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

Saturday, March 29, 2008

Monthly Summary: March 2008

March is almost over. Time to wrap up for the month.

Our March mortgage payment was the 23rd of 180 scheduled payments on the 15-year loan.

At the beginning of the month, our balance was $182,411.84. Our total principal payment of $3,309.41 included a $2,500 extra payment to principal. This reduced the outstanding balance to $179,102.43.

We are now about $7,845 ahead of schedule on the mortgage. If we stopped making any extra principal payments at this point, we would pay off our mortgage 10 months early.

We saved $26.59 in interest this month, for a total interest savings of $44.58 since December 2007.

Since we exceeded the average monthly payment required to meet our five-year goal, the new average principal payment fell slightly to $3,142.15.

April will be a challenging month for us, as I mentioned in the last post. We'll need to keep our focus so that we can stay on track, even if we aren't able to make much progress next month.

Monday, March 24, 2008

Spring Changes

Although much of New Hampshire remains covered in snow, I was happy to see the First Day of Spring appear on the calendar last Thursday. This change of the seasons will be accompanied by several changes in our lives. Some of these changes will help our mortgage saving plan, while others will be obstacles to our goal.

First, our utility bills should decrease as the temperature rises. Although we are fairly miserly with our home heating (we set the thermostat to 62 degrees F while at home and 55 degrees while away or asleep), our average winter gas bill still typically runs about 700 percent higher than our average summer bill. Increased hot water usage in the winter also contributes to our higher gas bill. Our electricity costs rise throughout the winter months, as shorter days mean more hours of electric lighting. There is also an electric component to our heating system which increases our consumption during winter.

Although hotter weather is on the way, we don't typically run our air conditioning at home. New Hampshire does get warm during the summer, but the evenings are usually mild, and any so-called "heat waves" don't tend to linger more than a few days. We try to bring the cool evening air into the house by using window fans at night. Once we get up in the morning, we close the windows to lock in the cool air, and close the blinds or curtains to block the heat on the sunny side of the house. We can seek refuge in the neighborhood pool if the warm weather gets unbearable. The two or three days we actually turned on the air conditioning last summer were a nice treat, but it's quite possible for us to live comfortably at home without relying on it like so many of our neighbors do. Our non-winter electric bills are usually about half the amount of the winter bills. Combined with our decreased demand for natural gas, we should pay $150-$200 less on utilities per month in the near future.

On top of the utility savings, we should see our gasoline consumption decrease in the coming months. I started riding my bicycle to work last summer, and I hope to ride more regularly this year now that I have more experience commuting by human power. My wife can also bike to work on occasion. However, she's managed to get a ride from a co-worker on a daily basis for the past two months, so she may continue to share rides instead of commuting by bicycle full-time.

Since we were married, we've been a two-car household. After tracking the cost associated with owning two vehicles (insurance, registration, and maintenance), I realized we could save a lot of money by selling one of the cars. In addition to the reduced cost of ownership, we'd gain some extra income from the sale of the car. The net savings could amount to over $10,000 in the first year, and around $2,000 per year going forward. Because of this, we've been challenging ourselves to live a one-car lifestyle since February 1, 2008. So far, we've managed to consolidate our trips, or arrange alternate transportation when we've needed to get around. Based on this success, we hope to sell the car by the end of April. All that's left to do now is to clean it up, decide on a selling price, and list it.

Our main obstacle to selling the car is uncertainty. Both of our jobs are tenuous right now. While neither of us expects to be without a job in the near future, the right combination of factors could motivate one (or both) of us to look for alternate employment. Because we don't know exactly where a potential new job might take us, we are hesitant to sell the car until the current uncertainty passes. However, since life is nothing if not uncertain, we're never going to have guaranteed job security. For that reason, we are tempted to just "bite the bullet" and sell the car, trusting that we can adapt to anything the future may hold.

The job uncertainty also threatens our mortgage saving plan. If either of us goes without a paycheck for more than a month, we will have no choice but to go back to paying the minimum required mortgage payment until the situation improves.

April is going to be a particularly difficult month for attacking the mortgage. We must pay our tax bill at mid-month. We're also budgeting for another large personal expense that should come due in April. If anything is left over, we will add it onto the regular mortgage payment, but the most likely scenario I foresee is paying the minimum in April, and using the economic stimulus payment (scheduled to arrive in May) to get back on track. The stimulus payment should cover all but a small portion of our April tax bill. However, the timing of the stimulus payment means that April's mortgage payment should be small, while May's mortgage payment has the potential to be much larger than usual.

