10 Things You Should Be Doing to Pay Off Your Mortgage Early (and the 1 Thing You Shouldn’t Do)

I am bound and determined to pay off my mortgage early.  It didn’t start that way, but a few years into the loan my husband and I realized there were just too many benefits to paying it off, so it needed to happen.  Since then, the desire to be debt-free has grown, while the loan balance has shrunk.

It’s an amazing feeling to watch this massive loan get smaller and smaller and I can’t wait for the day that it’s over.  What’s even more amazing has been realizing that little changes can actually cut off years of mortgage payments.  So, of course, when you add up all those little adjustments, you can seriously impact the length of your mortgage.

As with all major endeavors in life, the first step is always the most important, so if want to pay off your mortgage early, take one of these steps TODAY.

Here’s what I’m doing to pay off my mortgage early (and what you should be doing too!):

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Maintain a Forward Thinking Mindset

I know this doesn’t seem like an actionable step to take, but I promise you that it is. In fact, it’s possible that this is the most important step to take.

You need to constantly think about the future (when your mortgage is gone) and not about right now. I constantly remind myself that “my future self will thank me for this”.  It’s just like dieting. You need to trust and believe that you will be happy and grateful when you reach your goal.

A prime example of this is travel.  I’ll touch on this below, but major trips are something we’ve decided to give up (for now). One of the big ones that keeps getting pushed off is Disney World. It kills me to think that my 3-year old is missing out on that experience, but then I think about his 8-year old self.  In 5 years when our mortgage is paid off, he’ll get to experience a non-budget Disney World trip that will be even more amazing.  That thought makes me WANT to forgo the trip now because I know it will be better in the future.  

Cut Cable & Switch to Premium Channels

Yes, you read that right.  We cut our cable bill and then invested in premium channels.  And in doing so, we save ourselves about $1,000 a year…and still watch a ton of TV.

Times are changing.  I’m sorry to tell you, but your cable provider is ripping you off in ways you don’t even realize.  Cut it completely and instead invest in a Roku (a one-time purchase), which enables you to subscribe to Netflix and/or Amazon Prime.  Believe it or not, with Amazon Prime, you can now subscribe to single channels like Showtime, HBO, Starz, etc for $10-$15/month.  What’s even better is that you can cancel your subscription to those channels at any time. This means you can subscribe to HBO, get your fill of Game of Thrones and Veep, cancel, then switch to Showtime to get your fill of Homeland.  That’s what we do and it costs us around $30/month vs. over $100/month that cable was charging.

Related Post: The Best Cable TV Alternatives…so You Can Save a Ton of Money & Still Watch Your Favorite Shows

No More Restaurants or Take-Out

This one was hard initially, but got way easier over time. Eating out is delicious, but more importantly it’s convenient, so that was what we were up against.  The easiest way to combat the convenience conundrum is to just have some frozen pizzas on hand.  

But the real transformation happened when I started to meal plan.  Again, this sounds so basic and non-actionable, but I’m telling you, the effects were HUGE.  

You can read all the details of what happened on this post, but here’s the gist:  meal planning cut $500 off our food and grocery budget every month.  That savings goes directly to our mortgage.  If you want to cut down on your spending, this needs to be your first stop.

Convert Credit Card Points to Mortgage Principal Payments

This is one of my favorite mortgage-paying techniques.  

We switched our credit card (which we exclusively use for all of our purchases and expenses) to a credit card that offers points that convert directly to mortgage principal payments (ours is from Wells Fargo).  Not only does this mean that we get a little extra taken off our principal every month, but it happens automatically behind the scenes.  We do nothing!

This was one of those exciting discoveries that required no change to our lifestyle whatsoever. Just a bit of paperwork and voila! More money towards our principal.

Related Post: 8 Benefits of Using a Credit Card Instead of Cash

Make Bi-weekly Mortgage Payments instead of Monthly Mortgage Payments

This is a really important switch that I highly recommend everyone start doing. First, let’s make sure we’re clear on the terminology. Bi-weekly payments happen every 2 weeks. Bi-monthly payments happen twice a month.  At first, this sounds like the same thing.  But it’s not.  

If you make payments every two weeks (each payment is ½ of your monthly mortgage payment), you will end up making an extra two payments throughout the year (one full mortgage payment).  The bank will automatically put those extra payments towards your principal.  This trick alone will take years off of your mortgage!

