Progress to Date

  • Original Loan Amount: $204,000.00
  • Balance at Beginning of 5-year Goal (1/1/08): $188,983.82 @ 6.00%
  • Balance at Refinance in February 2009: $148,000.00 @ 4.625%
  • Outstanding Balance: $0.00 (PAID IN FULL!!!)
  • Latest Payment Date: April 2011
  • Latest Additional Principal Amount: $17,623.22
  • Amount Ahead of Schedule (since refinance): $121,462
  • Time Ahead of Schedule (since refinance): 7 years 10 months
  • Interest Saved Last Month: $23,972.48
  • Total Interest Saved: $28,435.55 ($1,037.74 on original mortgage; $27,397.81 on current mortgage)
  • Months Remaining in 5-year Goal: 20
  • Average Monthly Principal Needed to Meet Goal: N/A (Goal achieved)
  • Progress List Explained

Tuesday, February 26, 2008

Monitoring Expenses

I just tallied all of our expenses for February, since all of our bills have closed for the month. Despite our efforts to contain our spending, we incurred some unexpected costs, including bills for the dishwasher and some dental work. We also made a reservation for the one long vacation we're allowing ourselves to buy this year, which required a deposit up front (even though the trip won't happen until summer). Thus, our discretionary spending was over $1,000 higher in February than it was in January. However, when excluding the one-time expenses like the dishwasher and the vacation, I see that our spending was down this month. This is encouraging to me.

During the initial planning stages, my wife and I realized that our biggest obstacle to paying down our mortgage early was our spending. While we are not high earners, we do make a comfortable combined income and have no trouble paying our bills each month. However, we had been in the habit of dining out frequently, taking lots of trips, and shopping on a whim. Our entertainment expenses were pretty high. We would withdraw cash from the ATM each week and then wonder where it had all gone.

My wife suggested that she set a limit of $100 in discretionary expenses for herself each month. This covers all entertainment and shopping. I thought $200 sounded like a more reasonable number, but she was determined to take a more aggressive approach to saving money. So far it seems to be working. She has been carpooling to work, so our gas bills are down from a year ago (despite the higher cost of fuel). We ate at a restaurant only once this month, and still managed to keep up with friends on several occasions doing less-expensive activities (like snowshoeing with our dogs, or inviting people over for drinks and soup). We also haven't made a single ATM withdrawal in 2008.

I've set up a host of spreadsheets to help track where our money goes each month, including the cash that we get from time to time (payments from friends for gas, etc). In addition to keeping a close eye on our discretionary expenses, budgeting for the unexpected is going to be a big challenge. I'm sure we'll have more unexpected repairs, medical bills, and so on. Keeping the discretionary costs under control will be key. If we are fortunate enough to make it through a month without a surprise expense, the extra money can be funneled into the mortgage payment. Otherwise, we have a built-in buffer to help take care of those unexpected costs.

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