Taking stock of all the changes, I see the decreased utility costs and gasoline consumption lasting throughout the spring and summer, not picking up again until at least October. Selling the car will be a one-time event, along with the tax bill. The job uncertainty has the potential to linger for a while, but we have a few months of savings on hand in case we need to make employment changes in the near future.

Following up on last week's post, we've had continued success selling items to help reduce our clutter and increase our income. Getting paid for Spring Cleaning is great!

Monday, March 17, 2008

Selling Stuff

As I wrote in an earlier entry, I have been working on selling the excess stuff that's been cluttering our lives. I had originally started selling on eBay, but discovered half.com after reading about it on Antishay's blog. I'm surprised I didn't stumble on it myself, since it's an eBay site, but I was so focused on their main auction site that I didn't pay any attention to Half. What a pleasant surprise it was, then, when I started listing our stuff on Half -- it immediately started selling.

In less than a week, I've managed to get rid of a bunch of unwanted books, movies, CDs, and video games, netting about $100 so far. I'm amazed that there are so many people out there who want our old stuff. I am pleased that it's all going to others who will get more use from it than we did. I'm also pleased that we get some money from the sales, which we can put toward our expenses.

Of course, we do have some other items that can't be listed on Half because they don't fall into the categories that Half allows. I'll need to go back to eBay or some other site to continue to sell the rest. But after the simplicity of Half, I'm not as excited as the additional work required to create an eBay listing (photographs, descriptions, and so on). Plus, eBay charges a listing fee whether the item sells or not. Half only charges commission on completed sales.

We are slowly building up to sell some higher-priced items in the near future. I'm hoping that the success of the smaller listings (and the accompanying positive feedback) will benefit us when we finally list the more expensive stuff -- stuff that will make a real impact on our bottom line, including the omnipresent mortgage debt.

Monday, March 10, 2008

Purpose

Lately I've been reading a number of other blogs and websites dedicated to personal finance. While many include paying off the mortgage as an important step in achieving Financial Independence, I haven't discovered more than a handful which list "eliminating the mortgage" as the main goal. After reflecting on this for a while, I realized that this blog isn't really just about paying the mortgage either, despite the name I selected. Death to the Mortgage is the means to an end, not the end itself.

So what is that end? What is it that my wife and I hope to achieve by eliminating our last remaining debt? In my mind, we're looking for more flexibility to live our lives according to our own priorities -- not the priorities of our creditors or our employers. Right now, we're stuck with an obligation to pay a large sum to the bank every month for more than a decade. In order to do this, we have to spend the best part of our days away from the house, away from each other, doing tasks that would not ordinarily hold our interest for such a long duration. We're expected to do this without fail, day after day, week after week, year after year, so that we can meet our obligation to the bank. That obligation is far and away our largest monthly expense. Without the steady income from our jobs, we'd have trouble making the mortgage payment for more than a month or two. So in effect we are stuck working at our jobs so that we can pay the mortgage. Although this is an oversimplification, it illustrates the source of my frustration. We've allowed the terms of our mortgage dictate our need to work, and because we have to work, our employers dictate how we spend our time.

None of this makes us special. Untold numbers of others have the same arrangement. It seems to be the path of least resistance for all the homeowners we've ever known. I'm not saying that the bank duped us into taking on a debt that we didn't understand. We knew what we were getting into when we signed for the loan and moved into the house. Now that we've been playing by the rules for a while, though, we realized that we don't want to live this life anymore. We're taking action to take back our freedom.

Some people truly enjoy waking up every day and going to work. This gives them a sense of purpose, of belonging, of accomplishment. I find those people fascinating. I am not one of those people. I would be perfectly happy to fill every day with projects of my choosing. I don't think I'm unusual, either. If we're lucky, each of us has seven to nine decades to spend on this earth. Why should we have to spend six of them (two in school, and other four working and paying taxes) working for the future, only to come out old and tired in the end? I want more than four weeks of vacation every year. I want to have the freedom to stay home on the first gloriously warm day of spring, and not feel like I'm shirking my responsibility to others. I want to be able to take six months out of my life and hike the Appalachian Trail. I want to be able to choose to work or not work on my own terms, rather than remain trapped behind a desk in order to make ends meet. I want to be able to spend the prime of my life focusing my thoughts and energy and desires into stimulating, meaningful pursuits, whether or not they make me rich or create jobs or contribute to the Gross National Product.

