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, January 3, 2010

2009 in Review

Year Two is now in the books! Three years left to go.

First, the numbers. As in Year One, our goal for 2009 was to reduce the mortgage balance by one-fifth the amount of our balance at the start of the project. This nice, round number is $37,796.76 (one-fifth of $188,983.82). We managed to pay down the principal by a total of $39,985.39 in 2009, meaning we achieved over 105% of our goal for the year. Hooray!

  • $29,500 of the debt reduction in 2009 came from our own pockets as extra payments to principal. This averages around $2,460 per month. We actually had a wide variety of prepayment amounts during the year. Our lowest of $500 happened twice, and our highest of $6,500 also occurred twice. We went one month without making any payment at all (February, since we refinanced our mortgage during that month).
  • The principal portion of our "regular" monthly payments (not counting prepayments) continued to rise as the interest portion fell along with the outstanding balance. The principal portion rose from around $970 to over $1100 by year end. This number will continue to grow in Year Three and will be a more formidable part of our debt reduction as the number of months left in our goal period continues to shrink.
My wife and I were evaluating our "DTM" progress during our time spent traveling together over the recent holidays. Contrasting the first year (2008) to the second year (2009), we noted some shifts in our own attitudes. In the first year, the project was new, and we made some substantial changes to our routines to cut expenses and free up cash for extra mortgage payments. We were enthusiastic about the project, but weren't completely confident we'd be able to stick to the new routine after the first few months. It was a pleasant surprise to finish 2008 ahead of our goal.

By the time the second year was underway, our routine had changed. We'd adopted the habits associated with less spending and more debt reduction. In 2009 we knew what we were capable of; we just had to remain committed to our plan. Reaching our goal for the year was no longer a hopeful aspiration, but an expected outcome. In fact, despite our success in 2009, I think we may have been able to push ourselves even further than we did. Perhaps that's something to focus on for Year Three.

If anything looks to be different in the coming year, we believe it will be the uncertainty of our existing sources of income. Neither of us has any specific reason to fear we will lose our current jobs, but general employment has obviously continued to sour over the past couple of years. My wife has also enjoyed extra income from a second job during the past two summers; there is no guarantee how much contract work will be available for her to take on in 2010. While it would be unfortunate to fall behind on this project due to forces outside of our control (the whims of our employers), it's nice to know that our current practice of living well below our means (along with our emergency savings) would allow us flexibility if one of us did have to spend some time unemployed. I'll knock on wood and hope that nothing like that happens, but mentally it helps to be prepared for the worst when uncertainty is looming.

I'll close by repeating something I've said in the past, which is that our success in this project so far has come primarily from the great partnership my wife and I share. When one of us temporarily loses motivation, the other one helps keep the focus on the goal. When one of us gets frustrated with work, the other one reminds us why we're putting up with the aggravation. And both of us keep adding detail to our envisioned future life after we've put the mortgage debt behind us. Two years down; three to go. It's not that far off.

3 comments:

No Debt Guy said...

Nice work you two. I am on the same journey as you and look forward to seeing how you progress.

Middle Way said...

Your (continued) success is a testament to the strength of your union.

I know many single and married people who are unable to amass assets because they are not able to stick to a plan.

2010 will be a 5 digit year!

change is a good thing said...

I say it month after month, but you 2 are SO inspiring! I love to check in and see your progress, it's motivating us to make those extra payments too. We're so excited to see the mortgage debt decrease with each passing month. Thanks for always sharing your progress and being a great motivator! Happy New Year!