Finance · Homeowner

One Year Mortgage Free

It’s hard to believe that it’s already been a year since I paid off my mortgage. What have I done with the money previously going towards that expense? Read on…

Since I used some of my savings to pay off the remaining balance of my mortgage, my first priority was replenishing those accounts.  I was able to do this within a few months, thanks to a bonus at work that was far more than I anticipated.

Once my savings were at a more comfortable level, I increased my 401(k) contributions.  Instead of maxing out the entire $18,000 limit for 2015, which would result in fairly small paychecks, I decided instead to prepare myself to max out my contributions for 2016. This gives me a chance to get used to the modified paycheck now, rather than later. I calculated the percentage of pay by dividing $18,000 by 26 paychecks and then dividing this by my bi-weekly gross pay. I’ll end up contributing just over $15,000 this year and get a match on the first 4% from my employer.

I spent time this summer learning more about HSA accounts. I’d had one for 4 years but didn’t contribute more than what I expected my medical expenses to be for the year. What a mistake. I wish I had known sooner about the benefits of an HSA.  Similar to how I updated my 401(k) contributions, I used the same method for my HSA. While I won’t max out the contributions for 2015, I will for 2016 and I’ll already be used to the amount being taken out of my paycheck.

My car is quickly aging (it’s 7 years old already) so I set up automatic transfers to a Car Fund each payday.  I’m hoping to drive this car for many more years but want to be prepared in case something happens and that won’t be possible.  I expect this account to be fully funded by the end of 2016, partially dependent on getting a bonus early next year. If the bonus doesn’t pan out, it’ll take more time to fully fund the account. This shouldn’t be a problem, since I’m planning to keep my car until it’s at least 10 years old, if not older.

I also set up small automatic transfers each payday to a Fun Money account.  This is used for travel, new electronics, etc.  I have a couple trips planned for 2016 so I want to be prepared for the expenses.

While I haven’t used the excess funds for anything exciting, I have used them for something that makes me feel very confident about my future — attaining financial independence.

If you didn’t have a mortgage payment, what would you do with the extra money?

7 thoughts on “One Year Mortgage Free

  1. Congratulations on 1 year of being mortgage free! What an awesome accomplishment!

    I am not planning on paying off my mortgage any time soon… but it is coming due for renewal soon, so I am hoping that I can negotiate a much better rate, which may help us make extra payments toward the principle.

    I really think what you have done with your “extra” money sounds very smart and savvy.

    1. Thank you! It really is a weight off my shoulders. Hard to feel like you’re getting ahead when you’re paying interest on a loan.

      Hopefully you can lock in an interest rate before the Fed raises rates. Best of luck!

  2. Congratulations. Still about 5 years out from being mortgage free myself and can’t wait. Love how you are continuing to put your finances in order especially having funds to purchase a car later down the road.

    1. Thanks! I’ve never purchased a car without requiring a loan so it’s pretty exciting to have that as my next goal.

  3. Congrats on ditching the mortgage! We didn’t finish paying the last bit of ours off till this year in May. I know the feeling is great to not have to worry about the payment each month and it frees up your finances so much. Good to see you’re redirecting the mortgage payment to fund financial independence!

    1. I debated if I should pay off the mortgage with my savings or invest the money instead. But the peace of mind from being mortgage free is even better than I anticipated. Finally feel like I can focus on ER instead.

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