For the past four years, Simon and Marielle Boyce have written a blog together, documenting how living a sustainable lifestyle can also be financially sustainable. On Sustainable Personal Finance, the couple has shared the reasons why they don’t have cable, why they imported their car from the U.S. and even why they used cloth diapers with their first child.
To save even more money, the Boyces also grow some of their own food, eat 95% of their meals at home, try to buy most things used, travel only once every 4-5 years, bank where they can pay no fees and take full advantage of cash back credit cards. Simon even cuts his own hair. One thing they haven’t talked about recently is how – and why – they are aggressively paying down their mortgage.
I talked to Simon to find out more about how they planned to become mortgage debt-free in 7 years…or less.
Cait: Where is your home and when did you buy it?
Simon: We moved outside of the city, to a rural homestead east of Peterborough. It’s a 7-year-old, 5 bedroom ranch-style bungalow on an acre of land, with a finished basement and 1,000 square foot detached shop. We took possession on June 1, 2013.
Cait: What was the purchase price and how much were you able to put down?
Simon: We bought the house for $399,900, pulled $100,000 of equity from our first home for a down payment and took out a $299,900 mortgage to cover the rest.
Cait: I have to ask: What kind of mortgage rate did you get?
Simon: We got a 5-year fixed rate of 2.84%. The mortgage rate was good, but the key was that we opted to amortize over 15 years, instead of the usual 25, and we decided to make accelerated bi-weekly mortgage payments. We also got a mortgage product that would allow us to increase our payments by 10% each year, as well as make lump sum payments of up to 10% of the original principal amount each year, too.
Cait: What’s the balance of your mortgage now?
Simon: As of January 30th, 2015 our mortgage balance was $181,158. So, that means we paid off $118,742 in 20 months.
Cait: The most obvious question now is: How did you do it?
Simon: It was tough for the first 5 months, because we were carrying two homes. We tried to sell our first home by ourselves, but Peterborough proved to be a tough place to sell without a seller agency agreement. We came close, but it didn’t work out, so we eventually had to hire a realtor.
After we sold that house, and paid the selling agency’s fees, etc., we had some equity leftover that we used to make a 10% lump sum payment ($29,900) in 2013. In 2014, we made three more lump sum payments totalling $21,027, which mostly came from savings and a pension adjustment. And we recently made our lump sum payment for 2015 (which sadly came from an inheritance), which knocked off another $29,990 from our principal.
We’ve also increased our mortgage payment amount by 10% on three separate occasions.
Cait: When are you currently scheduled to be mortgage debt-free?
Simon: Our original debt-free date would’ve been June 2028, if we’d stuck with the mortgage loan repayment plan outlined by our lender, and never taken advantage of our prepayment privileges. As of today, though, we’re scheduled to be mortgage debt-free in January 2020. I’ll be 44 and Marielle will be just 35. But we’ll continue to make lump sum payments and should see this date inch closer.
Cait: Are you this aggressive/determined with all your financial goals?
Simon: We’re probably not as aggressive with other goals. We do have a well-funded emergency fund, and we invest in dividend paying stocks and ETFs to avoid MER charges. But our investing strategy is low risk. We both have defined benefit pension plans with our employer, so our retirement planning/funding has a strong foundation.
Cait: What keeps you motivated to become mortgage debt-free?
Simon: We both grew up in families where money was tight, and watched our parents carry mortgage debt at very high interest rates. We pay just 2.84%, while they were dealing with 18%. It was tough. We want to pay off our mortgage as quickly as possible, in case interest rates rise again in the future. But honestly, being mortgage debt-free has just always been a goal for us.
Cait: When the big day comes, how do you plan to celebrate?
Simon: We haven’t really thought about that. We will likely treat ourselves to a nice meal at the local steakhouse. Or maybe plan a vacation. The personal finance nerd in me will be ready to invest $3,000/month in our retirement. Maybe Marielle can retire early, after I get my pension – but she may not want to.
We do know that our next goal will be to help our two kids through post-secondary school, if they decide to go. We already fully fund their RESPs, but it would be nice to have increased cash flow for if and when either or both decide to attend, since we know they won’t be eligible for student loans.
Leave it to a personal finance blogger to celebrate becoming debt-free by setting another financial goal. ☺