Today I’m honored to be able to share a great story about finding the balance between life and money. Karen Whaley from Satisfied Spending has been kind enough to share her awesome story right here on Why We Money. I was fortunate enough to connect with Karen at FinCon this year. We discovered we not only have similar philosophies on money and life, but we live a very short distance from each other. Win-win. Without further ado, here’s Karen! Enjoy!
Whoa! You had a $145/mo mortgage payment? Wait. I know. You lived in a tiny house or mobile home. Right?
Nope. I lived in a 4 bed, 4 bath, 2300 sq. ft. home in one of the highest median income counties in the Midwest.
Top notch schools in a neighborhood that would make a 1980s family sitcom jealous. Your typical “American Dream” lifestyle, minus the white picket fence. (My fence was cedar.)
Then how did you get such a low mortgage? And why didn’t you keep it?
Well, let me tell you my story and share with you some money wisdom I’ve learned along the way.
Money, Money, Money!
During my money-obsessed days, I pursued many unconventional money practices.
To save money, I put bottles of water in the toilet tank and unplugged appliances using phantom energy.
To earn money, I pulled 0% cash advances on my credit card and placed the money in interest-bearing savings accounts. (This is a dangerous game and one I would not recommend you play.)
And these are only a couple of the money saving and earning techniques I’m not too embarrassed to tell you about!
While practicing my money shenanigans, I also reduced my mortgage payment (principal and interest only). It is one of my most financially responsible decisions. As many of you already know, low housing expenses provide vast opportunities to spend and save differently than the masses.
That said, one of my most mindful spending decisions is ditching my $145/mo mortgage.
A Brief “How” Behind a $145/mo Mortgage Payment
Let me be perfectly clear, my extremely low mortgage payment was mostly by fluke. Never in a million years would I expect what happened with my mortgage payment to happen with yours.
In a nutshell, I put 20% down on a 5/1 Adjustable Rate Mortgage (ARM) shortly before 2008. Now before you go get too excited about my perceived income, 10% of my down payment was courtesy of a Home Equity Line of Credit (HELOC).
Those were the good ol’ mortgage days, weren’t they? (Kidding. Kidding.)
While most individuals are devastated by the crash of 2008, I benefit from the mayhem.
My first rate adjustment is after the market crash. The new rate is now less than the original (a rate I was pretty damn proud of at the time!). Coupled with five years of principal reduction via standard payments, the monthly payment drops a good chunk.
And I didn’t do a stinking thing to create the lower payment. Can you imagine? A lower debt payment you didn’t lift a finger to get? Freaking. Amazing.
Over the next 9 years, extra principal payments are made. As a result, my monthly mortgage payment lowers with each rate adjustment.
Fourteen years after signing on the line for my ARM (but not a leg), my monthly mortgage principal and interest payment was $145.
Why I Lowered My Mortgage Payment
When the first rate reset occurs, I’m in the midst of my debt epiphany.
I snatch the lower payment with both hands! Using the difference in monthly payment amounts to pay-off other debt. If you have ever experienced a debt epiphany, you can understand my reasoning here.
During that year, I discover the budding FIRE movement. I pay-off all non-mortgage debt in short order. Using a few slightly questionable money saving and earning tactics, but never eating brown bananas. (Only because I don’t like bananas, or I totally would have done it!)
With my newly lit FIRE, I focus on maxing retirement and reducing monthly costs – including my mortgage payment.
Hours are spent in front of my mortgage loan spreadsheets and online retirement calculators running scenarios. I am going to achieve the perfect balance. I just need to run the numbers one. more. time.
To give you a taste of my obsession, I would sometimes get up in the middle of the night to run numbers. Crazy? No doubt. But maybe some of you can relate to the burning FIRE in my soul.
Yes, thanks to my extra principal payments, my mortgage payment was going down each annual rate adjustment. However, interest rates remaining low add fuel to my FIRE.
Picture Perfect
My financial picture is one you would applaud.
I have clawed my way out of significant consumer and student loan debt. My net worth would make any of you FIRE pursuers proud.
On the path to living life my way? Check.
