We Paid Cash: Getting Right Side Up on our Upside Down Mortgage

We paid cash!

A testimony from Jen from Yard Sale Mommy

A year and a half ago I was having hot chocolate with a dear friend over Christmas break, and she told me about this guy named Dave Ramsey and about his Total Money Makeover.  Stop using credit cards, pay cash for everything, never take out a loan, even for a car? We could never do that, I told her.

Three days later we drank the Dave Ramsey Kool-Aid. And I’m so glad we did. In six months, we fairly easily paid off all of our credit card debt and medical bills, built an emergency fund, started giving more to church, and got our debt down to nothing but two mortgages.

Wait… what? Yes, we had two mortgages — one more than we needed.

In 2003, my husband got a new job and we had to rent out our house instead of selling it because we stood to lose money on the sale. Fast forward eight years to 2011 — to sell the house now would mean losing even more money than before. We were underwater on this mortgage, not covering the payment and maintenance with the rent, and facing major repairs in the near future on our twelve-year-old home.

We needed to sell it. But in order to sell it, we had to save and we had to prepare to lose an unknown amount of money.

We put the house up for sale this past February. After three weeks, we were willing to lose five thousand dollars. After six weeks, we were willing to lose ten thousand dollars. After nine weeks, we finally got an offer: $20,000 below what we needed to break even.

I’m happy to say that we were able to bring $19,076.00 in cash to the closing of our upside down mortgage last month.

It took a year to save this much, but I got zealous about buying and reselling things on ebay, spent hours on MoneySavingMom.com learning how to better my grocery budget, and decided that a trip to Target should be an errand instead of an activity.

We cut back and did without and we were able to pay cash to get out of our upside down, underwater mortgage. It feels so good to be free from that extra mortgage!

Jen Wise is a SAHM of three sweet girls and the wife of one handsome engineer!  Every Saturday morning she can be found hitting the yard sales in Raleigh, North Carolina.  You can follow her yard-saleing, eBaying adventures at Yard Sale Mommy.

Have you saved up and paid cash for something — large or small? Submit your story for possible publication here.

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  1. Brittany Bauman says

    I LOVE Dave Ramsey! I am working on his series right now…as I’m moving (its sitting in my closet right now) He has so many good ideas and he makes the learning part WAY fun. I am 20 and my hubby is 24 so keeping our attention is KEY <3

    • L says

      My husband and I are in our lower 40s and are actually doing pretty well in our financial future, we own some property, have some retirement going, have some college funds going, and are close to having our house paid off. In saying that, please look at how young you are. Even though we have lived very frugally, my wishes would be to have saved MORE from the beginning, more for retirement, more for college. Even if it is $200 a month more towards retirement and another $200 more towards any future college needs. Take advantage of your young age and the time you have!

  2. Meredith says

    Oh, the power of Dave Ramsey…. his ‘magic’ worked in our house, too. What a blessing it is to be debt free!!! My husband is currently unemployed, but because we have no debt, it hasn’t been the catastrophe it could’ve been. While he is searching for a new job, we trust that God will help him find something…. hopefully the perfect job!
    Thanks also to MSM because I’ve been able to drastically reduce our grocery bill, which I had started to do before he was even laid off.
    BTW, I just found yard sale mommy… I love your blog and am gearing up for the consignment sale that will happening in October… you never know, I may even take your suggestions and start selling some of our stuff on ebay!
    Great job!

  3. Amanda says

    “A trip to Target should be an errand instead of an activity” LOL! Now you’re getting personal :)

    • L says

      I love this comment as well! Although Target has almost always been an errand vs. an activity. I am always secretly hoping for more time to get lost in Target and cruise the aisles, but generally it is all about following my list and heading back home….now if I lived closer to a Target, that would be a different story :)

    • sarah says

      I know my priorities are off – totally an activity for me, but mainly because it’s 25 miles each way. If I lived closer, it wouldn’t be such the highlight.

  4. Lily says

    I have question – Do we concentrate on paying off our mortgage first or save for retirement (traditional or roth IRA)? Any thoughts?

    • Meredith says

      10-15% of your gross salary to retirement…. I think a Roth IRA is better… pay the taxes now:) After you have that in place, college funds (if necessary) then the house…. this is according to Dave Ramsey’s teachings.

