Mortgage Free Diaries - Cash Flowing a new build with Gemma
The stars aligned when I crossed paths with Gemma at a Girls In Business event. As we chatted, I discovered that she was not only a coach like me but also living the mortgage-free life! Can you say "instant connection"?
For reference Gemma has recently turned 40 and her hubby is in his 40s. They had bought their land with cash 5 years earlier and are cash flowing building their home - they have currently built 30sqm (where they work and live) whilst they are saving up for the rest of the build.
Location: Stratford, Taranaki
Occupation: Teacher/Coach. Mentors people in having the courage to change, in love, work or friendships, so they do well and feel good.
Mortgage Free age: We kind of actually did it the other way around – we originally applied for a mortgage and moved back to Stratford to start building our home but then decided that we didn’t want a mortgage, so technically we never got a mortgage as we ended up cash flowing our build instead.
Cost of home paid off: Circa $320,000 NZD
Natural spender / saver or investor: My first instinct was to say we are natural savers but then realized that it can’t be true. Since we started learning about personal finance we realized we must be natural spenders because we were always broke! Now I like to think of us as managers of our finances and investors.
Given that you went down the pre-approval mortgage route, was there a certain reason why you ended up deciding not getting a mortgage?
We decided to not go through with it because we got sick and tired of all the conditions that went with the pre-approval loan (not wanting to bag the banks or anything!). It just didn’t suit what we wanted and we got tired of trying to jump through all the criteria. We then thought about whether we actually needed the loan and started to compare what kind of house we could build with the loan vs. what we could do by just doing it by ourselves with our own builder and doing it piece by piece, building what we could afford without a loan.
It was also when we started to think about what house we could get for paying off a mortgage over 30 years, it didn’t seem worth it! We decided we would rather go through 5 years of ‘pain’ – saving up little by little to build what we could afford and be ‘done’ in 5 years and still end up with what we wanted.
What was your main motivation for becoming mortgage free / not getting a mortgage to build your home?
Ultimately it was our goal for financial freedom we set a couple years prior. Also, we were sick of paying rent and paying other people’s mortgages and wanted to invest in ourselves and have our own financial freedom. When we were going through the process of getting our mortgage, we kept on coming back to our goal and realized that getting a mortgage didn’t align with this.
What was your biggest challenge during your journey and how did you overcome this?
We knew we were going to have to stop paying rent in order to save enough for the build – but then we didn’t have a place to live until it was built (chicken and egg situation!). So we had to be creative with what was available to us at the moment for us to be able to do that.
1st challenge - We ended up moving back with my father. Before the move, we were living and renting a brand new home (literally the first people to live there!) Dad’s house is off-the-grid with an outside toilet (long drop). His solar power was set up to sustain his lifestyle and one person, but not a family or our lifestyle. We went without power a lot, basically if there was no sun, there was no power. So that was quite challenging since no power means no water, lights or internet. Grateful to Dad for giving us a place to stay. It was the difference in living conditions that made it challenging. We did this for about 9 months.
2nd challenge – My husband still had to work in the city away from us (Palmerston North) so our family was split up. Doing solo parenting and being apart was a huge challenge. He was financially supporting us so we just had to make it work.
3rd challenge – My mum passed away at that time, so that was a big challenge for us as our family was not together and my husband was away for so much of that time. From memory he left the same night or morning after her funeral. So dealing with that, when in a sense we didn’t ‘have to’ was tough since we were doing it to save money to be mortgage and financially free. So, it was challenging, coping with our emotional wellbeing and it’s effect on our relationship, considering the support you need when one of your parents pass away.
Was there ever a time during your challenges where you thought that it was not ‘worth it’?
We did come up to those moments and we did ask ourselves if it was worth it. We just went back to our centre of how important our goal was to us, why it was important to us and discussed how can we support each other via the phone anytime we needed to, to make it work for us. We made sure we stuck together in terms of the challenges. Yes we definitely did question whether it was worth it.
What lifestyle has being mortgage free early given you?
We wanted to be free to take more risks. We wanted to take risks in our business and if any opportunities come up in our careers and business we wanted to be able to be in a position to take a risk. If we were stuck with a mortgage we would both have to be working specific jobs. When you are working a ‘normal’ job to pay off a mortgage I remember the exhaustion and lack of mental space to learn new things. We wanted to continue to learn about money and finances and we wanted to free our energy and minds up to still keep growing in the areas we wanted to grow in.
Also, aligning with our family values of at least one of us always being there with and for our daughter without the stress - such as being able to pick her up from school whenever it was needed or if she was sick we could be at home with her without stress of having to rush back to work, being there with her in school holidays etc.
Would you ever consider getting a mortgage?
I never like to think of things as fixed or definite. At the moment we have no intention but it doesn’t mean to say it’s definitely not something we would do in the future. We just don’t see how it would be of benefit to us right now. If one day we see it as something that would improve our lives we would go for it but until then, it’s a no.
What kind of conversations did you have about money growing up? Do you remember being taught about money by your parents?
Yes I was taught by my parents that ‘money doesn’t grow on trees’, that ‘we never have enough money’ and ‘everything is too expensive’. I was also taught that ‘money is the root of all evil’ and ‘that you have to work hard for money’ yet even when you work hard for money there was still never enough. It eventually starting making no sense. If you are working really hard, and then you get paid for working hard, but then there is still not enough to go around, then how does that make sense?! I believed this all the way up until my mid 30s, when I decided that something was not right here! How come there are other people who are financially well off and why can’t we be? What’s going on here? That’s when we decided to do a lot of learning about money and started reading books about it.
