Gorgeous Santorini

Yes that’s right! You get to spend money AND mutilate that mortgage! How? You get specific… REAL specific, but I’ll get to that in a second.

The picture above is one I took just a few weeks ago whilst touring abroad in Oia, Santorini, Greece. Oia, as you can no doubt tell, is a beautiful and relaxing place. Whilst you might not have heard of the town, you’ve no doubt seen the picturesque scenes time and time again, the ones with the all white and blue cave houses built into the cliff faces over the Agean sea. The ones that look like this:

Houses Of Oia

That was actually the view from the roof of the place we stayed in, just awesome. I’d love it if someone bought a parcel of land just outside the town and put a Wet n Wild on it with multi-kilometre water slides all down the hills/cliffs finally ending with it dumping you into the Agean sea with a huge launching ramp. Probably not the towns style though… Santorini was only one part of our fantastic tour too, we also had stops in Paris, Athens, Rome, Florence and Venice over a three week period. There was a lot of boarding planes and trains as well as various other types of transport not to mention the walking and steps! In one single day in Santorini we walked up over 1,000 steps just walking around and exploring. We both had a great time and I don’t think I’ll ever forget that relaxing moment when I took that top picture, best ice cold juice I’ve ever had Sunnies



There’s not a great deal to do in Santorini so if you don’t like just relaxing it may not be the place for you, but why you’d want to do anything there besides sun bake, relax, sip orange juice and enjoy the gorgeous view is beyond me. Aside from those things though we were still doing one very important thing whilst on our vacation, killing our mortgage. You see, we have automatic, reoccurring extra mortgage payments that come out each fortnight regardless of whether we’re on holidays or working hard. We’ve also analysed, cut back and even increased in some areas of our yearly expenses to make sure we’re not only killing our mortgage but also still living a happy life.

The 5%

I always encourage you to pour 70%+ of your after tax wage into paying off your mortgage however I am also a firm believer of making sure you’re appropriately well motivated to do this task. Paying off a mortgage (even for us mortgage mutilators) takes many years so you need to make sure you don’t descend into a pit of misery and boredom while your plan plays out. It is better to devote 65% of your after tax wage to paying off your mortgage for the 7 or so years it might take and spend the other 5% on something you love if it means you go the distance and never waiver from your plan. There’s not point getting to 70% and not being able to maintain it and then giving up 6 months later.

It’s because of this motivational need that DW and I regularly spend a good chunk of money on travel. Judging from most of the general population we’re a bit “weird” in that neither of us drink alcohol, neither of us have a coffee or soft drink habit, neither of us go shopping every other night or do other common things that suck away your hard earned money. We don’t really enjoy those things so it’s not hard for us to not do them. As such our coffee bill for last year was $0 for example. What we do enjoy greatly though is travel and so this is the one area where we splurge on and why not? If you’re going to spend money, best to spend it on what makes you happy! The only rule I set is a budget limit each year that we both agree on. Beyond that hard limit we spend it however we wish.

Spending To Save

This psychological hack of spending money in order to stop yourself from getting cabin fever isn’t new. I originally adapted the rule from the famous book “Your Money Or Your Life” which is a very good start for anyone just getting into the realm of budgeting as well as learning about how to handle money properly in their life. It describes the process of going through your past spending, sorting it into various categories (food, travel, coffee etc) and then deciding which ones truly bring you happiness and which don’t. If coffee for instance really brings you genuine happiness when you drink it (who knows maybe you’re a coffee aficionado or something!) then you keep spending money on it. If you feel “cable TV” doesn’t really float your boat however or maybe just doesn’t promote the life you want you eliminate it. In this way your expenses morph into a new form that actively encourages a happier life for you. It also usually ends up reducing peoples spending too which brings about the results of saving money AND making you happier.

We’ve cut out many things from our budget (TV, shopping, computers/tech/mobiles, cars, etc) and increased the ones that we’ve found really make us happy. The end result is that we never feel “deprived” or bored as the years go by. It actually feels a bit like cheating because we’re not only saving huge amounts of money but getting to splurge on what we want too. It’s a win/win situation that is pretty straight forward to setup. The only thing you have to be careful of is having too many “splurge” categories. I’d say any more than about two should start sounding alarm bells. For us it’s mainly travel and active hobbies because they keep us active and healthy.

Choosing Your 5%

As I’ve said, the best way to find out which category you should maintain or even increase is to properly analyse ALL your expenses. You might already know that “watching the footy” is what truly makes you happy but the important point is that you should be decreasing or eliminating the other negative expenses at the same time because it’s these savings that offset the other spending. It’s no good just spending another $100 a month on cable without first cutting that shopping and Mother habit. What you should see is the expenses that you don’t care about go away whilst your most favourite ones stay or possibly even go up a bit.

