Jan 27, 2016 To May 15, 2017 [Paid Off!]

Discussion in 'Mortgage Payoff Diaries' started by San Jose 5 Year Guy, Jan 27, 2016.

  1. San Jose 5 Year Guy

    San Jose 5 Year Guy Member

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    My resolution this year was to kill the mortgage. I have a plan... But it's not very fun. Taking it one day at a time. I started the year at $101,690.94. I'm down to $86,459.75. Next payment is for March.

    Basically, the plan is to pay $8600 additional on top of my $1137 payment. It will draw down my savings, $31k, by about $3700 a month... It'll take 78% of my paycheck... Likely I won't quite make it by November, as planned... But as long as I finish in December that's no big deal. When I finish, building back up the e fund will be quick, as my fixed costs will be down to $1500.

    I considered a lot of different ways to do it... Paying a larger lump earlier... But in the end I decided the even payments were the best way to balance risk with getting the job done. I want to use the low fixed costs to start a business, so I'm not too worried about the opportunity cost.

    This could be derailed if I lose my job... Tech industry can be volatile. Will be an educational year no matter what!

    Q: How to celebrate when I finish?
     
  2. San Jose 5 Year Guy

    San Jose 5 Year Guy Member

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    Today was a pay day. It was my first paycheck after the raise, about $60 more than I had calculated, which was nice. After this weekend, January is over and I can focus on February.

    It's nice to have the new money in the bank, and since I already paid the Feb mortgage payment, not too much will come out of it for fixed costs before the next paycheck. Basically it's like... I just need to chill out until I can make the next payment. I know I'm usually pretty bad with cash in the bank, so maybe I should transfer it out. I'm still thinking about cancelling the X-Files discs I bought on discount on Amazon... Even though it wasn't a huge cost... And I really like the show... First world problems.
     
  3. San Jose 5 Year Guy

    San Jose 5 Year Guy Member

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    Fun fact: savings rate averaged 70% for the last 3 months.
     
  4. San Jose 5 Year Guy

    San Jose 5 Year Guy Member

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    Today is the 10.5% mark in terms of time. 36.3% in terms of payments made and savings outside emergency fund. Next payment won't be for another 2 weeks. Valentine's Day will be the 15% mark in terms of time. Next payment will bring me up to 45.9%.
     
  5. San Jose 5 Year Guy

    San Jose 5 Year Guy Member

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    11.8%. Went on a date in SF that ended up costing $78. I think from now until 2017... No more SF dates.
     
  6. San Jose 5 Year Guy

    San Jose 5 Year Guy Member

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    14.4%. Today I went on a walk and got a haircut. I just did 30 push-ups so my arms hurt. It's actually not so bad. When consumption is taken out of the picture, it becomes clear that human relationships are the real determinant of happiness. I guess to the extent not spending money impacts other people, that's a bummer... But I feel fortunate with the stuff I already have.

    I had planned for a $2k tax refund, but it looks like it'll be more like $3k or $4k b/c of some investment loss writeoffs. But I can't file for it until later... waiting for paperwork. Anyway, the plan is to pay the next payment at the end of this month without touching my savings account. Huzzah! Onward and upward.
     
    Last edited: Feb 13, 2016
  7. cdub

    cdub Club Founder Staff Member

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    Wowsa! That's a big extra payment. :) Welcome to the site and good luck!
     
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  8. San Jose 5 Year Guy

    San Jose 5 Year Guy Member

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    Today is the 15.1% mark. Progress right now feels like patience, the patience to resist my urge to justify expenditure by rationalizing - "I want to feel normal" or "I deserve it" or "it won't delay me by much". Failure is by 1000 cuts, and worse, most of those cuts are unique habits we do without a thought. I only have one cut... Saying no to myself or others, trying to ignore the disappointment on both ends.

    Even simple things that felt free before - a few mile car ride or a small chai from Starbucks - they are at risk to cascade into bigger purchases. "gateway spending." If you never spend the gas to drive to the mall, you can't be tempted to buy an Apple Watch. In my case... Exactly that. It's almost fascinating how, even after I've seen the third world, after I've seen the massive opportunities there to make people happier... Somehow the Apple Watch is still appealing, even when its opulence really just symbolizes a lack of awareness... It is a difficult thing to enjoy while watching poor kids lack opportunity.

    But... No need to be heavy. Insert fart joke here. This weekend was definitely cheap but also I enjoyed it. I wonder if I can distract myself from spending money by involving myself in an elaborate but inconsequential bartering system? I'll trade you this old thimble for those old shoes and half a golf club? Reminds me of Zelda: Link's awakening.
     
