 30-year mortgage in just 2 years
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- Writer and blogger Kim Anderson and her husband, an engineer, paid off their home 27 years early.
- They made extra payments to their mortgage's principal, and watched the amortization table closely.
- They budgeted and put surplus cash, along with gifts and tax refunds, towards the mortgage payoff.
Kim Anderson and her husband bought their first home in 2009, in Canton, Georgia, a suburb just north of Atlanta.
"We bought our first home for around $120,000 as a short sale. When we decided to pay it off, we had about $93,000 we still owed," the mom of three and now full-time blogger at Thrifty Little Mom told Business Insider in 2021.
Eventually, they were able to pay off the full $93,000 mortgage balance in two years, using two strategies to help along the way.
1. They kept a close eye on their mortgage's amortization table
A mortgage's amortization table shows the full amount of interest and principal for each payment. While the earlier payments go largely toward interest (especially in the case of a high mortgage rate), the later payments go more toward the principal balance. And they can come in handy for mortgage payoffs.
Anderson and her husband paid close attention to their amortization table while planning their payoff and say it became a large part of their strategy.
"We plugged in what additional principal payment we could make each month, and it calculated how long it would take for us to pay off our loan based on paying that," she said. "We got obsessed with seeing the numbers drop."
They also started contributing more to their mortgage payment each month, adding an extra $1,260 to their $689 monthly payment and later increasing it to $2,515 a month. That helped to further drop the principal on their loan, putting more of each payment toward the principal balance.
By watching this table, they could see how their hard work was paying off and how much further they had to go.
2. They lived simply and contributed whatever they could, whenever they could
In addition to the larger, regular monthly payments described above, the Andersons put whatever extra money they could toward their mortgage for two years. The couple was only living on one salary — her husband's engineering salary — so they contributed where they could and budgeted as much as possible.
"Life was super simple during our debt payoff. We didn't do big vacations. We didn't buy new cars," Anderson told Business Insider. "We just worked hard, lived contently, and saved where we could."
By saving on the splurges and extra purchases, they were able to pay off their mortgage quicker. Anderson also changed to a cash-based budgeting system to keep track of how much extra they were able to save each month. When she had money left over from her grocery budget, for example, she'd send it straight to the mortgage. "I would literally go to the bank, fill out the slip, and hand them $30, $50, or $100 at a time, and it all helped," she said.
Additionally, the family put extra money they received throughout the year toward their mortgage. "Tax refunds and monetary family gifts all went to the payoff," Anderson said.
Tax refunds amounted to several thousand dollars for the family of five, and the couple also received a few thousand dollars in bonuses from the husband's salary, according to financial records viewed by Business Insider. Gifts from family were small, between $25 and $50 for holidays and birthdays, Anderson said.
Now based in North Carolina, the Andersons were able to pay for their next home in cash after selling their paid-off Georgia home.
Paying off the mortgage has helped to bring her family peace. "When we paid cash for our second house using the money we got from the sale of the first house we paid off, the motivation was to know that I had a home for my kids that couldn't be taken away by a bank," she said.
Editor's note: This article has been updated to include additional detail on the Andersons' sources of cash, including tax refund and family gift amounts.
This article was originally published in April 2021.