36 and Mortgage Free: One Family’s Journey

Our guest today is Will, a colleague at the high school where I work. As a teacher, I find it interesting to see different people earning similar incomes navigating their finances in such radically different ways from one another. Will stepped up the ladder to become a department head a few years ago. He is 40 years old, and he and his wife Rachel, who have lived on a single income since their first child was born eight years ago, have been mortgage free for four years. 

1. Was there a point at which you decided you wanted to manage your money really wisely? What would you say were the influences that made you become effective with your finances?

​When Rachel became pregnant with our first kid I realised that we would need to do something to make sure we could provide for the kid(s) in the future without feeling pinched. I wanted to be able to provide the type of life where we could afford to do fun things without stressing over the costs too much. It just so happened that at the same time a colleague told me about The Smith Manoeuvre and how she had paid off her mortgage in a couple of years. I looked into it and realised that after having paid my mortgage ($1000/month) religiously for 6 years ​I had paid the bank $72,000 but my mortgage had only been reduced by roughly $15,000! Once I switched to the Smith Manoeuvre I paid off the remaining mortgage of roughly $100,000 in four years. My wife has not worked since giving birth to our first kid 8 years ago, so we paid off the $100K on one income while raising 2 kids and not changing our activities too much. We have been mortgage free for four years.
2. For how many years have you been working full-time? As specifically as you are willing to share, what is the range of household income that you have lived with since you started working? ​I have been working full-time for 15 years. When I started teaching I was making $37K. This is what I was earning when we bought our house. Rachel was a student at the time. ​When she got a job our combined income was close to $100K. By the time we had kids our combined income was closer to $120K. Once she decided to stay home our income dropped to $80K but has slowly risen to $100K over the last 8 years.
3. What is your experience with debt? What is your current debt load? ​My experience with debt it that I don’t like it. I don’t mind borrowing money, I just dislike the imbalance between banks taking huge interest from me but giving me a pittance of interest on my bank account balances. Currently I have a small car loan of about $12K to pay back over 5 years​.
4. What percentage of your income do you currently put toward savings/retirement/kids’ education? ​I have no idea what the percentage is. I contribute nothing to RESPs. I put a couple of grand into savings every couple of months.​ Plus, I have a pension plan, and about 10% of my gross income goes into it.
5. What percentage of your money is spent on non-essentials such as eating out/going to the movies? ​We spend almost nothing on eating out and movies. Occasionally we buy food/drinks on the go if we are out with the kids and they are getting fractious.
6. What are your top tips for managing money on a single income? ​Don’t waste money on frills. Get some willpower.
7. What is your advice to people who struggle with the management of their personal finances? ​Set a realistic goal. Get the bank to garnish your wages as they go into your account. You will be shocked by the lower amount of the deposit the first time but after that you will not notice the difference.​
8.  What’s the main money goal you’re working on right now? Currently I don’t have a particular money goal. I would like to finish my house renos this summer without blowing my reno-savings.​
9. Do you plan to “upgrade” to a double income, or is it possible that you will continue to be a single income family? ​My wife hopes to return to working in the future but we have no particular date for that. When she does we will likely just put her entire income into savings and continue to live off mine.​ Since we can live off mine comfortably she can choose the perfect job for our needs. Neither of us want our kids coming home to an empty house.
10. Do you plan to “upgrade” your home or your lifestyle? Or do you plan to keep it simple so that you achieve financial freedom at an early age? ​We are planning to upgrade our house but this is in respect to the size and not the price. We are looking to move out of the city so we will likely be able to by something much larger for a comparable price. Even if we have to increase the mortgage I am not concerned since I know I can pay off $100K in four years on my income alone. If Rachel gets a job, this will be quicker.​








11 comments on “36 and Mortgage Free: One Family’s Journey

  1. Always great to read about another member of the no-mortgage club. I still feel like it was one of our biggest financial blunders (opportunity costs!), but one we are actually happier for. Being debt free is a fantastic feeling. I’m not sure I’d be as worry free with a $100k mortgage and $100k additional in the stock market. In fact, both of those single items tend to add stress to our lives, for whatever reason.

  2. I think having savings automated like Will said in #7 is a very good tip. Once you don’t see the money…it is out of sight out of mind. The money will start growing and you won’t be tempted to spend it. And yes…will power is also very important!

  3. Glad you liked my answers. Just to clarify one point that was mentioned in one comment. I put $1000 every couple of months into savings. If we really needed to I am sure we could do it every month, it would just require more discipline. We did something like that when we started paying off the mortgage in huge chunks. Our attempt to pay off the mortgage quickly coincided with Rachel leaving work to be a full time mother. At the time she stopped working (she got maternity benefits of about $750 every 2 weeks for 1 year) we were paying $1000/month in mortgage payments, $830/month in car payments and were able to put $1000/month in additional lump sums onto the mortgage because of The Smith Manoeuvre investments.
    Once the car was paid off (at the end of the maternity leave when the $750 every 2 weeks also stopped) we then put that $830 onto the mortgage. I am not very good at math so I rounded up and put $2000 lump sum/month onto the mortgage.
    Due to our investments through the Smith Manoeuvre being tax deductible, I also put our tax refunds of between $3000 – $4000 as lump sum payments.
    The only thing that allowed me to do this was self-discipline, it would have been so easy to blow the extra cash on a fancy vacation.
    I did some rough calculations and realized the following: I paid off a $100K mortgage in 4 years; the bank I had originally been with had told me it would take 13 more years at my current rate of payment. Not having to pay a mortgage for the extra 9 years has saved me roughly $100K in interest payments…that means $100K that stays in my pocket!
    Good luck with your debt loads!

  4. “​Don’t waste money on frills. Get some willpower.” Definitely my favorite quote. 🙂 I also love how he has every intention of paying off his next house in just four years on one income again. That is so inspiring!

  5. Thanks for agreeing to do this interview, Will. There was a time when I would have said, with some disdain, that you were “cheap”. Now, I think you’re wise. And I think you and Rachel have shown an admirable strength of character in going against the grain. I’m sure you get judgment on occasion. Just know that it’s coming from a place of blind misunderstanding. You’ve set yourselves up to have a lot of freedom. Enjoy it!

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