Plus, I have an emergency fund, savings for fun stuff, kid’s college savings, proper insurance, and a will & trust established for worst case scenarios.
Responsible money actions? Check.
And yet, I’m not happy. I’m quite miserable really.
On financial paper, my life is so bright you need to wear shades even at night! I’m a glowing example of the American Dream (but with a cedar picket fence).
While still aggressively saving and attacking my mortgage, I begin consuming information on human psychology and what makes people happy. The main take-a-ways:
- spend your time pursuing meaningful work for life satisfaction
- have strong social connections
- give back
I land my dream job. Actively pursue friendships. Donate money to charity and volunteer my time weekly. Oh, and I think less and less about my next financial move.
Yet, despite all that, I am never quite satisfied with life. Something is missing. And I can’t figure out what. I’m not unhappy per se, but I’m not exactly fulfilled either.
Shouldn’t I be livin’ it up by now?
After all, I have done the “right” money things per the financial gurus and FIRE bloggers. I’m doing expert-approved happiness generating things. I even follow spending advice from books like Happy Money: The Science of Happier Spending.
Questioning My Low Mortgage Payment
The Trigger
Then life happened. Neither you nor I can hide from the unexpected things life sometimes throws at us.
During my life upheaval, I am traveling at least twice a month to see my family. (That’s 50% of my weekends spent on the road!) Thankfully the trip isn’t too terrible, just inconvenient and boring.
During one of my trips, a random stranger asks me, “Why all the travel?”
This simple question stops me in my tracks.
Yeah. Why am I traveling so much? My phone works. So does my email. I can even video call and see my family’s smiling faces.
Upon reflection, I have always done a lot of traveling to be with my family.
While I don’t recall my exact response, it was something to the effect of, “To be with my family. They may be a little crazy, but their mine and I’m keeping them!”
I’m positive some of you can relate to this feeling. They’re likely nutty in their own way, but your family loves you. They are always happy to see you and welcome you with a hug!
For me, this out-of-the-blue exchange chucks rocks and clumps of dirt onto my perfectly manicured blazing with FIRE lawn. It makes me pause and consider my life a little differently than I have in a long time.
What do I want from life? I’m doing all the “happiness” actions per the experts. I’ve got my dream job, rockstar finances, friends, and consistently give back. I incorporate happy spending principles when buying.
But despite all the happiness knowledge telling me those things should make my cup overflow – it’s not.
Then it dawns on me. The heavens open and the angels sing majestic music. (Okay, so that’s a little dramatic but you get where I’m going, right?)
All the happiness factors focus on how you spend time to increase happiness. Yet, how I spend my time on a regular basis is missing something: my family.
The BIG Mortgage Question
HOLY SMOKES, BATMAN!! The wild ride of life has just thrown me the opportunity to move closer to my family!
It will significantly impact how I spend time. But it will also drastically change how I spend my money too. A real nail-biter of a FIRE question sits before me.
Do I ditch my, so ridiculously low the financial Joneses would be jealous, $145/mo mortgage payment to be closer to my family?
Keep in mind, by moving, I will not just be doubling (or even tripling) my principal and interest payment. I will increase my mortgage payment eightfold. How can I not with such a low mortgage payment?
I know, I know. I hear some of you shaking your head, doing the math, and mumbling about how it will just be a “normal mortgage amount now.” But you can’t discount the significance of the time and effort it took to get such an outrageously low mortgage.
Sure, the first payment drop may have been a fluke, but lots of willfully made extra payments were involved thereafter.
Should I do it? Would you do it?
Pulling the Trigger
With my money-obsessed FIRE brain screaming expletives while kicking and flailing, I take the leap and decide to move.
The entire time my brain is wailing,
“What the hell are you doing?!? People would kill for a $145/mo principal and interest mortgage payment!”
“You are taking away so many options for financial independence!”
“Are you stupid? You worked so hard to get to such a low monthly housing cost.”
And yet my heart is dancing a lively jig in my chest.
It’s an insanely unconventional financial decision in many different ways. Truly crazy. Get me a straitjacket. Stat!