    • says

      Yes, the baby step for a fully funded retirement account comes before paying off your mortgage. This is because so many seniors end up with a house that is paid off, but absolutely no retirement fund (my FIL is one of them and is living on social security only right now).

      I too like a Roth, but it really depends on your income. If you are in a high tax bracket, it may be better to defer the tax payments until retirement when you are in a lower income bracket. A financial planner (a real one, not an insurance salesman) should be able to determine that for you.

        • lise says

          I just spoke to my Edward Jones financial adviser yesterday and she is a huge Dave Ramsey fan. I have never read any of his work as my husband and I budget and have no debt. (besides our mortgage)

          I told her from what I had been reading (on MSM) that Dave Ramsey was AGAINST credit cards and she said he is not. He says, though, if you use them, pay them off every month…and we already do that.

          She also said close to or almost exactly what Meredith and Camille stated above. Makes total sense after it was explained to me!!
          God bless!

          • says

            Julie is correct. Dave is against credit cards. He makes a BIG deal of cutting them up with huge scissors during his Financial Peace University. I believe he has a statement that if you play with snakes you will eventually get bitten.

  5. Tabitha says

    Dave Ramsey is AWESOME!!! He changed the way we “do” money! We are DEBT free (except our do-able mortgage) Now we have a fully funded emergency fund (6 months savings) in the bank & college funds for both our children!!! WAAAHHHOOOO!!! So glad you jumped on the Ramsey-train!!!

    • says

      Here is something I am wondering……………..

      For children who won’t be in college for another 12+, how much should we save now for the standard 4 years of college?

      I think right now the local university here would cost about $7,000 (I may be way off). So would I would estimate $28,000 per kid…..but in 12 years how much should I estimate that to increase so that they would be covered?

      • Shantique says

        Savingforcollege.com has the simplest calculator to give u an idea of what u may need. Your current assumptions are not taking inflation into account. Normal inflation averages 2-3% annually. College costs are rising at a rate of 7% annually! The costs today are much lower than we can even imagine they will be!

  6. Sarah says

    We drank the kool-aid about 4 months ago and it has been such a blessing I can honestly say I am so looking forward to the furture and to the daywhere we can say we are debt free woohoo

    • Rose says

      I know must be a saying “drinking the kool aid” but what exactly you guys mean?? I have being trying to get a hold of he’s material at the local library but not luck yet 😞 I want to be debt free too trying hard so to does who have read please share se tips


      • Amie says

        Drinking the Koolaid means they’ve joined his teachings. Making a cult reference. Though, obviously he’s not a true cult. Have you spoken w your librarians? At my library they are just one branch in this area. I am able to borrow from other branches through them. They also have some connections to state and federal libraries. Also if you have the money check out a used bookstore. If you fb…post a status. Maybe one of your friends has a copy you can borrow. I purchased from Dave’s site when he had a $10sec special. You can signup for emails and they will send specials to you.

  7. says

    Hooray for you, Jen! This story is incredible. We live in Vegas and so many of our friends have just walked away from their homes. Granted, most are underwater by over $100K, but still…. I shared this on my Facebook page to encourage friends who are underwater and struggling.

    • April C. says

      We are in Henderson (just outside of Vegas) and we too are upside down on our mortgage, about $100,000 or more. It is hard to watch our neighborhood slowly disappear as people are just walking away from their homes. Or, watching the people who have been unemployed for going on two years that are doing everything they can to hold on to their homes but, in the end, don’t have a choice but to leave. I’m trying to stay hopeful that this won’t happen to us. But, as of yet, dh is not a Dave Ramsey kool-aid drinker :-) and so we are still living paycheck to paycheck. But I haven’t given up! I’ll copnvert him sooner or later :-)

      • says

        Keep on keeping! :-) It takes some convincing some times b/c DR’s advice is pretty radical. We were lucky enough to have bought only a few years ago as prices plummeted, but we’re still underwater (which is fine b/c we expected that and it’s not by much).

