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

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!

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