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When Trevor MacKenzie moved into his wife Rebecca's home in Ontario, Canada after getting married in 2012, it had about $104,800 left of its original $150,800 mortgage from 2009.
"Once I moved in, we decided to accelerate the payments and find out the maximum amount we could put to the mortgage per month, and sat down to see if it was feasible," explains Trevor. "Both of us went through university paying our way, and being debt-free was always kind of a goal."
"When you pay off something quicker, you're less likely to pay all that interest," says Rebecca, a speech language pathologist. "When I was young, my brother — who is ten years older — said, 'Did you know if you paid your house off in so many years you can save over $100,000? I thought, 'That's kind of crazy,' and I guess I've kind of carried it with me."
Instead of making monthly payments, the MacKenzies (who requested to use a different last name due to the sensitive financial information being shared) put money toward their goal every other week. Rebecca explains that while she was originally making payments of a little over $700 , they bumped that number up to a little over $3,000 starting in April of 2012.
As a guideline, they used the book "Enough Bull: How to Retire Well Without the Stock Market, Mutual Funds, or Even An Investment," which recommends paying any debt — including your mortgage — before saving for retirement.
"Our net average household income over the last three years while we paid this debt was $111,649," says Trevor, who works for the Canadian government. "We figured we were spending about 54% of our income on our home, — about 37% on our mortgage, and 17% on other costs. For us, it was fun. We're both more or less type A. We'd set up our spreadsheet and every month we got to see big improvements: our mortgage coming down and our net worth coming up."
It may have been fun when they looked at the numbers, but in the day-to-day, it wasn't easy. "We looked at our finances scrupulously," explains Rebecca. "Every month we went over them together — we had all our receipts and were going over every dollar, from our utilities to extra spending. It was stressful and hard because you saw other people spending money and we had money we could have spent!"
One of the keys to their success, they say, is the fact that when Rebecca initially purchased the house, she chose one she could afford. "She bought something she could pay off quicker," Trevor says. "The mortgage broker is willing to give you far more than you think is a good number."
In the summer of 2014, they finished paying off the house, and gave themselves a budget break until the end of the year.
"The funniest part is it frustrates me that all the money we would have saved would have added up," muses Rebecca about their savings break. "There's nothing really to show for it. We went out to eat, we went to a hotel, we purchased stupid stuff you want. That's exactly the point — when you don't add your money up for something specific, it essentially disappears. It was fun and freeing ... but ultimately, it's just gone."
Now, they're back to a strict budget, saving the bulk of their income. "Our plan over the next five years to take all that money and save it and invest it for our future home," Trevor says. "We'll put the next 5 to 7 years of savings toward building a home, as opposed to just purchasing one."
"You'd think being debt-free would be this crazy, overwhelming feeling, but really it's not very different," Rebecca concludes. "It's a little more freeing, but nothing really changes. You're living your life, you're still working, but we still have goals and still want to put that money to something. I don't think we're done."