  9. San Jose 5 Year Guy

    San Jose 5 Year Guy Member

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    I received my course material for Dave Ramsey's Financial Peace University today. I'm attending his current 9 week program starting next week. I've already read "The Total Money Makeover" and listened to the CDs from his previous 13 week version of the class, so I know all the material. If I was following his program strictly, I'd be maxing out my retirement accounts this year, and the mortgage payoff would be delayed until mid 2017. I'd have +$23,500 in retirement, but it would delay starting the business by six months to a year. The gamble is basically that the business will earn more than one year of retirement savings will earn... and I think you have to believe that if you're starting a business. Otherwise, why bother? I know I've heard before... when Dave talks about starting a business, he talks about it feeling like "you have two full time jobs" for a season, as you're building up the second business enough so that it earns enough money to let you quit your day job. I don't think I want to do that though. I'd rather save up money w/ my full time job enough to quit for at least 2 years and then spend 24/7 on the new venture. I do my best when I can focus on 1 thing.

    Today my audible subscription gave me a credit ($15), so I bought the book "Thinking, Fast and Slow." It talks about irrational and biased thinking that comes from the ways our mind tries to estimate answers to complex problems. Talks about what "intuition" is. Interesting stuff. I also came across a researcher who discovered a gene related to risk taking... so Dave's free spirits / spenders and nerds / savers ... there is a genetic basis for it. :p I got a (nerdy) kick out of that. Same author also had some interesting papers on how socioeconomic status influences perception of stock market risk.

    In summary - it's valuable to spend some time taking an inventory of yourself. Of your own risk levels. Of your own knowledge levels. And just keep these in mind and consider them when you make big decisions, so you don't just make choices out of habit.

    Anyway, the FPU materials are top notch. I think it'll be fun to take the class. I'll learn from it.

    $16,003 / $101,690.94, 15.7% of the way through this thing.
     
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  10. San Jose 5 Year Guy

    San Jose 5 Year Guy Member

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    First FPU class went well. Still haven't spent much outside the budget. As long as the weekend doesn't go crazy, Feb is locked down. 18.4%
     
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  11. San Jose 5 Year Guy

    San Jose 5 Year Guy Member

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    Paid my next payment today ($1136.52 + $8600 extra, so $9736 total... woooo). 19.34% finished by time. Mortgage balance down to $76,957.56 from $101,690.94 at the beginning of the year. Pleasantly, the B of A representative waived the $20 over-the-phone payment fee when I said I couldn't make my extra payment online because they wouldn't accept additional principal amounts over $5000. Savings are around $24k, which is about 8 months of living expenses if I need them. 15 March I should have everything I need to file my tax return... result being that I won't actually start eating into my savings until the May 1 payment. I've been reading some interesting stuff about negative interest rates recently. I also walked 28.75 miles (60,000 steps) on Saturday (that was too much). The second FPU class is tonight. I'm sick, but I'll go anyway. Usually I'm pretty healthy. Overall, wasteful spending for Feb was very low, and I'll call the month a win. I'm starting to have second thoughts about delaying retirement investing though... so I might go back and fund the 2015 IRA, and later this year I might hold off on the mortgage repayment and hit the turbo button on 401k maxing.
     
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  12. San Jose 5 Year Guy

    San Jose 5 Year Guy Member

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    Another week... Not much wasteful spending. I preordered an Amazon Echo Dot for $100, so I can voice control lights from my bedroom / listen to audio books from my bedroom /etc. I may cancel the order. We'll see.

    I sent my financial guy a note to fund a 2015 after tax IRA (so I can convert it easily to roth) before April 18. I also switched my paycheck to go to 100% Roth 401K. Also, I put in my taxes. Refund should be around $3800. I have around $3400 in the bank, so I should be able to live off of bank + tax refund for the months of March / April. The idea is that if I plow my paycheck into the 401k for March and April, I can get $15,640 into it. Then it's just another $2360 until it's maxed. If I lose my job... at least I shoved that much more money into the 401k, and I don't have to worry as much whether the next company has a 401K or not. This will delay my plan by 3-4 months, because I'll be living off of savings. And without more income, I won't be able to payoff the mortgage by 2017. Emotionally, seeing that I've made so much progress so far... it won't be pleasant to see that mortgage balance stick around, but I know I'll be more diversified / tax advantaged by fully funding this retirement stuff, and I have faith that after I finish, I'll be able to hop back onto the mortgage payoff train and finish that. I'm getting really killed by taxes, given my income level and given that I don't own my own business and take a bunch of deductions that way.
     
