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

Tuesday, August 31, 2010

Monthly Summary: August 2010

At the risk of sounding like a broken record, I have to again recognize my wife's contributions to our finances this summer. She has been working almost nonstop for the past 9 weeks and has brought in a substantial amount of extra income as a result. Although it sometimes feels odd to be making additional payments on our mortgage debt when there are so many news stories about people who are losing homes to foreclosure, I counter that with the knowledge that my wife is earning every penny through a lot of stress and sweat and hard work. It is very much appreciated.

We made the 18th of 120 scheduled payments on the ten-year mortgage in August. This was our 32nd payment since the project began in 2008.

At the start of the month, our balance stood at $81,944.70. We added $3,000 to the regular payment which reduced the debt to $77,717.74 by the end of August.

We realized $188.87 interest savings this month. We've saved $2,731.93 in interest since kicking off the project.

The balance on the ten-year mortgage is now $52,194 lower than it would have been if we had not made any additional principal payments. If we stopped making extra payments at this point, we would still pay off the loan three years and nine months early.

Twenty-eight months remain in our five-year goal period. We have to average $2,775.63 in total principal payments to achieve this goal on schedule.

I'm pleased with our progress this month. I'm also looking forward to continuing the attack on the mortgage debt in September. We should hopefully have more good news to share in the coming weeks.

Thursday, August 12, 2010

Personal Finance Articles

Two articles intrigued me over the past several weeks.

The first is about choosing a modest lifestyle in exchange for more freedom from professional obligations and the associated stress, baggage, and politics that accompany a full-time job.

This article puts into words exactly what my wife and I are striving toward: the ability to reduce or eliminate our monthly obligations so that we can step back from full-time employment, and enjoy our (simple) lives together. We'll be making memories together instead of accumulating possessions (and the maintenance, upkeep, and other responsibilities that accompany them).

The second article discusses (among other things) viewing mortgage debt reduction as a type of fixed-rate investment.

My favorite part:

In the past, financial planners typically recommended that homeowners devote as little cash to real estate as possible, and to invest it in the financial markets instead. But with stocks essentially where they were 11 years ago and market volatility seemingly on the rise, people are rethinking that wisdom. Devoting extra cash to repay a mortgage early is among the safest ways to produce an investment return.
I never agreed with the advice which said that it was wiser to invest in stocks than to pay down a mortgage. This relies on an assumption that past returns in stocks over the long term (meaning the span of a human life, or longer) will continue into the foreseeable future. This to me is a risky assumption to make.

If by some series of fortunate events, you were able to invest in safe, guaranteed debt instruments (think government debt with a fixed coupon) which pay a higher rate than the rate on a fixed mortgage, then I do think it would make sense to invest in those securities instead of paying down a mortgage. But I can't think of a realistic example of how any homeowners would find themselves in that scenario. For now, the only non-retirement money we have set aside is held in cash -- all of the rest goes toward the mortgage debt.