My husband and I purchased our first home in October 2001. We obtained a conventional mortgage in the amount of $127,000 at an interest rate of 12.5 percent, leaving us with a monthly payment of approximately $1,300. We went through the mortgage financing process knowing that we were biting off a lot. We didn't get the best interest rate available, but at the time we didn't have many options.
We planned to refinance right away. Instead, we found ourselves accumulating debt: a second mortgage that we used to build a garage; a new car; a small student loan; credit cards. The monthly payments associated with these debts added stress to our finances -- and our marriage. We had let debt pile up and we needed a financial escape.
We were finally able to refinance in 2003 at 9 percent. We rolled in all the debt we had accumulated, bringing the total mortgage at closing to about $180,000.
After refinancing, we felt like a weight was lifted off our backs; like we were starting out fresh. Our payment was raised slightly to $1,460 per month, but we didn't have all those extra bills. After our expenses, we had extra cash (around $3,000) at the end of every month.
We really enjoyed the freedom that came from refinancing and mainly used the excess cash to travel. My husband and I went on a five-day trip to Florida as a couple. During Thanksgiving we took our children to the Kalahari Resorts waterpark in Wisconsin Dells. A month later on Christmas we brought our children to Disney World. We had the time of our lives. We embarked on many trips after that, including visits to Mexico, New York, Canada, Florida, Alaska, South Dakota, and more.
We sold our first home in 2007 right before the market collapsed and were able to upgrade to a nicer house. In 2011 I was able to quit my day job in order to start my own business. Today I get to be my own boss.
We have never put ourselves in debt since those younger days of splurging.