It sounds like you must have done quite a lot of work on re-programming and changing your mindset around money?
Yeah so we totally reprogrammed our beliefs and stories – We did that through José Silva and his mind control books. I was really keen to learn how you can re-program your brain. I also did the Tony Robins coach training course so I was familiar with how beliefs and stories affect your life and how to recondition your mind through peak state etc. However, I needed to dig deep and really get into changing those childhood programmed stories about money that were stored at my subconscious level, so I did around 3 months of re-programming with Jose Silva, my husband did it too.
Did you/do you feel comfortable discussing your choice to not have a mortgage with friends and family? Did you receive any unexpected responses?
If someone was to ask us, I feel comfortable discussing our journey but we just don’t have people ask in such detail outside of “how’s your build going?” I also don’t want to seem like I am boasting, so I am a bit cautious of how I present our situation if someone asks.
What was a non-negotiable cost that you did not give up when you were saving to pay to build your house with cash?
Apart from making sure our basic survival needs were met it was education and our personal development books that were non-negotiable.
Do you feel different about money since building a home without a mortgage?
We changed our thoughts about money before the process. We felt like we had to become those people first, to have the mindset of a person that becomes mortgage free. So, not really different in the sense that we were already doing this (mindset) work beforehand.
Did you invest outside of Kiwisaver whilst you were/are saving for your build?
We have only just started to actively look at the investment side of things, but we did make a small investment (outside of government retirement schemes) at about the same time as we bought the land a few years ago, and we still own that investment i.e. we didn’t sell it to pay for building the house.
Do you have joint or separate finances? How important do you think this is?
We have joint finances and that is really important for our relationship and something we value. We never really thought about having separate finances – for us and our relationship it has always been important to have joint finances as we just see it as being united and aligning with our personal values.
What is the best money advice someone has ever given to you?
Where you are at right now financially is because of the relationship you have with money.
Learn what money means to you and how money works – because if you don’t, it doesn’t matter if you win Lotto, you will find yourself back to where you are right now.
A lot of people think ‘If I just win Lotto, I would be so much happier because I would have XYZ.’ When we began learning about money we realized it doesn’t matter if you win Lotto, if you don’t have financial literacy you are probably going to find your way back to where you are right now.
Money amplifies the person that you are. You can do all sorts of great things and all sorts of horrible things with money. So money is only as good as what you do with it.
It doesn’t matter if you have $1, it’s what you do with the $1 that matters.
What are your top 3 tips for becoming mortgage free/not getting a mortgage to buy or build your property?
These are more principles that I have applied during my journey than specific tips:
#1 Ask yourself why being mortgage free is important to you. If you know why it’s important then that will get you through your challenges, as problems and challenges are always going to pop up.
#2 Have the courage to do the things that need to be done.
#3 Become mentally and emotionally fit to help you through the challenges that come up along the way. If your mind is focused and strong, and you are emotionally well, then you are set up to reach your goal.
What would you say to other families out there who would like to become mortgage free but think that they are not able to do this with children?
Sounds a bit cliché but nothing is impossible, you just have to find a way that works for you and your family. At the end of the day it’s your family, it’s not my family. So it’s up to you to discuss as a family what it would look like and how it would work for you. It’s not impossible but sometimes you do have to do things that you don’t want to.
Also, make sure you don’t compromise your relationships and make sure that you are loving and supportive of each other. Have a look at your strengths and see how you can make it happen by working together. If you are not sure about something, go out and learn more about it.
Put all options on the table. At the beginning of our journey we initially thought we weren’t going to be able to do this – we were on one income because we wanted one of us to be home with our daughter. When you start looking at all the options – you’ve got to put everything on the table. It doesn’t matter how ridiculous it is. Never in a million years did I think we would move back with my father without electricity and a long drop!
I know another family down the road who lived in a tent to build their home mortgage free. I’m not saying for you all to go out and live in a tent, but I am saying to put all the options on the table even when it doesn’t even seem like an option, it’s still an option. That’s when you become resourceful.
Write all the reasons why you can’t do something, and then flip it around to be the reason why you can. And be prepared that the answers might make you uncomfortable but that is usually where the opportunities are.
Bonus cool money exercise that Gemma made up to help you understand your relationship with money:
1/ Get some money out in cash (ideally different types of bills $5-$100) and play with it, rub it on your body, bring it close to your face, throw it around the room, or do whatever comes to your mind at the time – get creative and get comfortable with touching and interacting with it!
2/ Journal about your experience in that moment you are playing around with money. How does it makes you feel? What did you do or say? This can reveal your current relationship with money.
When Gemma first did this exercise she found that she wanted the money to get away from her as soon as possible, she felt disgusted by it. She realized that this came from money stories she learned growing up (e.g. ‘money is the root of evil’) so she didn’t want to touch it.
A big thank you to Gemma for taking time out of her day and sharing her mortgage-free journey with us! You've lit up our motivation and inspiration lightbulbs!
If you, too, have unlocked the secret to paying off your mortgage early and are open to sharing your story, please touch base with me via the contacts page, I would love to hear from you :-)
Want to learn more about Gemma? Insta & facebook: gemmaschmeling
Friendly reminder: the above is all about personal preferences and thoughts. Soak up the fun, get inspired but remember, it's only for entertainment and educational purposes. None of our content is ever financial advice!
