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How I Paid Off My Mortgage Before Age Thirty

Many of you have asked to hear the story of my own journey to debt freedom, which includes a brief but peaceful run-in with the IRS.

As I ranted about debt a bit ago, then clarified the difference, in my opinion, between good debt and bad debt, I realize now that I’m a bit crazy.

I’ve been reading Clayton Christensen’s How Will You Measure Your Life? and will follow his lead in telling a story while resisting the urge to offer a prescription.

A Little Background

When I was 23 years old I was a newlywed, just getting started in my school’s accounting program. I had three years before I would graduate and earn my fortune on the High Seas of Accounting. I didn’t realize this at the time, but before I even took my first accounting job, I would already have two little boys. Like I said, crazy.

Life was simple. Julie was working for the State of Utah with the adult mentally ill (her degree is in social work). I was working part-time teaching German, and studying hard. Somewhere in those first few months of marriage I quietly set a goal for myself: I would own a home free and clear before the age of thirty. (In other words, I had until the end of 2010.)

(Also, during that time I was messing around with a spreadsheet that would eventually become YNAB’s first product.)

Many of you know my story. We were cash-strapped, and our first baby was due in 2004. I realized I would need to earn more money to make it possible to 1) avoid student loan debt and 2) let Julie stay home with the baby. I considered both of those aspirations non-negotiable, in the sense that I was looking for any way to make those a reality.

In September 2004 I launched It made enough to cover our monthly shortfall, and I was able to obtain my Masters of Accountancy degree two years later without taking on any debt.

Making It Official

I passed the CPA exam in the summer of 2006 and we moved to Texas for my first “real” job. At that point, I had just under five years to pay off a home I hadn’t bought yet. Toward the end of 2006 I made my goal of paying off the mortgage a bit more meaningful by writing it down on a notecard that I carried in my wallet.

I carried my house goal in a notecard in my wallet.

Well, the High Seas of Accounting were not for me. I was drowning. I jumped ship and took an internet marketing consulting gig back in Utah. I also kept working on YNAB in my spare time. The consulting gig lasted four months, and YNAB became my sole income. It was a scary time because our income was all over the place, but it was manageable because we had no debt. We rented a home in Utah and things were just fine.

Except by that time it was the middle of 2007, and I still didn’t own a home, let alone own a home free and clear. I had three and a half years left.

It also didn’t help that real estate was still on an absolute tear. Prices just kept climbing.

We were diligently saving for a downpayment on a home, and in the middle of 2008 it became a reality. We bought a home in a great neighborhood. The only regret that I have today is not buying something smaller. But at the time, we couldn't have been happier.

A Little Bit Crazy

I now had a very large (but affordable) mortgage on a beautiful home that I needed to pay off in two and a half years.

If YNAB is a “small” operation today, it was a tiny operation in 2008. I don’t remember all the specifics, but I know there were just two full-time employees, and we didn’t make a lot, between the two of us. In fact, I had yet to take any type of steady income from YNAB. Bless Julie’s heart for just plugging along with whatever I felt like we could pay ourselves. And bless her heart again for being so unbelievably happy and content in any situation.

I had a few people help us move into our new home. It was a quick move-in. We had very little furniture. I’ll list it here, because I want Julie to read this tonight, so we can stroll down memory lane together:

  • Washer and dryer
  • Kitchen table with eight chairs (we’ve always had illusions of entertaining…)
  • Living room bookshelf
  • Queen size bed
  • Crib
  • Two twin beds
  • A bedside table
  • A card table
  • A small blue sofa
  • A small “formal” stuffed chair
  • A lamp

So take all of that furniture and drop it into a massive home with wood floors, and you get a lot of echo! Our house echoed for a while.

With a large, fairly-empty house, and with a small business that was just ramping up to reinvest everything into the next version of its flagship product (this was the effort to get YNAB 3 out the door before the end of 2009), I had very little hope for making enough income to pay off my mortgage in two and a half years.

So I did what I had done back in 2004 when I realized we wouldn’t have enough money to let Julie stay home and stay out of debt: I started something on the side.

A friend and I began flipping websites. I won’t get into all of the details here because, frankly, it doesn’t really belong on this blog. But the short of it is that I had developed some skills in trying to market YNAB, and I put them to use with my friend/business partner. We would look at a site’s monetization strategy, conversion focus, and traffic, and see if we couldn’t twist one, two, or even all three of those knobs.

In the end, we were quite successful with it. The website flipping actually fed my family during a lot of 2009, where YNAB was reinvesting so heavily then that I couldn’t pull any money off the table.

Not only did the side business keep me financially afloat, it actually helped me start paying down chunks of the mortgage. I recognized toward the end of 2009 that I just might have a shot at paying off the mortgage before the end of 2010. In fact, I became so serious about paying off the mortgage that I told Julie I wouldn’t cut my hair until it was paid.

Down to the Wire

Staring at my hair every single morning as it grew longer and longer (by my standards…) was a stark reminder of my goal. It helped me stay tremendously focused.

Julie, through all of this, was as content as ever. Baby number three was now two years old, and baby number four had come at the end of 2009. Whether my hair was long or short didn’t really concern her. She was plenty busy without worrying about my antics.

Though she was tremendously supportive. The house was still very empty. The living room and dining room didn’t have a shred of furniture. Nothing hung on the walls. The family room did score a couch. The office was empty. The downstairs remained unfinished (every home in Utah comes with a basement that is unfinished, until…it’s finished). The bedrooms upstairs had…beds in them.

The cars were old. The vacations were simple (“Let’s drive to Grandma and Grandpa’s!”). The budget was forgiving (Rule Three) but tight.

Toward the beginning of 2010, YNAB had turned a corner. We had launched YNAB 3 (barely) on time, and the return on the investment had finally started to show itself. Unfortunately, that “return” came right at the end of 2009, so taxes were due a few months later, instead of a year and a few months later.

Casey, my tax advisor (he should do your taxes too, he’s phenomenal), called me up and let me know that I owed tens of thousands of dollars in taxes that I hadn’t been withholding.

I also had tens of thousands of dollars left to pay off my mortgage. It was April of 2010, my hair was atrociously long (again, by my standards), and I did something very stupid: I paid off the mortgage instead of paying the IRS.

Casey didn’t recommend I do this, but once he saw what I had done, he gave me a plan of action: “Keep sending the IRS money until it’s all paid. Just send them money regularly.”

So I sent them money for several months until my tax debt was paid. I never heard from the IRS.

Timestamped to show my atrociously long hair. We figured out the game.

What Worked For Us

A few things really moved the needle for us when it came to hitting that goal of being mortgage-free before the age of thirty:

  1. I recognized that my current income would be insufficient to reach the goal I had set for myself, and set out to increase my income.
  2. We deferred many “nice to haves” like bedside tables, or lamps, for a couple years.
  3. We would have reached the goal even sooner had we not fallen into the trap of thinking we needed a “big house to grow into.”
  4. The budget kept everything in line and on track.

I hope you've gleaned something useful from one guy's story that you can perhaps apply in your own situation. Everyone's circumstances are different. Whatever your path, I wish you all the best.

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How I Paid Off My Mortgage Before Age Thirty