I started focusing on my financial position a little over 2 years ago, and I realized that I was in trouble. My wife and I were newlyweds and there was more money going out than what was coming in, plus we had $18,000 worth of school loans to pay back. Rather than wallow in my sorrows, I decided that we were going to increase our income, pay off our debts, and live the way we had always dreamed.
Paying Off The Debt
To increase our income, my wife was able to find work (rather than go into more debt at school), and I started learning how to make some online money in addition to my full-time job at the office. With an extra $1,500 coming in each month, we were able to pay off all of our debts in just over a year.
Buying a House
After paying off all of our debts, it was pretty easy to save up a down-payment for a house. We found a lovely foreclosure that needed some work, but at the cost of only $78,000 we figured that we could make some improvements and still come in at a cost that was less than the actual value of the property. While we are still in the “improvement stage”, we are nearing completion and our house is already worth more than $100k for sure.
Paying Down the Mortgage
It is pretty normal to pay for a house over the course of 30 years these days. Well, my wife and I are far from normal. In order to save $75,000+ on interest payments, we’ve decided to pay off our house in less than 4 years. After all, not much has changed financially in the last couple of years, so instead of making those $1,500 payments toward our debts (which are gone now), we’re putting an extra $1,200 toward our mortgage (and having $300 worth of extra fun)!
After the Mortgage is Gone
Once we get rid of that pesky mortgage, think about how quickly we could increase our savings/investments? If we consistently put $2,000 (our mortgage payment of $711 plus our extra $1,200 + a little extra) a month into some retirement funds for the next 40 years, guess how much our fund would be worth when we’re 70 years old? Drumroll…….. $11,521,743.46!!! If that’s not considered rich, I don’t know what is.
You Can Do It Too!
The crazy thing is that my wife and I are not really that special. We just started by living frugally, increasing our income, and devoting every extra penny toward our debts (and then later our house). Anybody can do this! What’s stopping you? If you need a little kick-start, email me at derek [at] lifeandmyfinances [dot] com. I would absolutely love to help you get started down your “get rich trail”!
Are you heading down the road toward a better financial future? How are you doing it?