Last year, I couldn’t make up my mind when it came to our debt. At first, it seemed like we had paid off just shy of $20,000. Then, I remembered came clean about the fact that we still had a car payment. So we clocked in right around $24,000 when it was all said and done.
As someone who is chronically terrible with setting goals, I didn’t really want to do anything other than make at least two times our required mortgage payment each month. I knew we’d achieved that, but I wasn’t keeping too close of an eye on the actual numbers. Where did we land for 2016? $27,143.
Now, before you get too excited, let’s remember a few things:
This is my mortgage
So some of you will tell me it isn’t debt. And you would be wrong. In fact, I would contend that it is the most insidious kind of debt. What makes me say that? Because it took me a good few months of blogging before I even realized we had six-figures worth of debt. Prior to that moment, a mortgage was always something else. A reward for owning a home. American Dream debt. Good debt. It’s all nonsense. Debt is debt. Don’t believe me? Try not paying for a while and see how that goes.
This includes interest
This year, we paid $6,039 for the privilege of owning renting our home from the bank. The bank is thrilled. I am not. And before you start typing about that glorious tax write off, let me tell you two things: we’re already getting a tax break for two graduate degrees (woof) and LA LA LA, I can’t hear you. Seriously. I don’t care. I don’t want a mortgage.
This isn’t That Different From 2015
What is significant, though, is the fact that none of this money went towards anything else. Not my car. Not Mr. P’s car. It all went straight towards our mortgage. And what’s even more significant is the fact that the amount we put towards destroying our debt is over a third of our net income, excluding some side hustling.
So what does that mean for 2017? To be honest, I don’t know. I still have some money in our savings account that we could have tossed towards our mortgage, but I’d like to pursue investing a bit more aggressively as well. We will definitely max out both of our Roth IRAs for 2016, and that will continue to be a priority for us in 2017. While I’d like to set some grand goal of hitting $30,000–mostly because I like round numbers a whole lot more than I like decimals–, I’m not willing to make that commitment.
Instead, we’ll keep it simple. We will pay at least double each month for as long as we are able. If that means we hit a new milestone, excellent. If we slip down to last year’s payment total, that still puts us well on track to own our home free and clear just after my fortieth birthday.
I may royally stink at setting goals. But there is one thing that I can do pretty well. And that’s destroying this debt.
So Tell Me…How did 2016 shape up for you? Have you started to crunch any numbers? Are you better at goals than me? Let’s be serious. Everyone is better at goals than me.
Everyone is better at goals than you? Baha ha ha ha. If that were true, I would have hit mine. Instead, I made up new ones that weren’t even goals and then started counting them as wins against the old goals. Semi-fail! Our debt repayment (mortgage only as well) clocks in right around the same as you – a few thou shy of $30,000. Not too shabby. When I include it in our “spending on housing” category, it does inflate the year and make it look like we spent LOADS this year.
At least you set them! I’m all, “My goal is money. And fitness. Let’s be better at them.” Ha! And yes, aren’t numbers funny like that?! I keep our regular mortgage payment in the housing part of our budget. And I keep the doubt payment as a line item in the savings section (even though it’s not really savings…but then again it is because ZOMG the interest). And I don’t put my side hustle in our budget because it’s all over the place.
So basically our budget is just about as circular as our goals! 😉
My supervisor just came in my cube as I was reading this so either (A) you just landed yourself a new reader (you’re welcome), or (B) I’ll be looking for a new job soon. I guess both options could happen, too. Anywho, congrats on destroying more of your mortgage this year – that’s awesome! My 2016 was horrible, but only because I set a really aggressive goal and then all hell broke loose. I’m thankful that I’m financially in a better place today than I was 365 days ago even if I didn’t hit my goal.
That’s the most awesome perspective, Ernie! And I really think that is ultimately all we can ever ask of ourselves and SHOULD ask of ourselves. If every year is better than the last, that adds up to a pretty kick ass life, no?
And one more reader would be AWESOME. Ha! 🙂
Congrats on destroying $27k of debt!
Debt is debt indeed – but that particular debt is exactly what allows to someday no longer pay rent to a bank or landlord. 😉
That is an awesome year. Congrats on the progress! Honestly, I’m not sure I’m any good at goals either. I’m more direction focused. If I’m heading in the right direction, and putting in honest effort, then I am happy. I tend to keep a picture in my head of what “ideal” would look like, then just run like a crazy person in that general direction. If we hit some benchmarks along the way, we celebrate. But the benchmark isn’t really the end goal. It only matters to the extent it moves the needle on creating that “ideal.” So it looks like you are running in the right direction for you. And that is awesome!
I love this, Ms. Montana! You’re so right. Forward always. Sometimes it’s flying leaps and sometimes it’s baby steps.
Congratulations on the debt destroyed!
