Mortgage Free Diaries - Mortgage Free Mumma
Let’s be honest - becoming mortgage free is not for the faint hearted and today’s guest did this whilst juggling a toddler and baby during covid! Want to know how this mother of two became mortgage free by the age of 33. Keep scroll’in…………………….
Location: Adelaide, South Australia
Occupation: Stay at Home Mum for the past 4.5 years, before that I worked in retail/admin
Mortgage Free age: 33
Time taken to pay off mortgage: I bought the property in Dec 2012 as an investment property, and paid nothing off the principal balance for almost 5 years before we decided to start paying it down. Once we decided to start putting money towards the mortgage, it took us 5 years to pay off (Oct 2017-Oct 2022).
Mortgage/Cost of home paid off: $155,000 mortgage, plus about $19,000 interest (this doesn't include the interest charged before we started paying it off - the rental income received during that time covered the interest).
Natural spender / saver or investor: Definitely a natural saver!
Where did your inspiration of becoming mortgage free come from? I joined Instagram late in our mortgage free journey - we had just $99,999 left to pay - but I definitely took inspiration from other personal finance accounts. Before Instagram, I used to spend my downtime Googling 'mortgage free stories', reading any blogs or articles that came up. I am a fan of Mr Money Mustache's blog from way back, so I would often read comments from other Mustachians/bloggers about their mortgage free stories.
What was your main motivation for becoming mortgage free? To begin with, our main motivation was to increase our passive income, as the property was an investment. However, when we moved into the house in Dec 2018 (just over a year from when we started paying down the mortgage), I was 6 months pregnant with our first child. Our motivation was to be able to provide our family with the stability that mortgage freedom could offer.
What was your biggest challenge during your journey and how did you overcome this? Income - Yes, our mortgage was small in relative terms. But we were aiming to pay it off in arguably the hardest years - babies, toddlers, reduced income, covid, etc. I've totalled our incoming money for the 5 years it took to pay off the mortgage, and it averages out to 44% every year going towards the mortgage. Mortgage stress is commonly defined as having to spend 30% of your income on your mortgage, so we were effectively in 'mortgage stress' for 5 years straight. Some years were harder than others, and there were times where I questioned why I was being so determined. Would it have mattered if we missed our goal by a year or 2? Of course not. I just tried to keep my eye on the goal, transferring whatever extra we could, and delaying purchases that could wait for a little longer. I also tried to give myself grace in the 'low' income times (winter is hard for my husband's blue collar industry).
What lifestyle has being mortgage free early given you? We've been mortgage free now for 10 months, and so for the most part life has continued as it was beforehand. We've definitely loosened the purse-strings; we went on a mini family holiday earlier in the year, and we are now focussing on projects around the house. My husband has been able to take more days off than usual, choosing family time over work time. We aren't insulated from the cost of living crisis - I have noticed the increase in our groceries, petrol and utilities for example - so we haven't saved as much as I would have thought, given we no longer have to pay a mortgage.
How do you feel about getting another mortgage? Whilst we were going through the journey of paying down our mortgage, my husband and I would talk about whether we would ever get another mortgage. We both agreed that the max amount we would go into debt for again would be around $100-$150,000 (meaning we'd sell this house and 'upgrade'). At around the $100k mark, you really start to see the balance drop, especially as the interest is not as much each month. However, with the amount that houses have now increased in price, I'm not so sure we would ever sell and borrow again. Our house is valued at around $380-$400k, and I look at what say $500-$550k would buy us, and it doesn't seem worth the hassle of buying/selling/moving. What's that saying, the grass is greener where you water it. Plus, it'd be so hard to give up the freedom - I really detest paying interest!
What kind of conversations did you have about money growing up? Do you remember being taught about money by your parents? Money wasn't a taboo subject growing up, it's just that there wasn't a lot of it. My Mum was a single Mum for part of my childhood, and she kept to a strict budget. We never wanted for anything, but there wasn't a lot of 'extras'. Typical 90's upbringing I suppose. My parents both taught me the value of saving for things I wanted, we were given pocket money each week, and we had bank accounts through a school program. Mum taught us about looking for items on special, and to calculate unit pricing, she also showed us how interest accrued in our bank accounts. I am quite open about talking about money, and can't wait to pass on all my knowledge to my children (both of whom already have bank accounts, and piggy banks).
Did you/do you feel comfortable discussing your mortgage free journey/becoming mortgage free with friends and family? Did you receive any unexpected responses? Whilst we haven't exactly hidden the fact we are mortgage free, it hasn't really come up in conversation with friends and family. Our parents know we have paid the house off, and of course they are very proud of us, and a couple of close friends know, but otherwise it's not something we really advertise. Maybe it's because it feels like bragging? And also, our house was clearly a cheap buy, and it is in a cheap suburb, and so perhaps I feel like that would make other people say it was easy for us because of these factors?
