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

Thursday, March 31, 2011

Monthly Summary: March 2011 (Five-Year Goal complete)

My wife and I made a larger dent in our mortgage balance in March than we have in any prior month, by far. There were two reasons for this. The first, as I discussed earlier, was because I received a bonus in March which we chose to allocate entirely to our mortgage debt. The second reason is that we elected to withdraw a portion from our savings to reduce the mortgage balance even further. Our savings had reached the point where it was more than adequate to serve as an emergency fund, and rather than have extra cash earning next to nothing in a savings account, we made the decision to use the money for debt reduction, saving ourselves future interest payments.

In total, we added $28,000 additional principal to our March mortgage payment. It's very satisfying to see the debt drop from the $40K range down into the $10K range (skipping past the 30s and 20s in one fell swoop). By doing this we effectively achieved our original goal that we set at the beginning of this project: even if we don't add anything additional to principal going forward, the mortgage will be paid off within the five-year goal period (no later than April 2012) simply through our regular monthly payments. It feels great to have that locked in, regardless of what happens in the future.

The March payment was the 25th of 120 scheduled payments on the ten-year mortgage, and the 39th overall since this project began in January 2008.

At the beginning of the month the balance was $48,643.11. Adding the extra $28,000 to the required payment amount reduced the debt to $19,107.10 at the end of the month.

We realized $289.59 in interest savings this month, bringing our total realized interest savings to date to $4,463.07.

The mortgage balance is currently $103,425 less than it would be if we'd never made any extra payments to principal. If we stopped allocating extra money to the debt, we'd still pay off the loan six years and ten months early.

As mentioned, we've effectively reached our original five-year goal (even though the mortgage isn't gone yet). We have nine months left to pay off the mortgage within our revised four-year goal; we'd have to average combined principal payments of $2,123.01 to meet this goal.

We have reached perhaps the most important milestone yet in this project. My wife and I now have enough cash in our accounts to eliminate the mortgage completely. We need to have a discussion about our comfort level with reduced cash on hand, because paying off the mortgage now would mean that our savings would be substantially depleted. Without future mortgage payments, we should be able to rebuild the savings relatively quickly, but if something was to happen in the near future, it might put us in a bind. I'll elaborate on this pending decision in a future entry.

I feel like we have reached the threshold of the end of the journey now. It's just a matter of deciding when to pull the trigger and put the mortgage out of its misery.

3 comments:

Louise said...

thats fantastic! what a wonderful position to be in. It's great to see you so close to reaching your goal!

Laura @ move to portugal said...

Brilliant! Well done on achieving your 5 year goal!

Elle said...

Congratulations on knocking out a huge part of your mortgage!