How to pay off the mortgage in 6 years

Last year Kornel and Andrea Srejber of Kitchener, Ont., paid their mortgage off in six short years. Here’s how you can, too

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From the December 2014 issue of the magazine.

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How I did it

Kornel, 30, and Andrea Szrejber, 29, Kitchener, Ont. (Photo by Anya Chibis)

Last year my wife Andrea and I hit a huge milestone. We became mortgage free—just six years after buying our house. We didn’t have huge salaries, so, we focused on two key things—not overspending on our first home to begin with, and subsequently devoting almost 100% of one person’s income to the mortgage. This strategy allowed us to rapidly pay down the mortgage and by last year, we were mortgage-free. I was just 29. Of course, when I tell people this they think the two of us must have been eating Ramen Noodles and never going on vacations in order to achieve debt freedom at such a young age. Nothing could be further from the truth: we still managed to find $7,000 a year to go on holiday.

I should come clean though: before we stumbled on our winning strategy, we made a big mistake when we bought our first house. Everything was going well at first. Andrea and I both lived at home throughout university, which kept our student debts low. I also took part in four co-op terms while I was getting my degree in business administration. That allowed me to save about $35,000. Those good earnings allowed us to put 20% down towards our $250,000 starter home when we moved to Brampton, Ont., in 2007.

Why Brampton? Because it was close to Toronto—where both our new jobs were—and houses were affordable. Between the two of us, we were making $115,000. We considered renting but I’ve always been against putting money towards someone else’s mortgage.

At first, we were ecstatic living in Brampton. We had our good-paying jobs in Toronto—me as a food company analyst and Andrea in human resources— and felt as though we had made it. But reality soon sunk in. We bought an affordable home but our commute was two hours a day. Within a year, we hated our lives and had had enough. So, we sold the Brampton house. Buying a house so quickly after starting new jobs had been a mistake but it made us realize big city living wasn’t for us.

In 2008, we quit our jobs and moved back to our home town of Kitchener, Ont. We quickly got jobs making about $100,000 between the two of us. A few months later, we bought our $240,000 Kitchener home. We again put down 20% on the mortgage and dedicated Andrea’s salary to pay for all mortgage payments and daily expenses. We put 95% of my net salary towards the mortgage principal every year. That left us each $100 a week for spending money, which was fine with us. We kept expenses low, drove an old Honda for years, and I even started a small rock climbing business that gave us about $7,000 annually in extra income. We used it to vacation twice a year, mostly on package deals to Las Vegas or Florida.

The key for us was having a well-structured plan. I’ve learned that if you make debt repayment just a casual arrangement, and simply think that if there’s any money left over at the end of the year, you’ll put it towards the mortgage, it won’t happen. You’ll overspend.

By early 2013, our mortgage was paid off and within months we bought a larger $310,000 home with a nice backyard. We plan to stay here forever. Our daughter Lucy Marie was born this past July and our next goal is to top up our TFSAs and RRSPs and fund an RESP for Lucy. Some new financial goals will be good for our investment accounts—and wonderful for our family’s future.

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10 comments on “How to pay off the mortgage in 6 years

  1. Good for you guys! It’s the right thing to do and now to prepare for the future!
    Don’t wait — my parents just moved in with me because they didn’t bother to prepare. Not that I mind – I love them to bits! But I know they feel a bit bad about it too. They were left without choices, so good on ya for not waiting!

    Reply

  2. Why is this path always shown? Why pay down what could be a locked in 5 year 2.5% mortgage when you can take those same investable funds, and invest in equities- as I have done over the last 2 years, with a return of 28% in 2013 and 18% in 2014.
    This kind of financial article is very dangerous, as it gives the wrong investment advice in time of historic low interest rates.

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    • Hi Glen it’s Kornel from the article. We definitely took the more conservative approach by paying off the mortgage instead of investing in equities. In the end, we basically got a very high level of financial stability at the expense of a higher net worth (if we took the aggressive: investing fully in equities route). Regarding your 28% and 18% returns, it’s worth pointing out that it is extremely unlikely to obtain such returns long term (if you are able to do this then you should work on Bay Street and you’d become one of the wealthiest people in Canada :)

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  3. All well and good if you live where housing prices are so low. Try the lower mainland of BC…….

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  4. That’s a fantastic achievement – it puts it in perspective. With average incomes higher in the GTA than Vancouver, it fairly unrealistic to do this here. With average house prices over 1 million, we would only be able to do this if we live in a micro sized condo.

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  5. What perfect advice for well-heeled yuppies. So practical for so many. As long as both people work and earn decent money. Ugh.

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  6. Thank you so much for that amazing advice. Its great to see someone doing it right, way to go!! I absolutely will take this advice in my own life. Thanks.

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  7. Hi it’s Kornel from the article. I just wanted thank everyone for their comments, and I’m here if you have any questions :) Also I go into more detail on how we did it on the Build Wealth Canada podcast (www.BuildWealthCanada.ca) in case you’d like to learn more. Thank you MoneySense for sharing our story! I hope the readers found it helpful :)

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  8. Congratulations on establishing a clearly defined goal and for keeping your eye on the finishing line! At such a young age, your planning is ourstanding. Kudos to you for not succumbing to the madness of marketing in a world bombarded with advertising, shopping, and general overconsumption of pretty much everything.
    When I became a single parent of 3 young children, I managed to pay off my mortgage in just over 4 years. I planted a large garden to provide a good quantity of our food, did very little clothes shopping, drove as little as possible, ate meals at home, etc. All old time strategies that allowed me to maintain my focus.
    We lived in a city where people make big money, wasted big money, and expected the moon. It wasn’t easy ignoring the perceived wealth around us but much of the spending was credit card based. and many people were simply buying goods they couldn’t afford.
    My parents grew up during the years of the depression and the second world war. They used basic life skills of gardening, canning, cooking, sewing, knitting, rug making, maintaining their own home repairs, etc. to provide a very good life for our family. It was hard work and they never complained. I thank them to this day for their amazing dedication to ensuring financial independence. They always paid cash and never owned credit cards. Not one item purchased by them was ever debt financed. Fantastic role models!
    You as well are fantastic role models. By sharing your story, you may encourage more young people to follow your example. Keep up the great work!

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  9. I’m all for paying off my mortgage early, I find it much safer than investing in equities, which is quite volatile and when there’s a dip or even a crash in the market, I don’t want to be stuck waiting 3 years for things to rebound before I can take my money out to break even on my initial investment (that’s what happened to me after 2008). If you throw the money into your mortgage, you end up paying less in interest in the long run and pay it down faster. After it’s paid off, use the money you save every month to do whatever you’d like. Sounds much more stable to me to do it that way.

    Reply

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