Feature member Natalie and her family who are mortgage free after four years of hard work.
I clearly recall the day we decided to pay off our mortgage. My husband and I were sitting in the computer room with a cup of coffee and we were looking up the weather as we had decided to go to the snow for a day trip.
As I closed the web page a mortgage calculator flashed up on the screen which could calculate how much interest a consumer would pay on any given loan amount. Out of general curiosity I keyed in our mortgage balance of $165,000 and the calculator advised that over 25 years we would pay the bank a staggering $725,000 in interest. Our jaws dropped. Was this for real?
After some rough calculations we made a huge decision. We would contribute $3600 per month to our loan and $20,000 cash which I had saved up, sitting in a term deposit. The deal was made solid when we organised the bank to debit the set amount on the 15th of each month, leaving no room for temptation. As soon as the money was available in our account it was automatically transferred into our home loan account which had no redraw facility.
Over the next few weeks the reality of our commitment set in and I wondered how we could live off $500 per month for the next four years or if it was even possible! We were fortunate that we had not other debts, no car loans or personal loans and are a small family of three (soon to be four now!). My husband’s car is paid for (registration & insurance) and supplied through his workplace and we own my car outright which really helped.
The Foxtel was the first to go. We cancelled my husband’s income insurance and my RACV membership. We reduced our home insurance by removing accidental cover and reducing our contents cover because we could not afford it.
Our budget was $500 per month plus private health insurance which was $160 per month and that was with all household bills included, though we didn’t have a set budget on paper as such. I would pay small amounts for utility bills often. My husband received a $3000 bonus each year, which we spread across for bills and the government payments I received for having a child were left in an account for unforeseen circumstances. I received this at tax time in one lump sum, as it was hard to estimate my income.
There would be no eating out, going to the movies, purchasing new clothes, luxuries, coffee, holidays or toys. No new household items at all and if something broke we had to fix it instead of replacing it. No take-away, DVDs, getting my hair done or anything else. We literally spent zero on ourselves.
We created cheap cleaning alternatives by using vinegar, bicarb soda and Milton only. I have three spray bottles and dilute in water. The vinegar we buy in a large bulk bottle as well as the Milton. Personal items such as shampoo, conditioner and toilet paper I only ever buy on sale. I buy imperial leather soap in packs and do not purchase any ‘brand’ face products for myself or my son. We have never cared about product brands - the cheaper the better.
All baby food was made from scratch as were our meals. We didn’t buy packaged chips, treats or expensive pre-packaged foods and we purchased milk and freeze cartons. We made meals such as chow mein, lasagna, pasta dishes and rice dishes which we could freeze in batches and were very cost effective. Simple meals such as omelettes and homemade pancakes were common and all meals incorporated vegetables. We changed the way we ate and didn’t buy porterhouse and expensive cuts of meat anymore. The key was to buy when on sale and don’t run out of the basics, so we never had to pay full price. I bought fruit & vegetables boxes through Aussie Farmers Direct which cost me $50 a month and I also used frozen vegetables which I would buy in bulk packs when heavily discounted. Any fruit which was going off was pureed and frozen in single quantities to be thawed as required. We also made our own bread.
As far as our son was concerned, we received Pea Pods reusable nappies as a present and asked family to give disposable nappies rather than flowers for the very early days. I received a basket of newborn suits/clothes from our neighbor when we had our son which was a great start. My cousin also has two young boys so we did well in the recycled clothes department!
Family would buy clothes for birthdays and Christmas presents, which was terrific and we would get so excited to receive new clothing! I work from home and have a laptop supplied by work and no travel required which is another bonus. My son was only a baby, so I could work and not have to pay for childcare and I could work my own hours.
We had other benefits, such as my mobile phone and landline phone being paid for by work. As I am often making up to $400 worth of calls to customers per month so they pay both bills.
I would have to say our biggest savings were clothing and consumables. It is also very easy to spend money and have nothing to show for it which we just couldn’t do or there would have been nothing left to live off. My shoes were falling apart but I still didn’t care!
One major advantage we have is my husband is skilled in a few different trades and is able to turn his hand to anything. This saved us so much money over the years. Our hot water service broke down and we managed to salvage one from a friend who was throwing his out. It still had some life in it so we took it, my husband installed the unit and we have used it ever since!
To be honest I don’t feel like I have sacrificed that much now, though at the time I felt like I was sacrificing everything. In actual fact I realised how much we didn’t need. I always knew we would achieve our goal and often would imagine what we could do with our money once we were debt free. That very thought was what kept us going.
The icing on the cake was the day we both walked into the bank and asked them to transfer the remaining amount in the account because we wanted to pay off our house that day. We then went out for breakfast and ordered whatever we felt like!
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