- Your home could either be a blessing or a curse.
But in this episode, we're going to talk about
how you can love your home and afford it, too.
(upbeat pop music)
Well, hey you guys, I'm so excited about this episode,
because we are going to be talking about
how to own your home without letting it own you.
That's right.
Now, a lot of you are currently paying off debts
or you're saving up for your emergency fund—
which is fantastic—and paying off your mortgage
seems so far away.
But there are some things you can do to help you now
and in the future with paying off that mortgage.
So, we're going to walk through how to pay off your home early,
because who doesn't want to do that?
We're also going to Skype in a couple
who's currently on Baby Step Two with a mortgage,
but they want a new home.
I know some of you out there, you have the same situation.
And last but not least, we're going to talk about
when is the right time for you to buy a home,
and we're going to have a real estate agent here
to give us some great tips on the home-buying process.
But listen, the topic of your home; this is a big one.
It's kind of an emotional one, because not only
is it the biggest financial investment
most of you are ever going to make in your lifetime—
it's a big deal—but it's also your home, right?
Like, this is where you go to bed every night,
where you wake up every morning,
where you raise your kids, where you have meals.
Like, this is a huge staple in your life.
And for a lot of people, it brings
a lot of joy, which is so great.
But at the same time, it also can bring
a lot of financial stress and financial strain
and even some discontentment—yeah—
when you're comparing your house to everyone else's.
I feel like I'm in the season of life
where a lot of my friends are moving out
of their first homes because they
have multiple kids now, and they're busting at the seams.
And I've heard the phrase over and over,
like, "Ugh, if we just had more space,
everything would be better, right?"
So, it could be the size of the house
that you're discontent with, or maybe it's not.
Maybe it's what's inside your house
you're discontent with.
Or, you know, when you walk into someone else's house,
and you're like, "Am I in Pottery Barn right now?
What is this?"
Every light fixture looks like
it's from Restoration Hardware, and you're like, "Oh, my gosh,
this is just the most put together, beautiful—
like, your paint colors work with the fabrics on your couch."
All of it is just gorgeous, right?
Like that feeling you have? Ugh!
So, listen, you can be very discontent in your home.
And trust me: I have been there.
And this is a big deal, because this is totally
what happened to Winston and I when we moved
into our first home.
(jazzy piano music)
So, just a little backstory:
We bought our first home; it was in 2009.
(claps)
That's right. We bought at the bottom of the market.
So, we actually go our house on foreclosure.
We were able to get a bigger home
than we probably normally would've
just because of where the market was.
But here's the deal: When you're moving in to your home,
it's a little bit bigger than what you planned.
You don't have furniture.
Yep, we had no furniture.
We bought a couch, we bought a coffee table,
we bought a kitchen table, and some bedroom stuff.
So, like, that's it.
We had places that were just empty.
Like, barren rooms. There was nothing in them.
And when we moved in, I was like, "Oh, man,
I kind of now get why people go into debt."
It really—it was one of these first moments
where I was like, "I could go to Pottery Barn or wherever,
and I could go buy all this furniture.
We could pay for it, you know, a little bit each month."
But my instant gratification
and that itch would be scratched.
Like, "Oh! It's just going to feel so good.
I just want to do it now, I want to do it now."
The idea of waiting and saving was so hard.
But, of course, we did.
Don't worry. I did not go into debt for my furniture.
But it took us years.
And when I say years, I mean a solid five years
to finally furnish all of the rooms.
Because we took our time, we wanted some nice pieces.
But those first five years, there were moments
where I genuinely was kind of embarrassed
to have people over.
And I look back now, and I was like, "That's so stupid."
But beforehand, I was like, "Man, I like don't want to have
people over because it looks like we have nothing.
They're gonna walk into this empty house."
But I got over myself.
And it's so funny when you put expectations on people,
and they don't have them.
My friends, they don't care.
They didn't care at all—like, at all.
And so, it was just that moment that I look back
and I'm like, man, I'm so glad I got over that rather quickly
and that we took our time to furnish our home,
because we still have those pieces now, nine years later.
Right? So, they'll probably move with us
to our next home. So, we did some investment on that end.
But it was just important to point out that
discontentment is real, you guys. It is.
