How I paid $100,000 off my mortgage in less than 2 years

(Image credit: (Thinkstock))

By The Week Staff

last updated 10 January 2015

August 1, 2012, will forever be a day etched in my memory.

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Ever since I was 10 years old, I've dreamed of being a homeowner. That's when I was sitting at the dining room table at my mother's house and heard that my aunt, who had lived paycheck to paycheck and rented an apartment her whole life, had been laid off from her job after 20 years and would have to move in with my grandmother. There was no way I ever wanted to find myself in that situation, middle-aged and unemployed with no savings in the bank.

So I started saving toward my first home even before I graduated from university. While in school, I worked three part-time jobs (meat department clerk at a supermarket, administrative assistant at my university's MBA office, and freelance writer), earning over $10,000 annually. Instead of taking summers off, I worked full time as an administrative assistant in a government office, earning another $10,000 per summer, enough to cover the next year's tuition. After a 60-hour workweek I was exhausted, but I knew I wanted to graduate debt-free.

I've always been a saver, so frugality was second nature to me. I purchased my textbooks secondhand, cycled, and rode public transit. I limited myself to coffee once a week with friends and only went out when it benefited my career. Food is a major expense for students, so packing my lunch was a no-brainer — I estimate that saved me at least $5,000 a year. I graduated university debt-free, with a net worth of $70,000.

After eight months of working in a supermarket post-graduation, I was fortunate to land a full-time job in the financial industry, earning $32,000. I opened an investment account and started contributing $250 weekly toward investing in mutual funds to save for my home. I was a disciplined saver — even after graduation I continued to live like a student in the basement of my mother's home, paying $600 a month in rent. Through my full-time and part-time jobs and my freelance work, I was able to save an additional $110,000, bringing my net worth to $180,000, in only two and a half years.

In the September after graduation, even before I landed my salaried job, I was sitting on the couch at my parents' house, watching HGTV's Income Property with my mom like I did every Thursday night, when I had an idea: To achieve my dream of owning a home and paying down the mortgage as soon as possible, I would follow in the footsteps of host Scott McGillivray — who lived in the basement of his first house for eight years to get financially ahead — and rent out the main floor of my future home. Now I just needed to find that home!

After three years of house hunting, I finally found it in June 2012. It was love at first sight: a newly renovated, one-story bungalow with a basement apartment, in a great location near Lake Ontario, only 15 minutes from my parents. I was fortunate to avoid what I dreaded most, a bidding war, as the seller was moving to Alberta and wanted to sell quickly. The seller accepted my offer of $425,000, and two months later, I rented a moving truck and moved in my worldly possessions. After a grueling day of moving and unpacking, I stood in the living room, admiring my new house and staring out the bay window. The journey of becoming a homeowner was tough, but at that moment, it was well worth it.

My family and friends often wonder why I am so determined to pay off my mortgage so quickly, since it's technically "good debt." Besides my mortgage, I'm debt-free. Paying down my mortgage provides me with a guaranteed rate of return (unlike the stock market), and as a single homeowner, if I ever lose my job, I won't have to worry about my mortgage — and the rent from upstairs will be more than enough to cover my household expenses.

I've taken full advantage of mortgage prepayment privileges (many closed mortgages allow you to pay an annual, penalty-free percentage ahead of time, to cut down on interest). I've doubled up my mortgage payments, paying $850 weekly, made lump sum payments whenever I received checks for freelance writing income, and increased my mortgage payments 15 percent each year. Last year I managed to max out my mortgage prepayment privileges in only four months.

When it comes to spending money, I've continued to be frugal. By cycling and taking public transit to work, I've been able to save over $6,000 a year, which is the real cost of owning a car, according to personal finance columnist Rob Carrick. I don't have a mobile phone (I use MagicJack Plus, an internet-based telephone service, instead) or cable (I stream TV shows via online Canadian websites like www.cbc.ca and www.ctv.ca), which saves me about $1,800 annually.

Today I have a net worth of $450,000, which includes my house, investments, emergency fund, and retirement savings. If all goes according to plan, I will be mortgage-free by age 31. For me, that means the weight of the world will be lifted off my shoulders, and I'll have the freedom to pursue my other passions — like freelance writing full time, or penning a personal finance book to share my experiences with others — and be able to start saving toward my next goal: retiring early at age 55.

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