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, January 19, 2009

2009 Goal

Since we exceeded our goal in 2008, my wife and I discussed whether we should increase our goal for 2009. We finally settled on keeping the goal amount the same this year as we had last year.

The arithmetic is simple: the yearly goal amount is the total principal amount from the start of the project ($188,983.82) divided by the number of years we gave ourselves to complete the project (five). This amounts to $37,796.76 per year. This is our goal for 2009.

The main reason we won't be increasing our goal for 2009 is because we won't be selling a vehicle this year. We exceeded our goal in 2008 by a little more than $3,000, which was almost exactly what we contributed to our mortgage from the proceeds of the car sale.

There are a few uncertainties in 2009. First, I have no idea whether we'll owe any income tax this year. Last year's tax bill was an unwelcome surprise. We did adjust our withholding in April 2008 to avoid another big bill, but there were three months at the start of 2008 when we may not have had enough withheld from our paychecks. I am hoping we owe only a small amount, or end up with a flat return. A refund would really surprise me, though.

Second, my wife will again be doing some contract work this summer. This could potentially increase our income, but it's hard to forecast how much demand there will be for her work. I can't predict how much this would add to our bottom line at this point.

Third, there is always a chance one of us will lose our jobs. We don't have any specific reason to fear this, but employment is far from certain these days. Obviously, if this happened, we would likely have to put the entire project on hold until we could find new work.

Still, I am optimistic for the future. I've been running some numbers through my hypothetical spreadsheet model and noticed a few pleasant future scenarios. Being realistic, I've filed these under "Don't count your chickens before they hatch."

  1. If we pay $2,000 extra toward our principal every month beginning in January 2009, we will retire the loan in month 57 (three months early).
  2. If we continue the pattern of payments from 2008 in 2009 and beyond, we will eliminate the mortgage debt in month 51 (nine months early).
  3. If we contribute the same average extra amount to principal as we did in 2008 ($2,541.66), we will also complete our goal in month 51.
Right now I think scenario 1 above is most realistic given our current monthly income and expenses, but I'd be thrilled if we could achieve scenarios 2 or 3. Time will tell. If we do as well in 2009 as we did in 2008, we may have to set a more aggressive goal for ourselves in 2010.

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