But you can overcome it in your home,
and you can learn to love your home—
not everyone else's. I promise.
All right, coming up next, most of you are paying off debt,
and you are killing it.
You're in the process, and you're doing so great.
But there are some things you can actually do right now
to help pay off your mortgage early.
- Why do we fight with the person that we love the most?
- What's crazy is one of the leading causes of divorce
in America today: money fights and money problems.
- Money's the number one source of conflict.
It doesn't matter how much you have—a little or a lot.
It's still the source of a lot of friction.
And what happens to negative feelings that we bury?
They have a high rate of resurrection.
- It's amazing that money hits us in a place in our marriage
that no other subject does.
I want you to put yourself back in the driver's seat
of your life and your money, because I want you to learn
to love your life, not theirs.
- Your relationships can only be as healthy as you are.
- Don't get on the same page with your spouse
just because of your bank account.
Do this for your marriage.
All right, I think everyone out there
wants to pay off their mortgage faster, right?
So here are three things that you can do
no matter what Baby Step you're on.
Now, if you're wondering, "What is a Baby Step, Rachel?"
Well, if you don't know what the Baby Steps are,
it is a proven financial plan to get you out of debt.
They're amazing.
So, make sure to check out my recent episode, titled,
"The Seven Step Plan to Live Debt-Free."
You'll learn all about the Baby Steps.
All right. Number one how to pay off your mortgage faster
is to refinance for a better interest rate.
So, if the current interest rate is actually lower
than when you bought, this could be a great option for you,
because, ultimately, at the end, it's going
to save you money, which we love.
Number two is to refinance your mortgage
from a 30-year mortgage— if that's what you have—
to a 15-year fixed rate.
So, when you do this, I will warn you,
your monthly payment will go up a little bit.
But the good thing about that is
that you're paying off your home faster,
and you usually get a better interest rate
with a 15-year mortgage versus a 30-year.
So, if you think about it—like the math side—
a $250,000 mortgage— you could save over—
get ready for this—$130,000 in interest
by going to a 15-year fixed rate.
You guys, $130,000.
What could you do with $130,000?
I could do a lot of shopping— that's what I could do.
I mean, that's a lot of money back in your pocket.
So, if you want to do that— if you want to refinance,
I recommend Churchill Mortgage.
So, they are awesome. They work with people
all the time on this.
Make sure to check them out.
And last but not least, to pay off your home early
is to look at your current situation
and look at what your mortgage
is costing you in your budget.
How much is your mortgage?
Is it half of your monthly take-home pay?
If that's the case, you guys, you have too much house.
This is a hard pill for a lot of people to swallow.
But, seriously, think about it.
It's going to be really hard to win financially
and pay off debt and save up for an emergency fund
if half your income or more is going to your mortgage.
And so, you're working really hard to keep that house, okay?
So, you might be in a better situation
if you sell that home and move to one that you can afford,
where you have less house, but in the long run,
it's going to help you.
You're going to pay off that mortgage faster
because, financially, you will be ahead.
All right, most of you are in Baby Step 2,
and it probably feels like paying off your mortgage
is so far away, but stay motivated, you guys.
You can do this.
Use those steps we just talked about,
and pay off that mortgage. You can do it.
All right, we've called in a couple who is currently
where, probably, a lot of you are.
They are paying off debt, but they want to move.
But they want to be wise.
So, welcome to the show, Emma and Rolando.
Thank you so much for coming on and sharing your story.
- Thanks for having us.
- Yes, thank you for having us.
- Absolutely.
Okay, so, you guys are on the debt -free journey right now.
You're working your way out of debt.
So, I want to know— How much debt did you have,
and how much have you paid off so far?
- So, we started out with $169,000,
and in 25 months, we've paid off $153,000.
- You guys, that's insane. That's absolutely insane.
- Thank you. - Okay, I want to know—
What made you start when you had all that debt?
What made you say, "Okay, we want to actually get out.
We want to do something proactively with our money
and get out of debt." How did you—what made you start that?
- So, initially, Dave came to our church here in Houston.
And he made the pitch for Financial Peace University,
the class, and Rolando was pretty much all in
as soon as he heard it.
