Debt-free journey: ‘I tackled my debt – now I’m paying off my mortgage early’
After clearing her debt, personal finance blogger Ellie Kistnen from Dublin and her husband are on a mission to pay off their mortgage by the time they turn 50.
“Money was never a concern when I was younger. I had a decent-paid job and I just spent whatever I earned.
I’d book a holiday on a whim with a credit union loan. I’d buy clothes with my credit card. I’d go on a night out and blow my wages. When you’re young, you just don’t think of the financial impact.
Things changed when I turned 27. I realised I had to be grown-up and start managing my finances. That was the start of me facing up to the €7k of debt I had run up on my credit card and using cash envelopes to put money aside each week so that the cost of my rent and bills was spread out a little more evenly throughout the month.
I decided I was going to pay €50 off the credit card a week, but then, when I considered the interest of €70 a month, it meant I would actually only be paying off €120 a month.
It would have taken me forever to pay it off, which is partly why my husband gave me some of the money to clear it in full. At the time, we were trying to buy a house and the mortgage advisor told us it would be better to have all debts paid off.
We eventually got the mortgage and then, without even noticing, I realised that I’d run up another €3k on the credit card!
This time I cleared off the debt on my own. I hadn’t learned any lessons the first time, because someone helped me. But when I did it on my own, my savings journey really started.
I cleared that debt off bit by bit, but looking back, I should have used my savings, as my husband advised me to do. He couldn’t understand why I would pay interest when I could just pay it off in one go. At the time I wanted options and money to spare, but I can see now that he was right.
Once I cleared off that debt, I was empowered to save more. I opened up a joint bills account for us, which I added to as soon as I got paid. Then I set up lots of different sinking funds including one for car insurance and tax, one for entertainment and one for holidays.
As time went on, I really started geeking out on it. I started a savings fund for our girls’ birthdays and college fees and a ‘new tech’ fund. My laptop broke one year and I was so grateful that I had €500 saved up in the bank. It inspired me to always have money on hand for new phones, laptops and gadgets.
Once I had all our savings funds in place, I started to think about our mortgage and how much money we could save on it. We had a 25-year variable mortgage so I went on to the lending institution’s website to use their mortgage overpayments calculator.
I couldn’t believe it when I discovered that if we paid just €100 extra each month, we could save over €60,000 in interest payments.
I rang the company the next day and asked if I could bump it up. We had some tax relief at the time so we were in a financial position to be able to do it. But now we don’t even notice it – it’s just our normal mortgage payment.
Do we plan to retire early? Well, my husband is a head chef so it would be beneficial if he could. It’s a stressful job and chefs don’t always go to retirement age, so it would be great if he at least had options. Ultimately, we’d like to get the mortgage paid by the age of 50 so if we want to go part time, we can.
We’ve made cutbacks over the years but I honestly believe that anyone can do this. When you have a plan in place, you’d be surprised by just how quickly you can reduce debt. And when you plan your budget and you see where you’re spending your money frivolously, it becomes so much easier to save.
I’ve also found that practising gratitude really helps to curb unnecessary spending. I used to be very ambitious. I got a new kitchen and then I moved on to the next thing. I never really took the time to appreciate the new kitchen, it was always a case of, ‘What’s next?’
I still have ambition, but now, I’ve slowed down and taken the time to stop and appreciate what I have. It’s made me very humble and that shift has been a big part of my debt-free journey.”
This article was originally published in June 2022.