Question: I am impressed that you paid off your mortgage in just nine years. Could you share how you did it? We have been in our home for 11 years, but due to refinancing and taking cash out of it, our balance is the same as when we moved in. I now see the error of my ways and want to reverse course.  Can you help?

Answer: Using your home an ATM is a dangerous habit. Paying off a home is not as difficult as you might think — it just takes a plan and discipline. But reducing the principal balance in your home should only come after you’ve eliminated your consumer debt — credit cards, car and student loans, most of which usually charge higher interest than a home loan. Deciding to live debt-free and to control our spending by using a budget were the first two steps we took to pay off our home.

We have always worked to keep our overhead low — if we wanted to buy anything from a car to a remodeled kitchen, we saved the cash before we spent, and never financed it. Financing raises your monthly overhead and costs you more in interest. Because we were debt-free except for our home, we started by paying $2 extra each month. As our income increased, so did the principal amount we paid on the house. By using a budget, we were able to control our other expenses and free up more money to pay off the house. We always asked our lender to provide us with an annual loan history to be sure they properly applied our extra principal payments.

This doesn’t mean that it was always easy. There are times when we would have loved to take a few hundred dollars and buy some new furniture, but we realized we could buy high quality used stuff for a fraction of the price and still reach our goal of paying off the house. As we watched the principal balance plummet, our enthusiasm and determination to pay it off soared.

Read more about our budget system in our book, "America's Cheapest Family Gets You Right On The Money" or order HomeEconomiser newsletter back issues from June and July 2004