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, February 28, 2010

Monthly Summary: February 2010

February turned out to be an expensive month for us. In addition to learning that our tax bill would be even larger than anticipated, we paid a plumbing company to replace our failed water heater, and have to start thinking about repairing the water damage to our basement. I am glad we never stopped putting money away for emergencies during the Death to the Mortgage project. We'll be able to tap some of our savings to help with the taxes and repairs while staying on track for our DTM goal.

In February we made the twelfth of 120 scheduled payments on our ten-year mortgage, and the 26th overall since we started the five-year DTM project in January 2008.

When February arrived, our loan balance was $104,432.09. We included a $2,000 prepayment along with our required payment, reducing the debt to $101,291.80 by month's end.

Our prior efforts saved us $125.89 interest this month, and $1,826.91 in realized interest savings to date.

The balance is $34,789 lower than what it would be if we'd never made any extra payments on the ten-year mortgage. If we had to abandon the project after this month, we'd still pay off the note two years and eight months early.

We have 34 months left in the five-year (60-month) goal period we set for ourselves. The average total principal we must pay each month to reach this goal dropped to $2,979.17.

We reached a couple of milestones in February. First, we've now paid down over 50% of the original mortgage balance (which began at $204,000 in 2006). Being more than halfway through the debt is a good feeling.

Second, I believe we reached the break-even point on refinancing the mortgage in February 2009. It took exactly one year (twelve months) for the interest savings to offset the costs (fees, etc) involved in the refinance transaction. I calculated this by comparing the amount we actually paid on the newer ten-year loan against the amount I believe we would have paid if we'd kept the old 15-year mortgage. I reduced the hypothetical payment on the old loan by the difference in required monthly payment amounts (about $175 less now than before). Going forward, the reduced interest charges represent pure savings to our bottom line.

One odd fact to note...if we had not paid down the mortgage so aggressively over the past year, we would have reached the refinance break-even point sooner than we did -- because there would have been a higher principal balance each month to generate interest charges (and the reduced interest charges with the new mortgage would have been more substantial). Of course, by paying down the balance, we're also saving ourselves interest charges, so I'm not disappointed by this at all.

I'm looking forward to the return of daylight saving time in March...it will be nice to be able to ride my bicycle to and from work without my headlight and taillights!

3 comments:

Anonymous said...

I wish it were possible to pay extra on your principal in Belgium. Here you can only refinance, wich of course is more expensive.
It would be nice putting windfalls towards our loan. Now we're saving those, but they only make 1% in intrest, and the loan costs us 4%...

Middle Way said...

It's always nice to save interest. You mean you've been able to ride to work right through the winter this year?

The Executioner said...

Yes, I realize now that I haven't really commented on my winter cycling experiment, save perhaps for a quick remark in my entry from January 5 of this year. The experiment has been quite a success. I have some aggressive studded snow tires, good illumination, and some cold-weather gear which has served me well. I don't ride in the middle of big snowstorms, but I've still used the bicycle about 2/3 of the work days since winter really set in (mid-December or so).

My wife has also been riding some, which impresses me, since she doesn't have the studded tires. But she is a bit more selective about which days she rides.