Anne's Mortgage payoff story: Stay focused on 8 year goal

Discussion in 'Mortgage Payoff Diaries' started by Anne, Jan 9, 2017.

  1. Anne

    Anne New Member

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    Mortgage Debt:
    $112243
    Interest Saved:
    $1836
    Principal Pre-Paid:
    $781
    Hello, I see this is a small community but I want to do my best and create accountability to reach my goal of living mortgage free.
    I purchased my home 7 months ago, I owe 112k. I have a fully funded emergency fund, paid off car, and 15% going to retirement, but this is the goal I want to hit.
    My plan is to contribute an extra $1000 to the principle each month. I have $500 extra/month, which I want to keep available for other goals, but might pull some of that in some months. Using the Karl's Mortgage Calculator it should take me 7 years 7 months to hit my goal.
    Can you share you're tips on how you are staying focused? My plan is to do a check up on principle every quarter and track net worth growth.

    Thanks for the forum,
    Anne
     
    San Jose 5 Year Guy and cdub like this.
  2. cdub

    cdub Club Founder Staff Member

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    Mortgage Debt:
    $250717
    Interest Saved:
    $20028
    Principal Pre-Paid:
    $10377
    Welcome to the site! Yes we're small as of now. I created it mostly for my benefit to try and keep me honest with paying it off... but if anyone else wants to join in with the "fun" of getting mortgage free that's awesome! :)
     
  3. Anne

    Anne New Member

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    Mortgage Debt:
    $112243
    Interest Saved:
    $1836
    Principal Pre-Paid:
    $781
    January update: submitted just under $1k towards principle.
    Total principle only payments: $1531
    Total saved in interest: $3567
    Total left to pay: $111493
     
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  4. chela2002

    chela2002 New Member

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    Mortgage Debt:
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    Principal Pre-Paid:
    $438.56
    Keep at it Anne! That's great you've saved over $3500 in interest already.
     
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  5. A Bird In Hand

    A Bird In Hand New Member

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    Mortgage Debt:
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    Principal Pre-Paid:
    $103024
    That's a great goal. You didn't mention your mortgage terms, but if it's a 30 year it's probably around $500 P&I, so being able to throw 2x that into extra principle payments is fantastic. Assuming a 4% 30 year loan, you're only going to pay ~$17k interest over those 7.5 years. Very nice!

    As far as how to stay focused/committed to your goal, everyone is motivated by different things. A couple things that have helped me:

    - "Set it and forget it". Not sure whether your lender makes this easy, but with Quicken I was able to set recurring auto-payments that included a fixed extra principle amount. So even if I lost motivation, the extra payments would continue without any work on my part.

    - I wrote a couple mortgage calculators that helped me visualize what my extra payments meant. It's fun to look at the amount of interest I'm saving, the rate at which the P/I ratio of the monthly payments increases due to my extra payments, etc.

    - One of my favorite motivational tools is to use FIRECalc to see my success rate at various spending levels that are only achievable when the mortgage is gone. In your case, your annual expenses will be ~$18k less when the mortgage is gone. Depending on your other expenses, that could represent a very substantial decrease, moving up your FI date considerably.
     
  6. San Jose 5 Year Guy

    San Jose 5 Year Guy Member

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    Mortgage Debt:
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    Principal Pre-Paid:
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    1. I break my goals down into 1 month, 6 month, 1 year, etc. For example my goal for 2016 became to get the mortgage below $50k. Having a specific goal that I could reach sooner was a lot more motivating.
    2. I planned for periods of higher consumption. In 2017, I had a list of things I couldn't do (vacation, restaurant etc.) either until 1. i paid off the mortgage or 2. I reached July 1. I did this b/c it's easier to sacrifice when you know it's not going to last forever. It's hard to stay motivated when your brain things it's just going to be struggle as far as the eye can see.
    3. I planned really aggressive savings. I do this b/c even if I end up being 20% wrong (which is typical), the end result is still an impressive savings rate. If you plan for a more moderate savings rate, it's easy to slide into mediocrity.
    4. I transferred all my money into Betterment. It takes Betterment 5 days to do a transfer, so none of the mortgage paydown money was easy to access while I was saving it. Impulse buying was off the table.
    5. I made many graphs and charts of my progress. I also did a lot of searching for other people who had already paid off the mortgage early.

    I think the self forgiveness is really big. I can see from my long term net worth tracking a few period of 2-3 months where I was slacking off, and I can usually tell what caused it (a breakup, a family problem, etc.) The success I've had over the last 3 years is b/c I didn't let those periods last. I just accepted that they happened and then reset the plan given the new conditions. Over time, I've become better and better at avoiding these mistakes and faster & faster at resetting. I did find in this past 6 months that I finished earlier than I expected. In fact, overall I've ended up earning more money than I expected b/c having these goals hanging over my head forced me to ask for raises I probably wouldn't have otherwise.
     
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