The Story Behind the Numbers

I’m sure you’ve seen it before, some big headline about how someone paid off a massive amount of debt in a short time or made a ton of money in the stock market. I’ve been guilty of it when I talk about how we “paid off our $342,000 mortgage in less than 5 years.”  But the headlines don’t tell the story behind the numbers. They are clickbait.

When I first started this blog my intention was always to focus on authenticity over expertise. This post is going to tell the story behind the numbers of our debt pay-off journey.

Being transparent with my blog doesn’t mean that I will always share all of my numbers. But I will attempt to describe the whole story behind the numbers.

My intention with sharing my debt pay-down story was never meant to boast or brag. Rather, I think there are some debt pay down strategies that people can learn from.  But in sharing my story I must also acknowledge some of the privilege that enabled it. I didn’t do that before but will aim to in this post.

The Catalyst

A few weeks ago Ryan from Canadian Fire mentioned in a post that he was planning on writing a transparency post.  This got me thinking and lead me to Tanja from Our Next Life’s transparency post.  Tanja has written a few times about how personal finance bloggers have an obligation to be not only truthful but to tell the whole story.

With the notion of transparency rattling around in my mind, I then came across a tweet on Twitter that really got me fired up.

The person was boasting about how owning was better than renting.  The claim was that renting would cost them $1600 a month but owning only cost them $500 for their mortgage and $400 for utilities.  They were able to then put the difference of $700 into their investment accounts.

And on top of all the “saving”, they were also building their own equity instead of their landlord’s.

Frankly, I hate that argument. But the owning vs. renting debate is not the purpose of this post.

When other people started asking questions on how someone could only have a $500 mortgage payment the truth behind the numbers came out.  This person bought a $270,000 home and put down a down payment of $205,000.  So their mortgage was only $65,000.

In Canada this is not a common thing.  

According to the Canadian Real Estate Association, the average home price in Ontario (where this person stated they were from) is $625,691. And Statistics Canada reports that in 2016 (latest published data), the median mortgage amount for Ontario was $180,000. A far stretch from $270,000 and a $65,000 mortgage.

This isn’t an argument over renting vs. buying or the size of someone’s mortgage.  What really bothered me is that all of the facts were not originally presented.  The details were purposefully omitted to grab attention and make a point.

The Mortgage Details

So, in an effort to learn from someone else’s actions and to be transparent, here is the story behind my own personal mortgage pay off numbers. 

We went looking for our first home in 2009.  At the time we were pre-approved for just over $500,000 (to be honest I can’t remember the exact figure).

We had no debt, full-time jobs and we were soon to be married with combined finances. Neither of us would have qualified for a mortgage of that size that on our own. And without hubby I wouldn’t have wanted to; before him, I was happy renting.

Even though the bank approved us for over half a million dollars we were not ready to owe that much money.  We had always wanted to pay off our mortgage as quickly as we could.

The House Hunt

When we first started looking we set out price point not to exceed $350,000.  For a single-family home in the neighbourhoods we were looking this amounted to a home with shag carpet – on the front door. Canada was not hit with the housing crisis that the United States was around this time.

After looking at many homes we decided to increase our budget to $400,000.  We were young and naïve, knew nothing about renovations or financial independence, and just wanted a turnkey home.

We eventually found a home that we wanted but lost it in a multiple offer situation.  The second home we put an offer on we were successful in buying.  We settled on a purchase price of $387,500.

The Story Behind the Numbers – Down Payment

For the down payment, we had been saving and could draw from some long term savings we had.  Although we had RRSPs at the time, we were not familiar with the Home Buyers Plan and therefore did not tap into any of these funds.

We were very fortunate to receive $5000 from my parents and a $30,000 from hubby’s parents as monetary gifts towards our first home.

We were not able to come up with the 20% needed in order to not require CMHC mortgage insurance so there was a premium tacked on to our mortgage.

When the dust settled we had our first home and a $342,000 mortgage at an interest rate of 3.79%.  We locked that into a 5 year fixed rate because “rates would never go lower.” Ha! What did we know?

The Story Behind the Numbers –  Mortgage Accelerators

There were 9 key strategies that we did to help accelerate our mortgage pay down.  I’ve written about them previously here so I won’t get into that again. But I do want to make a quick note a $5000 inheritance was the only help we received in paying off the actual mortgage amount.

I want to acknowledge some of the other factors that helped us pay off our mortgage at the rate that we did. I also want to take a minute to note that I am a white female. And although I have never been subject to racism for being white I have experienced sexism in the workplace.