I didn’t set any goals except on the 401k, IRAs, and HSA this year. All of those goals have been met, but savings has suffered. I’m looking forward to setting some new, loftier goals for 2017!
Oooh, I’m looking forward to reading your goals for 2017, Amanda.
Congrats on the progress! We’ve got some similar goals in my household and have been “working” towards them for a while. For whatever reason, I’ve hit my breaking point. I want out from under my pile of debt (student loans, credit card, vehicle, mortgage). My wife and I are trying our own types of a side hustle to help. I’ve technically had mine for over 15 years, but haven’t looked at it as one. My wife started her own last spring. It hasn’t taken off like she’d hoped for, but she’s still giving it her all. It feels like 2016 was a year of being stalled. Any progress made was quickly met with unexpected events (costs) to deal with. 2017 is fast approaching. A new year. Another chance to kill that debt.
That’s the perfect way to put it. 2017 is another shot. And I feel your pain, at least a bit. I’ve been cutting back on tutoring for my sanity. And our mortgage progress looks SO impressive on this page…but considerably less impressive when I remember it’s still six figures worth of debt even if we slashed over $20k from it.
We’ll all have to hang in there and keep hustling!
LOL – “try not paying it for a while and see how that goes.”
Great job destroying your mortgage, we’ll be doing the same after our loans, because debt is debt, and debt is BAD. 2016 was good, not great. We made a lot of progress (haven’t crunched all of the numbers just yet), but it doesn’t look like we’ll be hitting our goal of entering 2017 with no CC balances. There is one left with approximately $1,500 that we can’t seem to come up with. Of course, it will not last long in the New Year, but it would have been awesome to reach that goal on time.
Ooooh, you’re so close! Even if you can’t quite hit it by the end of 2016, you’re knocking on the door. That’s incredible that you’ve continued to make so much progress. Woohoo!
Way to pay down that debt! I, too, hate my mortgage, except that I hate it even more because by this point in my life I shouldn’t even have one. So we are paying extra on it each month, but not enough to make a huge difference like you are. That was our not-quite-a-goal, similar to yours, except not as measurable. I think you do goals just fine, because you are killing it!
Thanks, Gary! I sometimes wonder if we would do even better if I set stricter goals. But I really find value in the wiggle room, too. It’s tricky!
And you definitely can’t think about it compared to me. We’re in a good place right now to do what we do. Who knows what the future holds! That’s like when I compare myself to people who pay off their entire mortgage in five years. Apples and oranges. You’re kicking butt, too!
$27k is more than last year so I would count that as a win! 2016 was pretty up and down so I’m really curious to see how it fell out for me in the end. Happy holidays to you and your family!!
Thank you so much, Leigh! I can’t wait for your year-end posts as well. Enjoy time with your families…and as newlyweds! 🙂 <3
Congrats on paying off more debt! My philosophy is that every dollar of debt that’s eliminated is a little victory. 🙂 We got rid of $20,000 in credit card debt through 2015 – 2016, which was awesssome. Admittedly most of our 2016 extra income went into savings for our house. That did mean we diverted funds from debt, but we did pour cash equity into our home.
I love your approach to a mortgage. I know a lot of people don’t count mortgages as debt, but I personally do. That’s how our debt total got up to $225,000! Yikes! We’re currently doing our badass 18 month student loan payoff of $65,000.
We’ll see how it goes. 🙂
I hope to meet one of those people. Because I seriously used to be that girl. I seriously sat at my computer one night and was like, “How do people get themselves into so much debt without realizing it?!…OH MY GOD we’re in so much debt and we don’t realize it!” 🙂
I often wonder how people can not consider a mortgage to be counted in the debt column. That just boogles my mind, lol! At one point, we had almost $90,000 in debt (including mortgage). We were rolling over a 401K and as the husband was speaking with our financial advisor the guy asked him what our current debt was and when the hubs told him, he said “That’s it? Seriously?”. The hubs and I were astounded because we thought it was a lot. Fast forward a few years and the economy tanked in our area and the hubs lost his job. We only had about $12,000 left on our mortgage and $5000 in credit cards. I freaked out over the house not being paid off and had nightmares about it being repossessed…..silly, I know. But it stressed me totally out so I paid off our mortgage out of our savings as well as the credit card that I had been chipping away at. We were lucky to have a fairly decent savings account and there was enough left to tide us over. Not everyone would have had that option. The way I look at it, if I’m paying a monthly note on anything…. it’s debt.
That’s a ton of money to drop off a mortgage! The interest portion of our balance definitely agrees with your view on mortgage debt being DEBT!
We are focused on killing student loans right now – I think we knocked around 18k off the principal in 2016. Still a little ways to go on that front.
Goals have worked well for us, but that’s doesn’t mean they have to work for everyone.