      • Anna says

        My husband and I are also so thankful for the Dave Ramsey ministry. We are debt free except for out mortgage with is also an underwater mortgage, by $130,000!!!! Man, it is so hard to know what to do. We are thankful we are able to make our payments right now, but we have been praying about what to do. Unfortunately we made a very stupid mistake and got into an ARM that obviously we cannot refinance out of right now. :-(

  8. Denise says

    That is too cool; we found Dave Ramsey also, but not until we were eyeball deep and lost 2 incomes in one month..we struggled, but we needed the struggle I think, to change us. It took 4 yrs to get debt free, and now we only owe on the house. Thanks to the housing bubble, we, too are underwater on our mortgage, so we are fighting our way thru that. E-fund is nearly finished, then we’re attacking the mortgage with a vengeance! I can’t wait to start – beans&rice and rice&beans are getting a little old around here lol:)

  9. Mary K says

    YEAH!!!! More Dave fans!!! We have been on his plan since August 2008 and we are now on step 3, and it feels AWESOME!!! Paying cash and saying no to debt is now second nature to us and I wouldn’t have it any other way :) I’m proud to say we drank the kool-aid!!!

  10. Brooke says

    I love to hear stories like this. We live in CA and are almost $200k underwater on our home and are rapidly outgrowing it. Many of our friends and neighbors have chosen to walk away but we are scrimping and saving to pay it down to a point where we can at least rent it out and continue working to pay it off.

    • Amy says

      We are also way underwater on our home and are trying to refinance through the government’s HARP loan here in Florida. If you owe 125% or less of your home’s value and you qualify, they will let you refinance. We just had our appraisal so I don’t know if our home’s value is high enough, but we’re hoping and praying for some relief! It is frustrating to watch others walk away from their homes, because all the foreclosures are causing the rest of our home’s values to go further and further down.

      • Brooke says

        It is SO frustrating. We don’t qualify under HARP since we have more than 125% LTV and all the foreclosures in our area have brought our value down so low. It’s like they said, “hey let’s help people who were hit SORT of hard but screw the people who were hit really hard!”
        We’re working to pay it down to that point so that we can at least re-fi.

        • Amy says

          Update on our appraisal: Our house is now appraised at half of our purchase price, and our current LTV is 150%, so no HARP for us after all! Such a bummer. We’re trying to stick to our plan, increase our payments, and not despair! :)

  11. Lindsay says

    I’m in a similar situation & have a closing date in two weeks where I’ll be bringing cash to make it happen. Took me a year to save up & 5 months to sell but at least I can walk away free and still have enough to start fresh in a new place (renting for a while). Dave Ramsey rules!

  12. Mandy W says

    I LOVE where you said you had to decide that Target was an errand, not an “activity”!!! I used to treat it as an activity also, and still do sometimes. Thanks for sharing this!

    • April D. says

      Totally agree! Although since I live a good hr. away from one when we do make the effort to go out for a big shopping trip I do find some excuse to go in…I just bring the coupons with me…!

  13. says

    This story is soooo incredibly inspiring! We heard about and started to “somewhat” follow Dave Ramsey a year or so ago but it hasn’t been till recently that we decided to fully drink the kool aide as you say. Now we are cash only and really working on a budget. I hope to have a success story very soon.

    I also sell on eBay…primarily I focus on selling my girls name brand clothing (gymboree, hanna andersson, gap, etc) so I can pretty much keep them dressed for free. I have been doing this for about 6 years now and it has saved us tons in clothing costs. I share my eBay knowledge and tips on my blog.

    Thanks for sharing.

  14. says

    This is probably a silly question since all of you are so in love with Dave :) – but I have been wondering if reading his books would just further discourage me. We have been dealing with unemployment and underemployment for almost 3 years now. Thanks to a healthy emergency fund prior to that happening, we are still not in debt other than our house. We HAD 50% equity into our home when the collapse happened and we are now underwater :(. $250,000 vanished into thin air. SO, I have been hesitant to read the books since I feel very stuck and discouraged right now. I don’t want to read something that makes me feel worse than I already do! Any thoughts?

    • Anonymous says

      My husband and I are actually in the process of filing bankruptcy after 2 years of unemployment for him, which cut our income 50%, then we were unable to get any assistance from the bank (don’t get me started!) and we finally had to leave our home, move 900 miles away and move in with my MOTHER! Us two and our two daughters. He finally got a job here, but still making half of what he made before. I have been VERY discouraged! I decided to get The Total Money Makeover and it was the complete opposite of discouraging! When you read some of the stories it’s inspiring and you realize you CAN come back from anything. While bankruptcy is the only option for us bc of the house that is worth HALF of what we paid and a car we lost, we just do not have the ability to pay that sizable debt on our still modest income.

