The Frugal Mom$ter Mortgage Pay Off: It Begins

Chris and I have discussed at length, more so I than him, about how nice it would be to get rid of the mortgage. I’ve written about my desire to pay off our mortgageseveral times, going back and forth on our goals, how we might achieve it, and what other things may stand in the way.

More recently, I believe I came up with a balanced approach to using our side (i.e. second job) incomes to pay down the mortgage (or pay it off hopefully soon!) and keep our main incomes for saving for emergencies, retirement, and other travel goals. This makes me feel a little more comfortable than throwing it all at a non-liquid asset.

Hesitating on Goals is Never Positive

I’ve been hesitant to share our actual mortgage numbers, but in actuality, I think sharing may help motivate us to keep going and reach our goals. It has worked so far, with the expense reports showing some glaring splurges this past year, and with writing about our hopes and dreams I believe it has kept me accountable to making them come true.

Without the reflection or the knowledge that I’ll be sharing something that might be not the best way to go about things, I probably wouldn’t have recognized so fully the downfall of credit card hacking during my personal experiment.

And in reality, if you were so nosey, you could see what we paid for our house, probably figure out the 20% down costs and have an idea of a mortgage amortization of where we’d stand currently anyway. I mean, if you’re really that interested in our financial situation. I’m thinking you’re not that invested though, you’ve got your own life strategies to worry about.

But First… Other Investment News

This September, I finally pulled the trigger on an investment for our 10 year wedding anniversary. I am still a little on edge about it, but after Chris called me a “chicken” for waiting another week, I just dove straight in. I am so thankful we are at a point where we can somewhat survive the consideration of a short-term loss in favor of a long-term gain.

And seriously, I’m thankful to be married to such a fearless person. He knows where we’ve come from and how much we’ve gained working on this frugal journey together. Or mainly, he’s let me take the reins and has trusted me through hundreds of thousands of debt being paid off! Without him by my side, I don’t think any of this would be possible. Nor would we have such great handmade furniture.

Our Mortgage History

I’ve mentioned before we had an underwater mortgage we paid off to rid ourselves of our old townhome and move into a much safer, like a million times safer, neighborhood back in 2014. With the new home, we put 20% down to avoid any PMI and mortgaged the rest. At the time, we knew it would take about 2-3 years to get back up and running after such a huge loss and gigantic check written to unload the old house. It was the most money we had ever seen in print with our names on it and all we had!

Here we are now, finally settling into our new home passing the 3-year mark in August. Since we purchased the home, we did put a little toward the mortgage each month, but no great shakes compared to what we currently plan to do. It might have been $500 extra here, or $200 more a month to round up our payments to an even number. Our taxes have increased quite a lot which was unanticipated, so that stuck a fork in adding too much extra.

Why Don’t You Just Refinance and Invest?

I have read about how others have refinanced to lower their payments or their final interest costs, but I just don’t feel like that would be a good fit for us right now. We can comfortably afford the mortgage payment, even if limited to one salary, so refinancing at a lower rate for a shorter term would put that in jeopardy. And losing a few thousand to make that happen is a waste of cash for us.

Investing is something I have been concerned about (see good news above!). This extra money toward an illiquid asset can be concerning, which is why I purposely decided on a more balanced approach (i.e. 5 years) instead of paying it off for 3 years and putting every extra dollar toward the mortgage.

With this in mind, we will still have a fair amount to invest and I look at it as a balanced portfolio. The mortgage payoff is a part of our portfolio of assets. As we pay it off, it’ll give us a guaranteed return of 4.125% on the payment, while we can invest in other accounts that will provide us other opportunities.

We may not be doing it the way you would, which is the “personal” of personal finance! I love that there are so many strategies to pay off or pay down debt, or leverage that money in the stock market. I am truly amazed by some who do amazing things with their money. While it’s fun for me to read and learn about, I prefer a slightly different path and I love the idea of one day not being tied to a mortgage and giving ourselves more breathing room.

As I’ve said, we sometimes sit in a weird place with our careers and don’t always have the security of knowing what the future holds. Does anyone anymore? So, sticking with our plan seems to be the most financially savvy for our goals, needs, and personal comfort.

The Numbers – What You Really Came For

  • Original Mortgage Amount: $235,657.48 – – 30 Year Term
  • Original Interest Cost for the Life of the Loan: $177, 487.48
  • Original Total cost of Home (balance + interest) after 30 Years: $472,487.90

The numbers may not be exactly within the cent, as I am going off of our mortgage amortization spreadsheet I started when we were looking for homes. It typically is higher than the actual mortgage balance by a few dollars.

  • Prior to Plan, Extra Payments Made Over 3 Years: $5,154.33
  • Interest Saved to Date: $32,049.42

Septemeber 2017 Mortgage Numbers

  • Starting Balance: $218,095.47
  • Prepaid: $1,668.00
  • Ending Balance: $215,860.55

In a snazzy chart form…

As you can see from the chart, even if we did not make any more payments than we have, we’ve already cut off about 4 years of our mortgage bringing it from 30 years to 26 years. At that point, I would be 59 years old, and Chris 60. So, we’d have no mortgage in traditional retirement.

What we’d like it to look like at the end of this journey:

If all goes well, I will turn 40 and we will submit the last payment for the mortgage. We might decide to use our main incomes to make it happen sooner, but as it stands we can still keep a decent buffer each year with a lump sum of around $60,000 at the end to wipe it clean.

My goal is to sharing monthly what we’ve been able to pay down. I’m not sure I’ll share complete numbers, but I definitely will keep the graph updated. I look forward to seeing that line flop right off the page and truly become home “owners” instead of borrowers.

Here’s to keeping positive and becoming truly debt-free! What are you working toward?