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

Sunday, December 28, 2008

2008 in Review

Year One is finished. Our mortgage is one-fifth closer to its death. Although paying down a long-term debt can seem like a maddeningly slow process at times, I am surprised at how quickly the past twelve months have passed. I'm pleased with the progress we've made so far, and look forward to continuing the attack on our mortgage in 2009.

Although I never published this in any previous entry, my goal for 2008 was for us to pay down one-fifth of the balance at the beginning of our project. This amount was $37,796.76 (one-fifth of $188,983.82). We actually reduced the balance by $40,940.03, which means we achieved 108% of our goal in 2008.

  • Of the $40,940.03 we paid toward the mortgage debt, $30,500 came out of our own pockets as extra contributions against the balance. This was an average of about $2,540 per month. Our highest extra amount was $5,000, and our lowest was $750. I'm glad we didn't have to skip payments in any month this year.
  • The remaining $10,440.03 came from our regular monthly payments (the principal portion of each required installment). At the beginning of 2008, the principal portion of the regular payment was about $775; by the end of the year, it was over $950. If we had not made any additional principal payments, this number would have only been about $820 by December 2008. The difference between those numbers represents our interest savings each month (I publish that in the monthly summaries).
When we started this project, I calculated that we would need to pay $3,149.73 per month in order to retire the mortgage within five years ($188,983.82 divided by 60 months). Today that number stands at $3,084.25 ($148,043.79 divided by 48 months). In early 2009, the principal portion of our regularly monthly payment will start to exceed $1,000 per month. This means we'll only need to come up with around $2,000 extra each month to achieve our goal. Since we managed to average well over $2,500 each month in 2008, I am hopeful that our progress in 2009 will continue on the 2008 pace.

Our biggest change in 2008 was selling our second car and becoming a one-car family. This hasn't affected our lifestyle as much as I originally thought it would. Aside from needing to plan our trips more carefully, I haven't felt like we've lost much in the way of freedom. We're spending time together in the car now, which suits me just fine (I like my wife's company).

My wife and I have talked about how we've shifted our behavior so we don't automatically buy something if we sense a need (or want, whim, desire, etc). We discuss our purchases together and decide whether spending money on a particular item or service is our only option. We also think of money in terms of time. Every $1,000 we spend roughly equates to one month less on our mortgage. If we're tempted to buy something that costs $250, for example, we ask ourselves if it's worth potentially postponing our debt-free lifestyle by another week in order to make that purchase (although the answer is sometimes "yes", more often than not, it's "no").

Overall, I would say that Year One has been a positive experience. I've paid more attention to our spending in 2008 than I ever had before. I learned that if one of us lost our job, we could still get by on a single income for an extended period of time if needed (though without the luxury of paying extra toward the mortgage). This is reassuring now when there is so much uncertainty in employment, stock markets, housing markets, and the cost of living. In a way, making the decision to pay down our mortgage has insulated us somewhat from this turmoil, as we have a plan for our future success and are on track to see it through. Our family and friends have been (mostly) supportive of our efforts, which contributed positively to this project.

My wife is a wonderful partner, and has helped me stay focused when the stress of work or unexpected expenses frustrated me along the way. She's shown enthusiasm for cutting our spending, and is focused on increasing our income as well. Thanks, baby, for all of your hard work and determination! I love you.

9 comments:

louise said...

that is such great progress on your mortgage! I really enjoy reading about how much you have saved and paid ahead, good on you for sticking with your plan
all the best for 2009 :)

Hannah said...

Congratulations on surpassing your 2008 goal. I look forward to reading about your 2009 progress. Best wishes for a happy and healthy New Year.

Anonymous said...

It seems that the strengths you and your wife possess help keep each other motivated and focused on your goal. You are both lucky to have partners that share in your dreams and desires. Best wishes in 2009!

Dreamer said...

congratulations executioner!

I just wonder that with the way things are in the current economy and people being laid off whether you feel exposed putting all spare cash to the mortgage pay off - do you keep a bit back to save or not?

Move To Portugal said...

Congratulations, you've done really well!

Happy New Year

Laura :)

change is a good thing said...

Your progess this first year is amazing and so inspiring! I have been off of the blogs for awhile, been swamped at work, and the holidays and all. When I get settled back into a routine this week, I will figure and publish all of my 2008 numbers. I know they won't be nearly as amazing as yours, but nonetheless, I am still proud of my progress! :) Great work in 2008 for you and your wife, and I am sure that 2009 will be a mighty fine year again for you! Happy New Year!

The Executioner said...

Thanks as always for the positive feedback! My wife and I are excited to maintain our progress as we move into 2009.

To Dreamer: Good question. We are not putting all of our spare cash into the mortgage (even though it's often tempting to do so). Every month we put a set amount into our reserve account. Last summer, we took half of the proceeds from selling our car and put that into savings as well. This month will reinforce the need for a reserve, as we had to make a cash outlay to do some home maintenance. More on that in a future post.

Ms. MoneyChat said...

how awesome! you guys had a wonderful year in 2008. i too am trying to pay off my mortgage early. i just began making extra principal payments this month. i look forward to the day when i owe absolutely nothing!

The Executioner said...

MoneyChat: It wasn't so long ago that my wife and I were starting out. Stick with it, and you'll get there. Good luck, and thanks!