      The avid fans here would beg to differ, but we are not super young, we lost all our retirement savings and everything we had. We have two children that we need to save for too. We are just trying to be able to live on our own again and that will be a struggle! The good news is my husband just got a new job that will help us move forward.

      Even at your darkest hour, I think picking up the books will give you some motivation and inspiration to keep going!

      • Danielle B says

        Not every avid fan would differ. Many of us may be in the very same situation, but don’t want to say anything because of the illusion that most fans on here have it together in some form or another. For every one person that comments about their financial success, there’s probably at least 10-20 who are in the depths of struggle.

        Don’t be discouraged! There is life after bankruptcy! And if you put the principles that Dave Ramsey teaches into practice after your bankruptcy is finished, you’ll begin the journey to financial success for yourself too. :-)

        • Anonymous says

          Thank you, Danielle!

          Thanks for sharing being in the same boat! I have taken this really hard. I work in the financial business, so it’s even more embarrassing. As soon as I file, have to walk into my bosses office and say “I filed bankruptcy” and every year I will have to explain myself each time I have to renew a license, then it’s public record for the rest of my career! Constant reminder of really awful times!

          • Danielle B says

            That does sound hard. But at the same time, think of all the people that may come across your path who have been in the same boat- bankruptcy- that you may be able to encourage over the coming years! You’re in the financial “business” but you’ve suffered terrible financial loss too. That may be what creates a new line of trust in you from people who have been “burnt” by the financial sector.
            If Dave Ramsey hadn’t gone through a bankruptcy and lost everything, he never would’ve learned how to handle his finances in a radically new way or have been able to reach so many other people with his message.
            Your recent struggles will give you a deeper compassion for others that you may never have had otherwise. From here on you’ll always have an even more sensitive ear, heart and shoulder for other’s financial struggles.

            Isaiah 61:1-3
            “1 The Spirit of the Sovereign LORD is on me,
            because the LORD has anointed me
            to proclaim good news to the poor.
            He has sent me to bind up the brokenhearted,
            to proclaim freedom for the captives
            and release from darkness for the prisoners,[a]
            2 to proclaim the year of the LORD’s favor
            and the day of vengeance of our God,
            to comfort all who mourn,
            3 and provide for those who grieve in Zion—
            to bestow on them a crown of beauty
            instead of ashes,
            the oil of joy
            instead of mourning,
            and a garment of praise
            instead of a spirit of despair.
            They will be called oaks of righteousness,
            a planting of the LORD
            for the display of his splendor.”

            I know it goes without saying, but try not to let what others may or may not think bother you too badly. There’s only one Person who can truly understand an individual’s struggle, and His opinion is really the only one that matters! Also, keep your eyes and ears open, because you never know when I new career opportunity may open up. (I know that may seem odd for a complete stranger to write to you, and I’ve tried to delete it several times, but I just can’t escape a “gut-feeling” that I should write it. So, there it is! :-) )

            Hang in there. You can do this thing!

        • posting... says

          Yes, I agree. There are many of us who do not post on the greatness of money, because we are struggling so much with job loss that never ends..or so it seems. I too have been at the point of no return. I have been so depressed that I am the only one working & we are not making it. 2 1/2 yrs of doing without just to get by and now it is at it’s worst. I see no light at the end of this long tunnel.

          • Danielle B says

            I’m sorry you’re having such a difficult time. I really do understand how draining financial struggle is. Don’t lose hope or give up though! You never know when Relief will break onto the scene!
            So many people that just barely survived the Great Depression went on to do amazing things in their lives because of their struggle. They wouldn’t have been a population strong enough to stand up against a great evil and win WWII had it not been for the previous 10 years’ hardships.
            You really can do this thing. You will survive, and you will go on to do amazing things in your life because of the struggle you are in now.

    • Guest says

      I’m sorry to hear that you’ve had such a challenging 3 years, Jenna. I’ve not been in your exact situation but I find that, even when things aren’t going well, Dave’s books inspire me to keep my head up and keep moving along even if they’re more like snail steps than baby steps. One of the things that I really like about Dave’s writing and show is that he doesn’t harrangue people about their past mistakes. He addresses how our decisions make or break our finances and really focuses on what you can do now. So I say – GO FOR IT!

    • says

      I would go for it!

      The books helped me have a different approach about how I spend money and creative ideas for saving money. For me, it was the realization that things like cable, eating out, etc wasn’t worth not paying off my house early. We are still a long ways away, but it really helped me to see that there are things that I can live without (despite what this culture teaches) that can free up money to pay off debts, mortgage, etc….even if a little bit at a time. Hope this helps.