Although I acknowledge that being white had an impact on my mortgage pay down journey, I’m not 100% sure about the quantifiable facts. For this reason, I am mentioning it here but have not gone into more detail below.

No Debt

Going through university I never accumulated any student debt.  My parents told us that we would never qualify for student loans because they were both working.  Whether or not this was true at the time I’m not sure we just trusted what they said and never applied.

I was a high achiever in school and was able to earn enough scholarship money to pay for all of my first university degree.  I also worked summers throughout my degree to earn extra spending money.  

My parents had saved some money for my university but since I had enough in scholarship money I made a deal with them that I would pay for my schooling if they would pay for me to move out.  

The truth is, I never wanted to go to university but I always wanted to move out.  So the compromise worked for everyone.

Hubby went to a trade school and although he did accrue some student and vehicle debt by the time he was finished, we were able to pay that off together before buying our first home.

Teaching Career

I am a teacher in a province that has the highest-paid teachers in the country.  

When I decided to go back to university to get my teaching degree I had a super supportive principal that let me still work while going back to school.  He also was a key factor in my getting a teaching job immediately upon my graduation.

Because I had gone back to school I was now at the top of the grid for years of education.  With my two degrees, I am being paid the same amount I would be if I had a Master’s degree.

I was also immediately on track to get a permanent teaching contract. This meant that my income would gradually increase for the next 9 years until I was at the top of the salary grid for years of experience.  Being on track for a permanent contract also meant that I never had to deal with the uncertainty of losing my position.

I had colleagues that took more than 5 years to get on track to their permanent contract.  My specialization and skill set as well as having a very supportive principal helped me avoid this uncertainty.

Dual Income

Being married isn’t a superpower but it definitely makes things easier to afford when you can rely on two incomes. We try to avoid lifestyle inflation in order to be able to live off of one income and save the other. Although this sounds really great in theory, it’s not always a reality for us.

As a single person, I would not have been able to afford the mortgage much less pay it off at the rate that we did together.

Oil Industry and Overtime

While we were paying off our mortgage hubby took a job in the oil industry up in Fort McMurray.  We rented a room for him to stay and he commuted with our smart car. 

As a teacher, I am a salaried employee and never earn overtime. Over the two years hubby worked in Fort McMurray he worked as much overtime as he could get.  This meant that often he would be home for 48 hours every two weeks.  

It was during this time that I was also going back to school and working full time.  While he was away at work it was easy for me to focus on what I needed to do without feeling guilty for not spending time with my then-new husband.

Hubby had some great paycheques while he was living in Fort McMurray which really helped accelerate our mortgage pay down.  But it wasn’t the lifestyle that we wanted long term.  He worked up there for 2 years before being able to find a comparable job with a 15-minute commute.

The job closer to home means less pay but we aren’t paying for rent for him and he is home every night. But he still works in the oil industry at a refinery and would be considered a high income earner.

No Kids

During the time it took us to pay off our mortgage we didn’t have kids.  That doesn’t mean that you can’t pay off your mortgage when you have kids. But kids tend to cost money, and that’s money that cannot be put towards a mortgage lump sum payment.

Without kids, at the time we didn’t need to worry about saving for college funds or all the other things that kids require.  All of our money could go towards our own personal goals.

Current Situation

We paid off our original mortgage back in 2014 and then proceeded to borrow against it (through a home equity line of credit) to buy investment real estate.  We lived “mortgage-free” for 5 years.  And even though we didn’t have a traditional mortgage payment we still had a monthly interest payment for our HELOC.

From the beginning of our real estate investing journey, we have always treated it like a business.  Even though we had interest charges they were always covered by our rental property income.  Personally, it still felt like we were mortgage-free.

But then we decided to move and completely renovated the upstairs of our new bungalow.  We converted our previous home into a rental which meant it now had a mortgage on it and so did our new home. 

And if I’m being honest, I hate having a mortgage payment again. I know that paying off your mortgage fast may not be the best decision on paper, but no mortgage payment means more cash flow every month.  And more cash flow means more options.

The Story Behind the Numbers – Final Thoughts

As a reader, you have a right to know all the facts behind those clickbait headlines. Don’t settle for someone who only sells you the sizzle without providing you the steak.

My intention with this post is to tell you the story behind the numbers. To explain the circumstances that helped us achieve our goal, and to show that what we did may not be possible for everyone.  

Now that we have another mortgage, I’m not sure it will be possible for us to pay it off as fast again.

I’m not perfect.

But I aim to continue to be as authentic as possible and to tell you the full story behind the numbers while still maintaining my family’s privacy.