That’s amazing that you cut down your principal by almost $20k! Woohoo! And our interest is relatively low (and so much lower than student loans), but I hate feeling like I’m paying for my house AND renting from the bank at the same time.
Round of applause! That’s great!
I did a lot of work on our mortgage this year but it doesn’t LOOK like we did a great job with it because it’s so big. It’s only down 4%. Humph. I’m still having trouble deciding what to really focus on – building up savings, investing, or cutting down debt. The usual “I want to do EVERYTHING” thing is holding me up but I should make some decisions for the new year.
That’s my problem, too. Actually, BOTH of those things are my problems. I’m torn between investing and our mortgage. I’m trying to keep a balance of both. But then I realize how much it takes to actually make a dent in $175,000 and I get all sorts of cranky.
Ha! Everyone is better at goals than you – except me! I love making it a “habit” to pay double each month. I am much better with plans like that. We haven’t crunched any numbers yet – and we probably won’t. Since we haven’t done that in years – it wouldn’t be that meaningful! You are ROCKING it with killing debt – glad you are giving yourself credit for that 🙂
Thank you, Vicki! A habit is a great way to frame it. I figure if I keep tossing money at our mortgage and into Vanguard, I’m doing alright!
Hey! A little or a lot…… everybody that has commented is doing great just by focusing on doing things to pay down debt and not incur more. The hubs and I haven’t used credit cards in the last ten years. We have one that we bring with us when we travel for emergencies. But it is used so seldom that they send us a notification every couple of years that we need to charge $50 on it to keep the account open, lol! We also have a gas card that we use only when we’re traveling and it’s paid off in full immediately. Having no monthly credit card bill of any kind is awesome….we had one for way too many years. And getting rid of the mortgage a few years early was a huge weight off of my mind!
My two goals this year are small. Add a little more to savings by reducing what I spend at the grocery store.
Those two goals can make a huge difference, though. When we finally got our budget down to $200 for groceries, I was shocked at how well we can eat for so little.
Sometimes the small things can make a difference. Not buying paper towels and using napkins instead. Line drying your clothes…… I was flabbergasted at how much that saved on my electric bill! Making your own cleaning products. Reusing jars instead of buying storage containers. Shopping secondhand for clothing. Stuff like that adds up to more than you would think. Now I just have to learn to control my impulses at the grocery store, lol!
“Debt is debt. Don’t believe me? Try not paying for a while and see how that goes.” Bahaha.
You’re making such great progress–we’re all proud of you.
We don’t have our numbers yet this year, but one of our favorite date nights is sitting together on New Year’s Day and putting our new numbers in the spreadsheet to see how far we’ve come since last year. It’s a chance to talk about our goals and dreams and tweak our plans to make them happen.
What a fun way to ring in the new year! I love this idea. I think it must be so energizing!
That’s solid debt destruction there! I’ve started to crunch some year end numbers, or at least getting things set up for a quick update once year end hits.
But I do know we hit a couple of our big goals including contributions to our investments. We also paid down a pretty big chunk of debt. I haven’t estimated our net worth yet but I’m confident we exceeded that goal too, especially given how well the market has done recently.
That’s awesome! I guess the good thing about really only have this goal is that it’s just a few clicks in the account to add the mortgage and the everything else 🙂 Can’t wait to read your year-end post!
Don’t get mad at me, Penny, but you’re being way too hard on yourself. You and Mr. P are doing a fantastic job. Paid off home by the time you’re 40? Are you kidding me? Not many Americans can say that.
2016 has been very good to me and Mrs. G. I’m not gloating, but it’s great being RETIRED! Our last day was over two months ago and neither of us have even thought a second about our former jobs. The one nice thing about blogging is that it keeps you busy. Finally, our portfolio is up about $180K this year. We put in around $60K and the rest came from the market. And the amazing thing about it is that we didn’t do anything exotic. We invested in simple index funds.
Thanks! It wasn’t really meant to be too hard on myself. Except maybe for the goal thing. But whatever goal-setting we do seems to be working.
I’m so thrilled for you and Mrs. G. You’ve had an amazing year. I’m so glad to hear retirement, the blog, and your portfolio are treating you well. Woohoo!
That’s awesome – great job! I agree mortgage debt is still debt – it even has it in its name 🙂 2016 was great for me financially, hoping to keep it up in 2017.
Woot! Go Penny! 27k is awesome debt slaying!
Congrats on paying down that debt! It’s a big accomplishment!
Thanks, Stephen. Only $173,000 to go 😉
Our mortgage should be gone next month after 11 years. Prepayments work!
Home ownership is part of the American dream but it might not makes sense for a lot of people. Even if you have the money to pay off your mortgage it might not make sense to do it.
If your interest rate is low you can make more in the market than you can paying off the home.
Yup! That’s very true. It’s why we’ve consistently tried to do a combination of both.