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, May 23, 2011

That Time of the Month

This is the time of the month (the beginning of the 4th week) by which I've always made the mortgage payment in the past. Only May 2011 is different. There's an empty spot in the checking account ledger where a big withdrawal used to hang out.

(Warning: this entry may read as if I'm bragging...but I'm really just feeling the satisfaction of our new financial situation. Finally reaping the benefits of our hard work, perhaps.)

We're actually feeling a double benefit from having the mortgage paid off. Not only are we avoiding the "mandatory" monthly payment -- we're also avoiding the extra principal payment which we had become accustomed to saving during the DTM project. The extra principal amount varied, but looking back at our payments, we averaged over $2,800 in extra payments each month (excluding the large payoff amount at the end of the project).

What this means is that the extra cash in our new monthly budget is somewhere north of $4,000.

Our savings could definitely use some replenishment. We drained a large portion during the final two months of the project to deliver the final two death blows to the mortgage debt. But using the very rough $4,000 figure above, we could have our savings account balance back above the pre-payoff balance by the end of this calendar year.

But why stop there? Why not take advantage of our learned frugality and continue to benefit our overall financial situation? At the start of the project, I said that one of the things I wanted us to gain from a mortgage-free lifestyle was increased freedom from obligations, so that we could live on a single salary (or two part-time salaries) if we so choose. So starting next month, we are living on one salary. No, neither of us is going to quit (or change) jobs, but we will be directing 100% of the post-tax portion of one of our salaries into our savings. Since we both make a similar take-home pay, it doesn't really matter which of our salaries covers expenses and which goes into savings -- it's a communal pot of money anyway. It will be automatic. We won't even think about spending what we don't have in our checking account.

With this plan in place, we'll have the "emergency fund" portion of our savings fully restored by the end of the summer. After that, we can start making decisions about what to do with the surplus. I'd love to start doing some more dedicated investing for our future -- allowing our assets to start contributing to our income, resulting in our money working for us.

In addition to saving and investing, there are some other things that we gave up at the end of 2007 which we will likely start to re-integrate into our planned spending. I'll elaborate on those in a future entry.