I've written about how we paid off our mortgage as well as how we all can save money by taking our lunches to work, but this piece by Crown Ministries (pdf -- page 14) tells the story of a guy who combined the two ideas. He started brown bagging his lunch to work and put the money he was saving against paying off his mortgage. The details:
The daily savings of brown-bagging my lunch was about $5 per day. That’s $5 times 21 working days per month, or about $105 savings per month, which is good in and of itself. But if I had not been intentional about it, the $105 that I saved would have gotten lost in the shuffle and spent in some other way. That’s when I developed the Index Card System.
The Index Card System ensures that the money we intentionally save by means of brown-bagging our lunch, or any method of cost saving, gets redirected purposefully. Here’s how it worked for me. I took ordinary index cards and wrote “$105” and the months “January” thru “December” on them and put them in with the rest of my bills. Each month that my mortgage was due, I treated the index card as a bill and used it to pay an additional principle payment on my mortgage. I simply wrote “Principle payment only” in the memo, and the bank applied that money against my mortgage balance. None of that money went toward interest. The full amount went directly to reduce my mortgage balance. As a result of sticking to the Index Card System, I knocked seven years off the life of my mortgage and saved almost $14,000 in interest.
Think about that. By simply applying the money saved from brown-bagging a lunch, it is possible to knock many years off the life of your mortgage and save potentially tens of thousands of dollars in interest. Anybody have a taste for peanut butter and jelly?
What a great example of the fact that if you can keep small spending under control, you can have a MAJOR impact on your net worth. With one simple change over a long period of time (he doesn't say how long, but paying off his mortgage didn't happen overnight), this man dramatically improved his finances. Many of us can do the same -- if we simply make a small change here and there and have the discipline to see it through.
One other note: I'm sure it just wasn't the savings that helped him pay off his house early. He probably bought a house the "right" way.