I was more hesitant.
I was—we both have student loans.
I had almost $90,000 in student loans.
So, I figured I'm always gonna be paying these loans anyway.
Why would we sacrifice so much?
And then, we laid out all of our debt when we got home.
And that's when it hit me
that we have to do something about this.
Dave illustrated a borrower being slave to a lender
with the chains. - The chains, yeah.
- And that just—that just got me whenever we laid out
all of our debt, and I said we have to.
Because I'm literally working to pay my student loans.
- Totally. Okay, so how long will that debt-free journey be
from start to finish? What do you predict?
- From start to finish, it'll be about 28 months.
- 28 months. Okay, and you guys own a home currently?
- We do.
- And so, are you guys happy there?
Are you itching to move?
Where are you at in that process?
- So, we're kind of on different sides of the fence there.
We're both happy where we're at.
However, I'm excited that, once we're out of debt,
we'd be able to save up, sell our home,
and eventually purchase a larger home.
She's got a different perspective on that, though.
- Yeah, he's the one— I guess I'm the more
content one, I guess you could say.
He's already looking at homes, you know,
"Just for fun," he says— ready to move to a bigger house.
And I'm just more content and comfortable
where we are already.
- And so, I'm curious— What's the biggest
motivation to move?
Do you feel like you're busting at the seams
for a bigger home, or you're just like, "Man,
we could afford it, and it'll be fine?"
Like what's the—what do you think?
- I think it's both, right? So, as our family grows,
I'd love to grow into a bigger home.
And then, again—being out of debt—not having that
weighing us down, it'd be a whole lot easier
to move into a bigger home, because we can then afford it.
- Yes, totally, totally.
Okay, so the fact that you kind of have that itch
and together, you guys may not necessarily want
the same things right this minute.
What keeps you from not doing it?
What keeps you guys paying off all your debt,
saving up for a down payment?
What keeps you on the plan
when you still have that itch to move?
- Well, I think—starting off—it's understanding
that we're so close, first of all.
We're so close to being out of debt.
Why jeopardize that at all right now?
And then, just being able to say "We're free, we're debt-free,
we don't have any bondage now."
And it'll open up and free up that income.
- Yeah, and I agree with that, and it's also
seeing the success of focusing on this getting out of debt—
how successful you are by just focusing on one thing,
rather than spreading your efforts out,
and then just remembering why we're doing this.
We have two little ones, so knowing, like Dave says,
we're changing our family tree.
And that is worth the wait for us.
- So good, I mean that's just, like, the classic example
of that long-term goal—
that long-term freedom—what you see.
It may not be in the moment, but you see it's out there.
You see it's possible, and that keeps you motivated,
which I think is just so important.
So, what would you say—what would you say
to someone watching, and maybe they have $85,000 in debt,
and they're like, "Man, I think I'm going to start this journey.
But, like, ugh! I hate my house. I hate the carpet in it.
I hate the paint, I want a different floor plan."
And they just want to move right now with all that
consumer debt, what would you say?
- I'd say, "Just wait.
It'll be worth the wait.
And again, because you'll be able to
use the income that—instead of paying toward debt,
you'll be able to throw it at a house.
You'll be able to, possibly, afford the home of your dreams,
instead of having to settle for something less."
- Yeah, I agree that it's worth—
it would be worth the wait.
And you have to learn to— I guess my big word
is just being content and be happy for what you do have.
Work at this current goal, and know that, in the future,
those all will be possibilities— that you don't have
this debt weighing you down.
And like he said, you'll have even more
options available to you.
- Oh, I love that. Right. Because it's not like
you're never going to be able to have the nice home, right?
It just, maybe, putting something—put things in place
for you to enjoy that home so much more than right now.
So, I think that's such good advice, you guys.
And you're killing it.
I mean, you guys are doing crazy stuff right now,
paying off all that debt.
You're sacrificing, putting some of your wants aside
for the moment, but absolutely— absolutely incredible.
And you're exactly right what you said earlier, Emma.
You are changing your family tree for those two kids.
So, thank you so, so much for coming on
and encouraging those watching.
- Thank you for having us.
Appreciate it. - Thank you so much.
- I mean, how awesome were they?
