I Paid Down My Mortgage By $100,000 In A Year...Without A Budget

A year ago I made a commitment to pay off my mortgage. I have to admit it wasn't an easy decision at first to take on, not even taking into account the dollar amount, as I had conflicting goals.

My "real" aspiration was to save up enough money for a down payment on an investment property. It lined up with my overall objective to build multiple passive income streams as I work towards achieving financial freedom.

Then I realized that the greatest comfort and peace of mind would come in the form of being completely debt free and THEN focus my attention on making these larger investment decisions.

From then on the seed was planted firmly. I had an overwhelmingly deep desire to be a home OWNER. No one would have a claim to my property except me. I became OBSESSED with the idea.

I imagined having a feeling of comfort when I walked through the front door and knowing that no matter what happened to me I would own the roof over my head.

That's when I started asking myself the most important question that I circle back to regarding any challenge, "how am I going to do that"?

Income Allocation

I've been a proponent of income allocation for the past few years. Although I consider myself fairly disciplined, budgets just don't seem to fit my lifestyle. What I do instead is portion out my income into separate bank accounts that each have their own purpose.

Because I also focus on my fitness I found the best way to break it down in my mind was similar to macro nutrient planning. Our foods fall into categories of either carbohydrates, protein, or fat.

The idea is that depending on your overall calorie limit you'll then tweak the proportion of these macro nutrients based on your overall fitness goals. So in this case the calorie limit is the income received each paycheck and I portion everything to separate bank accounts based on their intended purpose.

Using an income allocation strategy still gives me the boundaries I need while not making me feel stressed about managing every penny in each spending category of my life.

I think of this concept as a money management style leading to strong financial fitness.

Here's my setup:

Tithe - 10%
Fun - 5%
Living Expenses - 20%
Debt - 60%

The Game Plan

First I had to determine what was the bare minimum I could portion out towards my daily living needs.

I added up my mortgage, bills such as water/electric/phone/internet/auto, food (both groceries and dining out), and anything else that I regularly spend money on throughout the month. It's important to note that I've been debt free pretty much since my last year in the military over a decade ago other than a few small personal loans that are paid off quickly.

Honestly, determining how much to set aside for these expenses took the largest leap of faith. Essentially I'm shooting towards running as lean as possible with limited funds in my account.

Also, living on this amount is directly related to my ability to go out and earn the income that I'm shooting for. Sales by it's very nature can give some people the feeling of uncertainty. I determined that if I made at least $150,000 or more then it was possible to live off of 25%.

Earning anything below that would mean I would have to adjust my percentage up a bit for living expenses which means I therefore have to take away money from my goal of paying off the house. I have a very consistent sales track record but this was definitely a factor to keep in mind throughout the year.

I also had to think of the what if's. What if I couldn't get the leads I was shooting for and would my close rate stay the same or decline? These are things that I considered but ultimately I had to commit and then adjust along the way if necessary.

Next I determined how much I would give away. I know that sounds crazy but I believe that when you give you switch your brain into living and maintaining an abundance mindset.

Now I'm no longer focused on going out there each day in the world just to crush it in sales. I have another purpose that benefits a great cause. Every sale I make is a win-win-win. The client wins, the charity I support wins, and then I win.

I truly believe you can get everything you want in life if you just help enough people get what they want.

I set an annual goal to contribute $10,000 to St. Jude Children's Hospital as my charity of choice. I stacked this with another goal which was to run a marathon in 4 hours. I signed up for the Rock n' Roll marathon in San Diego in the middle of the year and the one in San Antonio at the end of the year.

In order to gain free entry to the race I signed up as a Platinum sponsor which would require me to contribute $5,000 to St. Judes for each race. So now I had a high degree of accountability to make sure that I'm both donating (even when sales were slow) AND training consistently to perform well in the races.

After that I turned my attention to fun stuff. I'm frugal by nature but I'm a firm believer in blowing some money purely for enjoyment. Money is a multi-tool and can serve so many purposes.

I have an account, which I portion out only 5% of my income specifically for the purpose of spending every dollar whenever the heck I feel like. This is where I spend money for those race registrations throughout the year, new gear, travel, and whatever else I feel like.

I manage to participate in a few triathlons and my first century bike race in addition to the two marathons. I also had a goal to travel with my sweetheart and my family with three domestic trips and one abroad. I kicked off the year with a trip to Lake Tahoe with my sweetheart and snowboarded for the first time.

The marathon in San Diego was a two-fer. A nice weekend in the jewel of California (and my old military stomping grounds) and a 26.2 mile tour by foot throughout the city. I took my sweetheart, my daughter, and mother to Cozumel to celebrate my birthday in the summer.

Lastly, my sweetheart and I took a trip to New Jersey to attend a Tony Robbins "Unleash the Power Within" conference which was freaking amazing.

Now, did all of these trips get paid for by the 5% only? Short answer, no.

The lodging, airfare, and transportation arrangements surely did but daily expenses during the trips were again handled by what I had in my account for that purpose just as they would while at home.

Lastly, I turned my attention to what I could now put towards my mortgage. This was the easy part because it's already been determined by default as being all that's left.

A total of 60% of my income would go towards my debt. Every single week when I got paid I would open up my spreadsheet, enter the amount of my paycheck, and my preset calculations would tell me exactly how much to transfer to what account based on my income allocation plan.

Once I made those transfers I'd pop open my mortgage companies dashboard, enter the amount of the payment (making sure it was principal only), and post that bad boy.

Some weeks were big chunks and some were meek depending on sales but it was always the same percentage. If I had my regular monthly mortgage payment coming up then I'd still throw on the extra amount for that week in addition to it.

Every week, without fail, no matter what. It feels so good to chip away little by little and then look back on the progress and see what has been accomplished.

Recap
Overall I was right on target for my income goal. My performance was consistent and allowed my to stick to my program without any adjustments. Sure there were some pay periods that were a bit lower than others but that was to be expected.

I didn't hit my goal of paying off the mortgage. Could I have made an even bigger jump by contributing an additional 15% of my income towards the debt instead of tithing and lifestyle, sure.

Overall I wanted a balanced approach to keep the quality of life reasonable while still making progress. For me, it was the best approach.

For the year, I was able to

• Pay a total of $104,530 on my mortgage
• Donate over $10,000 to charity
• Take 4 trips, including 1 international

A highly successful year in my opinion with a manageable balance remaining that I believe can be paid in the first quarter of the year. From there I can set my sites on some more exciting plans!

Bonus

I also had the wild hair to propose to my sweet heart, get a nice rock to slap on her finger, and married her within 60 days of proposing. The wedding was simple at a beautiful location that didn't charge during week, attended by 15 family members, and we pigged out at a pretty swanky Brazilian steakhouse.

Life is good!