I don't feel lazy or selfish for wanting this for my wife and myself; in fact, I feel enlightened knowing that we have a choice in shaping our future. We're choosing to sacrifice now so that we have more flexibility in the future. Others have the same options, but choose a different path. We've told our friends and family about our plan. Some tell us it's a good idea, but "not for them" because of the choices they've made. In the end it comes down to a choice. We can buy now and pay later, or pay now and play later. I'm looking forward to playing.

I feel like Andy Dufresne, chipping away at the cell wall of debt with our little rock hammer of extra principal payments, scattering interest savings out in the prison yard, and preparing for the ultimate break out of the Shawshank mortgage in the not-too-distant future.

So what, then is our Zihuatanejo? I like to imagine us living modestly, choosing our employment (and unemployment) without concern of layoffs or strikes or unnecessary relocations. Maybe we'll find something we love and try to make it into our own business. Maybe we'll keep working to build up our savings to generate investment income. Maybe we'll move into the woods and live like hermits, rarely seen or heard from. Truthfully, we haven't completely figured out what exactly we'll do at that point, only what we will NOT be doing (living as slaves to The Man). We'll have many more options without debt holding us back. I'm confident we'll make the right choice when that time comes.

Monday, March 3, 2008

Our Attitudes about Debt

Time for a little bit more background information about my wife and me. By some amazing stroke of luck, I was fortunate enough to meet a woman who eschews debt as much as I do. At the time of our marriage, neither of us carried any debt, with the exception of the mortgage I had on my previous residence. As I've mentioned before, we are not wealthy, but we have been disciplined enough in our spending that we've been able to avoid purchases which would have required us to borrow from lenders.

When I bought my first home, one of the initial changes I made was to replace the carpeting throughout the interior. I didn't have enough cash on hand to cover the bill, so I signed up for one of those "No Interest for One Year" promotions that the big home improvement stores offer periodically. I made a habit of setting some money aside each month in a savings account, making sure that I wouldn't fall short on the due date (as anything less than a 100% payment of the outstanding balance would trigger back interest on the entire amount). However, I would get irritated each time I received a monthly statement showing the outstanding balance. Finally, I couldn't take it any more and scraped together enough extra cash to get rid of the loan before the year was up. Even that relatively small debt (the total loan amount was, I believe, around $2200) drove me crazy. Since then, I've avoided debt traps like that, instead opting to save up in advance, or (more commonly) foregoing the purchase altogether.

It was a great feeling when we paid off the HELOC (second mortgage) in December 2007. That was an adjustable loan with a higher interest rate than our main mortgage. I realized that it made no sense for us to pay additional principal to the main mortgage until the HELOC was gone, because it was more expensive to pay the interest on the second mortgage each month. I could not imagine trying to juggle additional loans on top of that. I have a great amount of respect for others who are working to eliminate all of their debts (including credit cards, car loans, and student loans) in addition to their mortgages. That must feel like a more daunting task, requiring more discipline and focus than tackling a mortgage alone.

I'm very thankful that my wife and I have been fortunate enough to find ourselves in our present financial situation. I believe a combination of luck, discipline, and a supportive environment of family and friends have enabled us to get this far already.

  • We both come from families who understood the value of money, and taught us the basics of saving, spending, and using debt and credit judiciously.
  • We both have generous parents who started planning early to fund our education, and paid the majority of our education expenses. They also taught us how to be good students, which meant we received some aid in the form of scholarships. Because of these two factors, we had no need to take out student loans.
  • We both purchased reasonably priced automobiles, and independently managed to pay off our auto loans early, before we met each other.
  • We both use credit cards as our primary method of making purchases, but have the discipline to limit spending to a strict budget, and pay the balances in full each month. Neither of us has carried a balance on our credit cards for years.
  • I was fortunate to buy a condo during favorable market conditions during the early 2000s and sell it at a profit when we purchased our current home. This allowed us to make a larger down payment on our house than we would have been able to save up on our own.
  • We have both been fortunate enough to find ourselves in good health, though we are still relatively young. The few issues we have had have been relatively minor, and primarily covered through our employer-sponsored health insurance.
  • I was fortunate to get a job with a financial services company after graduation which taught me good investing and saving habits.
  • We both work and contribute income to the household each month, which allows us to reduce our debt more aggressively than a single income would.
  • We both share the common goal of eliminating all debt from our lives so that we can make future choices without feeling tied to a monthly mortgage payment.
Lately I have been wishing we had started this plan earlier, so that we would be even farther down the path than we are already. But patience is part of the plan, and we are determined to succeed.