You guys, I love how focused they are.
They're just so great.
Okay, so those of you working through the Baby Steps
or those of you who haven't even started the process,
there's one requirement I have of you.
And yes, I'm going to require this of you.
You have to have life insurance.
Okay, I know we go over this often,
but it's really important, and you have to have it.
I mean, imagine if something were to happen to you
or your spouse, and they left you with that mortgage
and all the other expenses?
It would be terrible, so you need to make sure
that you and your family are taken care of.
Now, Winston and I, we use Zander Insurance,
because they make it so easy.
All it takes is a simple phone call or visit their website,
and they will shop the best rates for you.
We recommend getting 10 to 12 times your annual income.
And if you already have term life insurance,
then it would be a good idea to get a new quote,
especially if you've made any lifestyle changes,
like losing weight or you quit smoking.
All you have to do is go to Zander.com
or click the link in the show notes.
Alright, coming up next is Alex Helton,
who is an awesome real estate agent.
And he is going to walk us through
when you are financially ready to purchase a home
and what to look for.
He is one of our real estate Endorsed Local Providers,
and these are agents that we recommend
all over the country to help you buy and sell a home.
(synthetic music)
- Well, thanks, Alex, so much for coming on,
sharing your wisdom. - Thanks, Rachel.
Glad to be here.
- So appreciate it.
All right, you guys. So, when you're looking to buy a home,
here are three things to remember
when it comes to your money to know
that you are ready to buy that home.
First and foremost, I want you completely out of debt
and a fully funded emergency fund of three to six months
of expenses in the bank.
So, this is great, because this sets you up
for your house to be a blessing, not a curse.
And, Alex, you know that, but it is—it's so key.
So key to be out of debt and have that emergency fund.
Because if you're broke, you guys, and you buy a house,
you become broker, is what ends up happening.
So, getting that solid foundation is so, so key.
And then, next, I want to make sure that you have
a good down payment on your home.
So, Alex, I always tell people 10 to 20% down payment is
the ideal world, so would you agree with that?
- For sure. So, we would recommend putting 10% down.
By doing that, you are—keep in mind
these folks are working toward
ultimately getting the home paid off, right?
And so, if somebody says, "Hey, can I get a loan
and put nothing down," they are out there. Those are options.
It's just not consistent with where we're trying to go.
- I think that that is great advice.
And, you guys, if you are saving up for a down payment,
you can click the link in the show notes
and get my free Down Payment Goal Tracker
to help you stay encouraged while you're saving up
for that down payment.
And then, last but not least, when you're taking out
your mortgage, make sure to get a 15-year fixed rate
and that your payment is no more than 25%
of your take-home pay, so that's key.
All right, Alex, you've been doing this for how long?
How long have you been selling homes
and helping people buy homes?
- Six weeks now.
(Rachel laughs)
- I, literally, was like, "You're really good at this."
- 12 years, 12 years. - 12 years, okay.
So, what are some things that people should be looking for
when they're going to buy a home?
- The first thing I would do would be encourage them
to remember what got them here, right?
So, patience. They're working a plan,
and they've had discipline.
And so, what you don't want to do is throw
all those things out, get into the process,
be overly emotional, and then put yourself
in a bad situation, right?
The second thing that we want to encourage people
that have never bought a home before
is that this is your first home.
There's probably going to be a second,
maybe a third, a fourth, a fifth.
This is not your forever home, so just keeping that in mind.
- Because it's emotional, right?
Because when you're buying a home,
you're imagining yourself in it,
especially your first one, right?
It's like—this is the biggest purchase
you've ever made in your life, for most people.
And it's like—this is where I'm going to raise my family.
This is where life's going to happen.
It's going to be so exciting and so great.
But it's probably not going to be your dream home,
especially your first one.
So, I think that's a great, realistic expectation
just to throw out there and remember, so that's good.
- Yeah, so now that we have the right mindset,
then we're going to work on three things
before we go shopping.
The first one is getting really clear on a budget.
We know what you all recommend with having a mortgage
with HOAs and taxes no more than 25% of your take-home.
But that doesn't mean that they're clear on their budget.
So, they need to get clear on their budget first.
- That's good.
- The second thing would be a wish list.