One of the reasons this technique is so powerful is that many people are on a bi-weekly pay schedule. This means that your partial mortgage payments can fit very nicely into your budget and you’ll never really feel that extra payment being taken from you.

Give up Major Travel

I already mentioned this to you and I realize it’s one of the things most people wouldn’t be willing to give up.  But we’ve decided we’re not taking anymore major vacations until the mortgage is paid off.

This decision, however, has a pretty amazing unintended consequence. It is unbelievable motivation to get this mortgage paid off STAT.  

We want to travel.  More than you can possibly believe.  We talk about it constantly.  We plan out extravagant trips and list all the places we want to go.  And we will do it….when the mortgage is paid off.

Talk About It Constantly

If you want to accomplish something huge, you need to make it “a thing.”  You need to be obsessed with it.  You need to always be thinking about it.

And we do.  We talk about it constantly.  

This works wonders for us.  We keep each other pumped up and motivated. We come up with new ideas and act on them instantly.  It’s how we’ve done everything on this list.  It’s one of the best tools in our arsenal that’s helping us pay off our mortgage early.

Make Extra Principal Payments Every Month

Every month we put an extra payment towards our principal.  We’ve been doing this since the beginning, so we don’t even feel it coming out of our budget.  To us, it’s just part of the mortgage payment.

All of this is setup to withdraw from our checking account automatically.  It happens every other week (½ the mortgage payment that we owe + a set amount that will go directly towards the principal).

Every time either of us experiences a raise, we increase the amount we’re putting towards the principal.  Again, this way we never feel the money being taken from us.  We work hard to keep our lifestyle low key, so we never increase our spending when we make more money.

Put Available Lump Sums Towards the Mortgage

For us, we get at least two lump sums each year: my husband’s bonus and our tax return.  We often have things we need to put the money towards (home repairs, medical bills, etc), but a portion of those lump sums always goes towards the mortgage.  

These extra principal payments are important not only for the obvious reason, but also because they provide great motivation.  When you’re used to watching your mortgage decrease slowly, a big jump feels amazing.

Regularly Sit Down to Goal Set, Budget, and Prioritize

Now you know how boring we are. 😉  Does it make it any better if I tell you we actually love doing this?

What I want you to know is that this can be a really fun exercise. It can be over a bottle of wine and take the place of a date night. We do this every few months and we love it. We sit down and plan out our budget, talk about where we are with our goals, and brainstorm more things we can be doing.  

Sometimes we shift gears and focus on different avenues of saving money and sometimes we just provide more motivation for each other.  Either way, it keeps us on track to reach our goal of paying off the mortgage.

What You Shouldn’t Do to Pay Off the Mortgage Early

I just went through a list of everything I am doing to pay off my mortgage early, so I thought it was worth mentioning something I won’t do. My gut tells me that not making this one move is the right thing to do, but I will be honest, sometimes I have my doubts.  If we stopped doing this, we’d probably have the mortgage gone by now.  But it’s the safe move to make and one we’re not budging on:  

We still make monthly contributions to retirement accounts, college funds and a health savings account (HSA).  This includes a 401K, 2 IRAs, a 529 for each of our children, and an HSA.

These accounts are important…way, way, way more important than paying off the mortgage. Not only that, but there are clear incentives to contributing now instead of pushing it off until later (even if there will be more to contribute later).  

The 401K and HSA get company matches.  That’s money we lose if we don’t add our own funds.  The IRAs have relatively low annual limits, so even when we do have more, we won’t be able to contribute as much as we like. And the college funds don’t really belong to us. They belong to our children, so I’m not willing to mess with them.  My kids can do what they want with their money when they’re old enough.

Related post: 4 Long-Term Investments You Should Start Making Now

I’m telling you this only so that you don’t jump right away and start redirecting all of your funds to the mortgage.  It’s enticing, but probably not the smartest move. Patience is the hardest part of this endeavor!

I hope this list proves to be as helpful for you as it has been for me.  I’ve done a lot of research trying to figure out how to pay off my mortgage early, so it feels good to share the tips.  If you have anymore tricks you’ve used to pay off your mortgage, be sure to share in the comments.  Good luck on your mortgage paying adventure!

If you’d like more tips on saving & making money, getting out of debt, and reaching early retirement, subscribe to my Financial Freedom Mailing List for notification of new posts. Thanks for your time!