Sometimes you can learn the most from Americans who tackled their mortgage head on. This is one of the reasons why we take a closer look at Derek’s story today, who was able to pay off his $55K mortgage in less than one year. Read on and learn how he tackled this mammoth task!
Derek was just coming off an emotional divorce and was ready to get his life back in order. First on the list was improving his financial situation, specifically paying off his mortgage.
When he started, his mortgage debt $54,562.20.
When Derek came up with the idea to pay his mortgage off in a year, he obviously needed some plan of attack. To pay off his debt, he would get his repayments from the following sources:
- Tuition reimbursements from employer – $7,000;
- Monthly website income (after-tax) – $1,000;
- Monthly disposable income from day job – $1,000;
- Monthly earnings from new website – $200;
- Bi-weekly income from work – $3,000;
- Regular monthly mortgage payments – $350.
Once everything was added up, it seemed that Derek was still short of $6,400. Derek also had some savings one the side, which he could live off when unforeseen expenses arose; this amount totaled to $7,565.20
The Execution of the Plan
As we all know, plans don’t always go as planned and changes do happen along the way. Here’s how the plan evolved for Derek.
January & February
In January and February, Derek decided to break away from his original plan and actually add to his emergency fund until he had $15,000. He also bought a 2008 Chevy Malibu, which he hoped he could sell for a profit later.
Things started to change for Derek in March, when it turned out he paid too much taxes. He was set to get a return of $4,700. He also got a $2,850 insurance check after a water leak sprung from the roof (which he didn’t use to fix the roof immediately). He also sold his car for $6,000, leaving him with a nice profit of $650. At the end, he could add to his savings to reach 15,000 and pay off $10,000 on the mortgage.
In April, Derek decided to cut back on expenses. This led to a reduction in his monthly phone bill and smarter grocery shopping. He also switched insurance companies, which made him able to pay off another $3,500.
When September hit, Derek decided to flip another car – a 2001 GMC Sierra. In the end, he sold it in November and ended up with a lovely profit of $1,350.
Derek decided to pay off all his debt in December. He had $14.799 left to pay and $15,300 left in his bank account. When his new paycheck came in, he had $17,000 in his bank account and paid off the mortgage and the remaining interest of $14,814.62.
Here’s his Month to Month Total
- January – $54,217
- February – $53,871
- March – $43,524
- April – $39,999
- May – $34,120
- June – $31,252
- July – $27,934
- August – $26,656
- September – $26,656
- October – $23,334
- November – $14,799
- December – $0.00 🙂
Anyone can pay off their mortgage effectively with a good plan in place. Derek has proven that smart saving and finding multiple sources of income can help Americans to not only pay their mortgage, but also beef up their savings!
Of course, paying off your mortgage does mean you’ll need a bit more income at your disposal. Therefore, if you only have income from your day job – and don’t have any other source of income – you might have to look for another job or investment that could help you get the money you need.