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

Friday, July 18, 2008

Extra Scratch

My wife just returned from a week-long business trip. She's taken on additional work this summer to bring in some extra income and explore the possibility of a future career change. Later this month she is committed to another week-long stint with the second job. She has to file an expense report before getting paid for her recent work. Because of that, I am not sure whether we will be able to make an additional principal payment on the mortgage in July, or if (due to the time associated with processing her check) we will have to wait and make a more sizeable contribution in August. My hope is that the check comes in while we still have time to pay in July, so we can save one more month of interest on the principal reduction.

When attacking a fixed-rate mortgage, it's best to make payments as early as possible to maximize the compounding of interest saved over time. For example, every $1,000 of the loan at a fixed interest rate of 6 percent will accrue $5 in interest charges each month the balance remains unpaid (0.06 divided by 12 months, multiplied by $1,000). Over five years, a principal reduction of $1,000 will result in $300 total interest savings if the debt is paid off in month 1, versus only $60 in savings if the debt is paid off at the beginning of year four (month 49).

My wife is exploring her options with the second job right now. I haven't yet included her projected summer income in our budget for the rest of the year. Once the checks do finally arrive, I expect her to take some personal fun money off the top since she made the extra effort to earn it. She told me that whatever remains will be directed toward the mortgage. I look forward to seeing the outstanding balance continue to drop during the coming months. I'm also thrilled to have a partner who is fully committed to aggressively eliminating our last remaining debt.

3 comments:

change is a good thing said...

You are very fortunate to have a partner who is as committed as you to getting rid of your mortgage debt as soon as possible. Doing it alone is much tougher, but I think it would be even harder if I had a partner who didn't see the benefit and wasn't willing to make the sacrifices necessary. I look forward to seeing your progress, it is very inspiring!!

The Executioner said...

Thanks. I have thought many times that I probably wouldn't even have tried to attempt this endeavor without a partner to help keep me motivated throughout the process.

Anonymous said...

I just discovered your blog. I look forward to following your progress. I too am trying to pay off my mortgage early.