What was a non-negotiable cost that you did not give up during your mortgage free journey? There were a lot of things we went without on our mortgage free journey (newer cars, holidays, date nights etc), but I wouldn't compromise on making the house comfortable for our children. It is a 1960's build, and when we moved in there was no heating, and the air con was just a poorly operating evaporative system. We spent money on installing 2 split system air conditioners, replaced the (almost non-existent) ceiling insulation, and had roller shutters installed on the 3 bedroom windows. We also had the toilet replaced because it was old and often leaked/blocked. We *could* have forgone these expenses (about $10,000 over 2 years), and we would have reached our goal of mortgage freedom about 6-8 months sooner, but that wasn't worth it to us.
Do you feel different about money since becoming mortgage free? No, I'd say I feel the same about money. To me, money brings security, stability, safety, choices, options, comfort. So if anything, this journey to mortgage freedom has further cemented what money feels like to me. The biggest expense of my life is behind me, a goal ticked off, and now I have a tool to use for other purposes.
Did you invest outside of superannuation whilst paying down your mortgage? Why? Three months before we started paying down the principal balance on my investment property, we decided to invest in shares. Between July 2017 and Sept 2018 we invested a total of $33,000 between 2 ETFs. Once we had made the decision to move into the property when the tenant's lease ended (Dec 2018), we chose to put investing on hold while we focused on paying down the mortgage. By Nov 2021 our share portfolio was valued at around $52,000 and our mortgage was $85,000. We had a 2.5 year old girl and a 6 month old boy, and my spidey senses were telling me that interest rates were going to start rising soon. We had a good long discussion about the pros and cons, and about what was most important to us at the time (me to be able to continue as a SAHM, my husband to be able to remain self-employed, among other things), before deciding to liquidate our portfolio and pay the mortgage down to $33,000. I know this is controversial, but it's been almost 2 years since we did this, and we don't regret our decision. We will likely begin investing again soon.
Do you have joint or separate finances? How important do you think this is? We've been together almost 11 years now, and our finances have been combined for about 9 years. For us, it just works. He has always earnt more than me, but there has never been a 'my money' 'your money' battle between us. We are a team, our goals are aligned, and it's all 'our money'. My husband likes to call me the Chief Financial Officer for our family, because I enjoy managing the money (shopping around for deals, paying the bills, researching financial products etc). We have one joint transaction account and one joint savings account, and big purchases are discussed before any decisions are made. Looking back, I realise now how important it is/was to find a partner that I could trust to share finances with. I'm not sure it would have worked if one of us was more of a spender than a saver. It's definitely an important conversation to have before deciding to combine finances.
What is the best money advice someone has ever given to you? I don't know if I'd say this is the best advice, but it was certainly important - When I was 16, I got my first job (housekeeping at an upmarket hotel) and my bank graciously sent me an application for a credit card. I didn't know anything about credit cards, so I asked my Mum what it was for, and she just simply said, "You don't need one. If you don't have the money for something, you can't afford it. The only exception is a house one day." To this day, the only thing I have ever been in debt for is my house. I have never had a credit card, personal loan, BNPL account, or car finance.
What are your top 3 tips for becoming mortgage free? I read this out to my husband and he said - be a tightarse, don't live, and buy in a cheap area lol! But seriously, be very intentional with your expenses - work out what your wants and needs truly are - any extra money going towards your mortgage balance is saving you in interest. Keep your eye on the prize - it's a marathon, not a sprint - use colouring in debt free charts, or anything else to keep yourself motivated. Don't tell anyone (outside of close family/friends/anonymous Insta account) - it's a big goal/dream/idea, and while most people will have good intentions, they may put you off, by being negative about it.
What would you say to other families or mumma’s out there who would like to become mortgage free but think that they are not able to do this with children? It is not easy, but then nothing worth having truly is. Be kind to yourself, life with children can be tiring, messy, expensive, unpredictable, and sometimes you just have to go with the flow. Any extra money you can direct towards your mortgage will help you in the long run. Compounding works both ways - the more you pay now, the less interest you pay, meaning more of your repayments go towards the principal balance, which means you are charged less interest.... and on and on the cycle goes!
I would like to say big thank you to MFM for generously devoting her valuable time to share her unbelievably inspiring journey towards achieving a mortgage-free lifestyle. Make sure you check out her awe-inspiring journey on Instagram: mortgage free.mumma
If you have also paid off your mortgage early and are keen to spill the tea - flick me an email, I would love to hear from you!
Friendly reminder: The above reflects personal choices and opinions. As always all my posts and content are for entertainment, inspiration and education purposes only and is never financial advice.