    • Danielle B says

      My husband and I are rebuilding our lives after filing bankruptcy back in March. We struggled for two years, fighting with everything we had not to have to file, but in the end it was too much.

      Dave Ramsey was so encouraging for us, especially during the struggle.

      We’re now rebuilding our lives, using Dave Ramsey techniques.

      He has a very positive outlook, and really teaches you that no matter what your current situation is there’s some way to better it, even if it is teensy tiny baby steps. In fact, reading and listening to some of his stuff may be the very thing that encourages and motivates you.

      If it hadn’t been for his teachings, our bankruptcy would have crushed my heart and hope. But, knowing that we did everything we really could do, and that we were armed with new strategies to put in place after it was all said and done, I have hope that we will make it.

      Hope that helps! :-)

  15. margaret says

    “decided that a trip to Target should be an errand instead of an activity”
    I need to work on this. Target is very good at what they do…

  16. Mona says

    I have heard so much about Dave Ramsey. Where do I start? Which book do you recommend for newbies? I would love to pay off our house, etc. but it seems so overwhelming. ($1000 emergency fund, 3-6 months of expenses in savings) That almost seems impossible when you are living pay check to pay check. I would appreciate input on where to begin. Thanks.

  17. amanda says

    theres a website called frugabee (www.frugabee.com) and i has saved me over $200 in my first shopping trip..soo many free products. its a monthly subscription program but its only $14/mo and the program pays for itself hundreds of times over in grocery savings. if you sign up using promo code SAVINGS you get two weeks free. you should check it out

  18. says

    Thank you so much for sharing. Our house has been on the market for about 4 years now – talk about discouraging. We do fully own the house we’re currently living in, and rent the other one out – but that lends itself to other troubles. Trying to figure out how to sell it. Thanks for the encouragement.

  19. sarah says

    I’ve been visiting yardsalemommy the past couple of months and like it! But I can’t relate to how she’s able to go out every Saturday morning and leave her husband with the kids. Sigh…maybe when my kids can stay home by themselves. My husband is gone at the crack of dawn riding his road bike.

    • MomofTwoPreciousGirls says

      How come hubby gets to do what he wants and u don’t?? What ur trying to do is to benefit ur whole family. That should be a priority for him.

  20. says

    I love it! “Drank the David Ramsey Koolaid.” I’ve been hearing a lot about this guy recently. I should probably look into it because I have credit cards, a car, & a new mortgage to pay (which is cheaper than my rent!).

  21. says

    Let’s just say, I precede way too many sentences around here with “Dave Ramsey says…” :)

    Anyhow, when we got married, my husband and I had $238,000 in debt (house, car, 3 student loans). In 5.5 years we’ve paid off $88,000 in debt! We are $41,000 from paying off all but our largest mortgage. (Yes, we have two mortgages on one house…we’re underwater and renting out our home too.) We can’t wait to scream “We’re Debt-Free!”

    What’s crazy is, during that time we’ve been missionaries in China, half-salaried, unemployed, underemployed, moved 5 times, added two children, and even lived with our parents. It’s not ideal by any means, yet God continues to provide for us as we strive to become debt free and continue to follow the call to youth ministry.

    Thanks for posting! I love hearing others’ stories of conquering debt!

  22. Michelle says

    We are definitely in a similar situation. We thought it would be a good idea to keep our old house as a rental and it has been nothing but financial and emotional stress. We are now in the process of paying down the mortgage so we can hopefully put it on the market and sell it next March once our renters lease is up.

  23. Jule says

    I feel suffocated by debt right now. I currently am married with 2 kids and have a good job work full time and so does my husband. He had legal problems. Has racked up $10,000 in debt from that. Made a horrible investment and lost $6,000 that I had to take a loan from my 401k to cover and we are both stuck in leases for our cars plus credits card debit. I see no light. I work just to pay bills and live like the poorest person in the world I feel like giving up and just stop paying everything and let my credit go bad but I know that will just make it worse. I don’t know how this program would help me unless it’s giving me a third income.. Just praying for things to get better I have been living like this for years now and it seems to get worse and worse.

  24. Amanda says

    Shopping at Target is our favorite activity and it shouldn’t be. We need to think of it as an errand too. Very inspirational!

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