I posted a link on facebook that went viral.  It went to Kelly’s story of how they paid off their house in 5 years.   Reading her story again made me think about how I could write my own future “house” debt free story.  Then live it.

Following Dave’s baby steps, we still need to finish our emergency fund; direct 15% of our income to retirement, and invest for college.  Then we can start working on our house.

Here’s how to write this story before it happens:

1.  Decide on a time frame.  For example 2 years (or 24 months) to finish the emergency fund.

2.  Figure up how much $$$ you need. I need $7,0000 to finish  the emergency fund.

3.  Divide the amount of money you need by the number of months.  This will reveal how much money per month you need to find in your budget.  $7,000 / 24 = $291.66.

4.  Make a sample budget to see where you will need to cut spending to allocate this much money to your goal. Is it doable?  No?  Then extend the number of months you will need.  Start by adding 3 months at a time until you get to a manageable number for your budget.

Is it so doable that you can’t believe it?  Shorten your time frame.  Lets get this baby done! (If I only took 1 year to finish my emergency fund I would need $583.33 a month.)

5.  Tighten your belt for the shortest time frame you can manage.  No restaurants, vacations, extra stuff….eat tuna, beans, peanut butter and ramen noodles if you have to. (But maybe not together.)

Then onto the house

If it took me 1 year to fund my emergency fund, I would owe $122,291.82 on my mortgage when I was done.

I’d be used to not spending that $583.33 a month and could chuck it at the mortgage without noticing a change.

If I did, I would pay off my house 6 years and 3 months early and save $14,0000 in interest.

Then I would not only recoup $1,000 a month to our pocket, but I’d have that $583.33 too.

At the end of the first house payment free year, it would add up to $19,000.

 Invested in a good growth stock mutual fund (averaging 10% return) at the end of 15 years I would have $472,571.59

At the end of 20 years:  $745,938.20

After 25 years: $1,111,764.39

Stupid house payment.