All my money knowledge to this point tells me this is an irresponsible (ludicrous even) decision. And yes, on financial paper, it just might be.
But life isn’t about money. Money is about living life.
Despite all my knowledge, somewhere along my journey, I lost sight of this truth. And I didn’t even realize it until life smacked me in the face.
No doubt having enough money makes living easier. I would never suggest to you otherwise.
It still doesn’t change the fact that I am in a house because of money. I have other options. I’m staying because it is the “right” financial move based on FIRE and a whole host of “best practice” personal finance philosophies.
The often-used statement, “It’s called personal finance because it’s personal,” echoes in my head.
Yes, I built a fabulously responsible financial FIRE empire. But at what personal cost?
Bottom line, staying in a house solely due to a low mortgage means the money controls me instead of me controlling the money.
By ditching my $145/mo mortgage, I fully embrace the idea of life before money.
An Unconventional Money Decision Backed by Science
Based on the dancing, my heart is clearly thrilled! But my head is stubbornly sitting at the foot of the gangplank, refusing to get on the “Let’s Move” ship.
Life just sucker punched me with the reminder that no one is guaranteed tomorrow.
As a result, what mattered most to my heart became glaringly obvious. You would think that would be enough for my brain to let go of the reigns, wouldn’t you? But it wasn’t.
I’m a very practical, analytical individual. (As if you hadn’t figured that out from the spreadsheet nonsense mentioned earlier.) Maybe you are too.
So how do you convince your head to follow your heart when it comes to money? How exactly do you embrace life before money?
Again, I turn to the experts and listen to their advice, but with a new perspective. I lean into my emotions and harness their power to make better more personal, life-based financial decisions. You should too.
Listen to the Experts
Per various money and happiness studies, five ways you find life happiness are:
- Buying time
- Creating experiences
- Social acceptance & connection
- Expressing yourself
- Irreversible decisions
There are many ways to find happiness. But these five points convinced my brain to follow my heart.
Time & Experiences
An increased mortgage payment buys me time and results in more opportunities for experiences with the people I love and value most: my family.
I can recapture all my travel time and turn it into quality family time.
Additionally, it’s easier to more regularly see and participate in my family’s lives. The increase in quality time creates memories I can reflect on and savor the rest of my life.
After basic survival needs are met, the more money you spend buying time for enjoyable activities or creating experiences, the happier you will be.
Social Connection
On top of time and experiences, social acceptance and connection cannot be ignored. Most human need theories emphasize love and belonging (social connections) as critical to your happiness.
It stands to reason then, the people you love and value most are also the individuals you crave the strongest connection with. For me, that’s my family. Who is it for you?
Self-Expression
Could I have moved closer to family and spent less than 8 times as much on my mortgage? Sure!
However, self-expression is another a known maker of happiness.
For years I made a list of house attributes I wanted in my dream home. From location to layout to pull-out kitchen shelves (yes, really). My new house reflects all I have learned over the years about who I am and how I want to live.
Self-expression for you may be a tattoo, hairstyle, or always wearing flannel shirts. (Hey, it worked for Paul Bunyan.) Or maybe it’s decorating your front door every holiday season or driving an antique car.
There is no right or wrong answer here. Just your answer.
Irreversible Decisions
Lastly, the book Stumbling on Happiness revealed to me an unexpected life happiness factor. When you are faced with irreversible decisions you are happier with your choices in the long run. You are psychologically wired this way.
Knowing this fun little psychology tidbit was the nudge pushing my brain over the edge.
I knew once the house was sold, there was no turning back. Change is hard; especially large changes.
This piece of information gave me comfort. Even though the initial decision and action is hard, ultimately, I will be happy with my irreversible decision to move.
Have you ever thought about irreversible spending decisions you have made? In hindsight, are you happy with them?
Lean into Emotions
As if hard and fast scientific facts about happiness were not enough, my brain also latched on to the following decision-making morsel: Without emotion, you and I cannot make decisions.
Therefore, you need to embrace your emotions when making money decisions, not shove them aside as I did for years.