So what is your one category of splurgeyness? Do you love travel just like us or is it something a bit different?

Mutilate The Mortgage With… Spending Money! is a post from: www.MutilateTheMortgage.com!



Got a mortgage? Learn how to kick it's ass fast!
You can pay off your mortgage early. So early that you can be mortgage free before you even have kids, before you hit 30 and you can do it without cutting back on the things you love too.




Alex Shoolman

How To Pay Off A Mortgage Early - What if you could be mortgage free in under 10 years, automatically and without cutting back on the things you love?
Editor in Chief at Alex Shoolman - Learn how to improve your life with technology, see where it's going in the future and how you can take advantage of it.
Editor in Chief at Mutilate The Mortgage - We help people go from "no idea" to mortgage free in under 10 years.

  • Michelle

    Great post!!
    I really enjoy this site and check it regularly for updates.
    Trying hard to mutilate our mortgage ASAP!! I find your posts very motivating.
    Thanks

  • I love your 5% “slush fund” to keep you motivated and on track to pay off your mortgage. I have a different approach but similar idea and ultimately the same goal to pay the mortgage off early.

    The wife and I are on a 7 year journey to pay our mortgage off early. But unlike your recommendation of 70% of after-tax pay. Our plan calls for ~22% of our gross pay over the 7-year time-frame. Would love to get your thoughts on the strategy we are deploying.

    Thanks for sharing.

    Cheers!

    • Sounds like a good plan if it’s under 10 years :-) However that rate of 22% sounds pretty small to be honest. Obviously you might have 10 kids in which case it’s excellent so it’s all relative but if you’re like “most” Australians and have 1-2 kids (or none) then I’m sure it could be more. Feel free to post more details on your strategy and I’ll see if there’s any pointers I can give you!

  • Korina

    70%! How on earth do you manage that? With all the bills associated with having a house I just don’t see how that is possible. Or are you putting 70% of one salary and living off the other? Or do you not have kids? We have four kids and one wage. I’m obviously new to your website but am always looking for ways to save and pay more off the mortgage so am very interested to learn what I can. :)

    • We are the mythical and super efficient “DINKs”, so obviously we’ll have a lot more income and a lot less expenses than you guys do. We do indeed put more than 70% of both our after tax wages towards our mortgage and have done so for years so it is possible. I will admit that it is much harder the lower your income is and the higher your “forced” expenses are. So for you guys only having one income and four kids things are going to be very different. Certainly don’t be disappointed if you can’t make it to 70%, just be realistic with all your costs and always be trying to decrease them (or increase your income(s)). There are a lot of “solid” costs here in Australia such as your council rates, water/sewerage connection charges, car rego etc but there are far more “flexible” ones. How much water you use, how efficient your power use is, how far you drive, one car or two? And so on. The best way to deal with these is to look at all your costs, sort them according to which ones make you the happiest and then ruthlessly cut the ones on the bottom off.

  • Cat

    Thanks for this great website, it’s helping us to look at our income and mortgage from a totally new perspective. Whenever I say we’re trying to pay our mortgage down in 8 years, people scoff and say it’s unachievable and optimistic. I’m coming to realise many people aren’t prepared to make sacrifices and, so, prefer everyone else to be stuck in lifelong debt with them. Misery loves company or something like that. MTM has shown me this is completely achievable (and, if anything, 8 years might be a pessimistic approach!) and is giving us the solid strategy to do so. Even with a couple of kidlets under our wings ;) Thank you! It would be great to hear some advice about investment properties. We have a small one, the rent for which which does pay the base mortgage and a touch extra; however we do incur expenses such as rates, maintenance etc that dip into our income. Cheers.

Related Posts

Mutilate The Mortgage With...

One Of The Best Things We’ve Ever Done

Over a year ago my wife and I went into the city for a very special appointment. It wasn’t a dinner date or to go see a movie, no it was far more unique and Read more…

Mutilate The Mortgage With...

Success By A Thousand Improvements

Currently you might have a mortgage of say, $250,000. This mortgage, assuming you’ve done your homework and negotiated down to a good rate might be at something like 3.64%. That’s bonkers low as we’ve previously discussed Read more…

FHB Tips

The Ultimate Guide To Paying Off Your $400K Mortgage

This post is part of the fantastic “Ultimate Guide” series which aims to help any person, with any income andany number of children to easily see what type of time frames they should be aiming for regarding Read more…