If you’re in the market to buy a house and you want to pay it off early follow these simple steps.
Do not buy a house until all your other debts are paid off!
This one step is tricky to do because we want to have everything now. But if you wait to move into a home when you’re 100% debt free the house is more enjoyable. If any issue arises and you need to fix something in the home you’re in a financial position to take care of it.
Also, if you get into a house and you still have student loans, auto loans, and credit card debt it’s going to be hard to hit your goal of paying off the your house early. If you are trying pay off all your debt at once everything becomes mediocre and the time to getting out of debt lengths. But if you move in with one goal in mind you’ll do more than you ever would with fifteen goals that you’re striving for at once.
When buying a house choose one that costs no more than your annual household income.
This principle may sound crazy but it works! If you make $100,000 a year than you buy a $100,000 home. If you make $50,000 a year than you buy a $50,000 home. By following this step the debt is more manageable. Also, you’ll be paying a lot less in interest compared to the conventional wisdom of a mortgage size 3 times your annual household income.
I believe conventional wisdom is stuck in an era where people lived in one place for 40 years. But that kind of lifestyle is rare these days. As a millennial I want options and independence. I want a “nice” home now, but not the baggage of a huge mortgage. So stick to the small mortgage!
Create a budget around paying your house off quickly.
When you create your monthly budget be sure to make the mortgage payment as well as the extra payment the top of your priorities. Believe me, things will pop up and detract you from this goal. But you must stay committed to getting this mortgage eliminated! So make this item your non negotiable. Meaning, you would rather take money from you out to eat budget then take it from the extra mortgage payment.
If you make the extra mortgage payment the last thing on the budget you’ll never be able to pay the mortgage off as quickly as you like. Because there will never be money left over, never. Life always happens.
Enjoy the free things in life while you’re striving to hit this goal.
While striving to pay off the mortgage you need to start to enjoy the free things in life in order to cut back on expenses. Remember, no one sets on their deathbed saying I wish I would have eaten out more. So start making the home cooked meals! Take your kids to the park and play rather than going to an overpriced arcade. There are a number of free things in life you can get enjoyment out of.
By following these simple steps I was able to pay my house off in 33 months! The steps are simple but the discipline you need to hit your goal is going to be the key factor. One thing I did to stay motivated was to put up a debt countdown calendar on my fridge. Every payment I made was exciting because I was able to go to the calendar and cross off the payment, which reinforced my belief that I was making progress.
I believe paying off your mortgage is the quickest way to becoming wealthy. Once your mortgage is paid off and you’re 100% debt free the choices you have in life are endless. You’ll now have the extra cash and security to take on any venture you want!
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