Harness your emotional power to make more satisfying choices with money. The trick here is knowing which emotions to focus on when spending to get the most “personal” from your personal finance.
In the words of President Snow from the popular Hunger Games movies,
Hope, it is the only thing stronger than fear.”
According to what I’ve read, President Snow is right. Hope and fear are the two key emotions required to guide wise spending.
Hope
Be emotionally raw with yourself when spending. For any size spending (including savings and paying off debt), ask yourself,
“Does this spending bring me hope for my future?”
When deciding to move, I examined my inner-heart, my dreams, and my ideal vision of life. I talked to others and wrote down the pros and cons. My conclusion for both my brain and heart was sticking with my $145/mo mortgage payment did not bring me hope for my future. Despite the higher cost, moving closer to family did.
Do you still need to know how much you can afford? Yes. Spending outside your means, regardless of the reason, will ultimately bring misery.
Yet, guilt-free spending is found when spending brings hope to your life without breaking the bank.
Fear
Lots of spending is based on fear, whether you recognize it or not. Often that fear is rooted in your beliefs about money. Sometimes it’s driven by your emotional needs.
When you make spending decisions based on fear, you are more likely to experience buyer’s remorse. (Now is not the time to dive into the psychological why of it.)
My core money belief is security. Which means money primarily represents security to me. It does for many people.
Understanding my money’s primary meaning is security, frees me from unknowingly acting on fear driven by that belief.
I can be financially secure in my move, despite the initial (and shocking) uptick in spending. I know, I’ve run the numbers.
So next time you are spending, ask,
“What happens if I don’t spend on this?”
This question will start the process to help you identify any hidden fears possibly driving your spending decision.
Living My Authentic Life Today And Tomorrow
In the end, my “Is this it?” feeling, reflected my failure to use money as a tool to support my life today.
In a twisted way, I’m thankful for the harsh slap life provided. It re-opened my eyes to the why behind my money.
Regardless of the perceived security driven by my core money belief, my low housing costs were not supporting my strong family values or giving me hope for my future. My housing did not allow me to pursue my heart’s life desires today.
Further, the vision I have for my life would never be achieved by staying in my house and banking (pun intended) on living life “tomorrow.” A tomorrow I’ve rudely been reminded may never materialize.
The curveball life threw my way, made me realize I was too focused on what I would do “tomorrow.” Tomorrow being when I am financially independent.
On some level, I was chasing after the FIRE Joneses. And even though I knew better, I was subconsciously believing satisfaction is at the end of a burning rainbow.
I was using FIRE as an escape hatch from today. Are you doing the same?
Embracing today is where happiness and satisfaction are found.
To live an authentic life, you must examine your values and visions for today too. Let your heart be your spending guide when seeking a life worth loving every day – not just tomorrow.
Does this mean if you are on FIRE you shouldn’t be? No.
Does it mean if you are striving to be debt-free you should stop? No.
Does this mean you should toss “responsible” money actions out the window? No.
Does this mean money is evil? Definitely not.
However, I share with you this bit of hard-won wisdom: No matter the financial path you are on, do not lose sight of why you money – for both tomorrow and today.
Have you ever let the money control you instead of vice versa? How are you using money to embrace your life vision and values today? What are ways you are spending for happiness?
Karen Whaley is a Certified Financial Education Instructor and a Financial Lifestyle Coach. Her passion is helping people shift their relationship with money to achieve maximum spending satisfaction today without sacrificing tomorrow. When not finding purpose for peoples’ pennies, you will find Karen on a golf course, playing board games, or devouring a good book. Create your own spending satisfaction at SatisifiedSpending.com and follow her on Twitter @satisfiedspend.
SC | MissFunctional Money says
Karen – I absolutely loved reading your story. Your steadfast determination is impressive, but your realization of your true priorities is even more impressive. I love the personal finance community, but it’s so important that people like you continue to remind everyone that money is a TOOL, not the goal — it often gets convoluted in this space.
Thanks for sharing!
Karen Whaley says
Thank you, Miss Functional Money! By sharing my story, I hope it helps others remember “money is a tool” and not be reminded the hard way as I was.