And not just a wish list but prioritizing your wish list.
And some of those may be non-negotiable,
and others may be strong preferences.
But that's going to be really helpful
for somebody starting out.
- And those non-negotiables, I think, are so important,
because, I mean, I think about, like, for instance,
it could be a yard, right?
You're like, "I don't want a zero-lot-line.
We want a yard."
And what it does is it just starts narrowing down
what you want. And those big priorities—
those non-negotiables—you're still going to have options,
but it's not like this whole world of houses,
and it's so overwhelming.
It does narrow it down, and it helps you
be wise in those decisions.
- That's right. - I think that's so smart.
- Yep. The third thing is going to be
choosing an agent—hiring an agent.
You know, we recommend reaching out to
an Endorsed Local Provider in your area
for real estate services.
And when you're looking for an agent—
when you're interviewing those agents—
we recommend interviewing, you know,
anywhere from two, three, however many
it takes to be comfortable.
And you're probably going to be comfortable with them,
because you trust them.
- Yes, trust is huge.
- And not a blind trust. Like, you're the expert.
I don't know what I'm doing.
But we're partnering together,
and I'm trusting you to guide me.
I'm trusting that you're going to be patient with me—
to answer questions that I have, right?
If red flags pop up or whatever it may be—
I'm trusting that you're looking out for me
and that you're giving me really good advice.
- Such good tips.
Okay, so I want to know some red flags.
Some things when someone walks in a home—
that they have to just run out the back door,
and you're like, "Get out of there! Don't do it!"
What are the big red flags to look for?
- Yeah, just throughout the process—
so we're assuming that you're working with an agent
that is an ELP and that you trust them
and that you're comfortable with them.
But if you hear the words— I was thinking about this—
if you hear the words coming out of anybody, alright—
- Can't wait.
- of, "That's not a big deal."
And then they want to keep moving on—
huge red flag for me.
- So good.
- And it may or may not be.
- Yes.
- But I—
- But they're not taking the time to explain it.
- And these folks should expect that they take the time
to explain it to the point that they are comfortable
making their own decision to move forward or not.
- So good. Oh, I love that.
Guys, there's so much in this.
Yeah, for real though, such great advice, Alex.
Thank you.
And I know you guys probably learned a ton,
so seriously, thanks so much for coming on.
- Yeah, my pleasure.
(upbeat pop music)
- Okay, you guys. If you're getting ready to buy or sell
a home, make sure you connect
with an ELP real estate agent like Alex.
So, click the link in the show notes
to get in touch today.
All right, best part of the show. I celebrate you guys.
That's right! #sheworkshardsavingmoney.
And it's a Baby Step 6 edition.
That's right! These are all people
who are currently paying off their mortgage.
Tami said, "Baby Step 6:
Took my coin jar and took a bit of money
from selling a couple of items from our home
for a $55 principal-only mortgage payment.
A little at a time is better than none.
I now owe less on the mortgage than my annual salary.
Feels so great!" Oh, great job, Tami.
- Kevin said, "What a year!
We finish out the year with our biggest
mortgage payment ever! Over $10,000!!
$75,000 of debt paid off in a year!
And one year closer to freedom.
Don't let anyone tell you you can't do something.
You can do this! Crush 2019!"
I love that, Kevin. That's right.
Anyone— you can do this you guys.
Melissa said, "We are celebrating
a major victory over here today.
Last week, we brought in our final mortgage payment
to Veridian Credit Union and walked out
with a weight off our shoulders."
You can do it, too, and we are here
to support you along the way.
Melissa, you guys paid off your house.
Look, guys, it's possible. They're doing it.
Oh, I love it so much.
Well, I really hope you guys found some encouragement
on today's show and ways to pay off your home early.
All right, thanks to Emma and Rolando for Skyping in
and for Alex for coming on and giving us
some great real estate tips.
And make sure to subscribe to my new podcast.
That's right! The Rachel Cruze Show is on
the Apple podcast or wherever you get your podcasts.
I don't want you to miss out, so make sure
you go and subscribe there.
Well, thanks, you guys. Thanks for watching,
and remember: As always, take control of your money
and create a life you love.
(upbeat pop music)
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