  13. San Jose 5 Year Guy

    San Jose 5 Year Guy Member

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    23.3% by the original schedule. My next paycheck will be 100% Roth 401k, so I won't be making any mortgage progress for the next 2 months. I also misbehaved this week and bought about $600 of stuff I didn't need. My total waste for the year is about $1200 so far, so it was a pretty big deviation. $300 for new speakers, $200 for a collectible toy, and $90 for video games.

    The collectible I bought because it was rare. Everything is rare, so the logic doesn't really hold up, but it's a familiar weakness of mine, a type of mental illness I guess. The speakers I bought because my rear left surround sound speaker stopped working, and the manufacturer was slow in responding to my service request (speaker was $60 new).

    I may not be spending much money, but damnit I want my a/v setup to work so I can enjoy being at home. So rather than waiting for the company to respond, instead I "invested" (let's be honest, I lazily threw hundreds of dollars at the problem) in a pair of $150/each speakers with larger woofers. Moved my old fronts to the surround position, and my old surround speakers are sitting around so that when I repair the broken one, they'll become 7.1 rears. I'm enjoying the new speakers. Stuff can be nice. But my old setup was fine. I could have been more patient. When you say, "I have sacrificed so much, I deserve it!" Those are the words of an idiot. Nobody deserves anything. We just plan and we get what we achieve. Relatively low fixed costs save me from this being a major setback... As long as I don't keep doing it.

    Last weekend I visited IKEA and bought a $7 LED light. I installed it under the top of my $15 rast bedside table, with the switch on the side so I can easily turn it on. It lets me have some visibility at night without directly seeing a bulb.
     
  14. cdub

    cdub Club Founder Staff Member

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    Nonsense! You're allowed to have some fun. :) Life life a little bit. At the rate you're paying down the mortgage from earlier everything seems right on track. Keep it up!
     
  15. San Jose 5 Year Guy

    San Jose 5 Year Guy Member

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    25.5% now I think? The first 401k deposit has gone through, so my net worth passed the $400k mark for the first time, which feels good. Two weekends and 3 days before the next paycheck. The next lesson in the Dave Ramsey class is "Buyer Beware." I think I actually prefer the audio from the 13 class version of the program... but it's very similar to the current program. Going back for a second to the 4th class ("Dumping Debt") - he talks about the history of credit card companies. There are some excellent PBS Frontline documentaries on credit card practices, and they're pretty gross. But it's also eye opening to hear the MIT/Harvard consultant guy (Andrew Kahr) discussing calmly how he convinced people to screw themselves over.



    How Providian misled card holders

    He's so evil... I want to dress up as him for Halloween. When credit card offers arrive in the mail, they should be required to play the Halloween theme when you open the envelope.



    It's interesting to note that 80%+ of the "Dumping Debt" class is either narrative about the history of credit cards (to give the class context) or about the reasons why a person would want to be debt free. Only the very end of the class discusses the tactics (Debt Snowball). Obviously, this is because 80% of the tactics happening is a person being sufficiently motivated to sacrifice... so I understand that. I think it's interesting how it's no different for other areas of behavior change. A person will not endure the pain of exercise or eating salad unless they are sufficiently motivated. So instead of going out and buying salad, maybe you should listen to a book about dying early from heart disease.

    Also, taking a step back a bit... the (very) rich will often say that money has become a scorecard for them. But I think it's a score for everyone. The game is about 80 years long. It's a score regardless of if people have reached a point of satisfaction and disconnection that they think of it that way. For many people who did not grow up rich, the growth of wealth is essentially just an indication of how much you've been able to change your productivity behavior from the default of your family average. The real limitation on everyone is time. We all have a finite number of brownies we'll eat before we die. A finite number of steps we'll take. A finite number of words we'll say. What will you do with them? If you're worried about how much you'll accomplish in the time you have left... look toward the motivation. Everything flows from that. A working knowledge of how to engineer motivation and behavior change pays dividends across every area of somebody's life. If we get stuck on technicals - how many pushups we're able to do, how long we're able to run, the money we earn, or whatever - those are just points in time. To get upset by them is to lose sight of the engine pulling the whole train: the depth and breadth of the underlying motivation. So it's important for all of us to rededicate ourselves to our long term goals. To review the change we want to see before we go into that good night.

     
    Last edited: Mar 19, 2016
  16. San Jose 5 Year Guy

    San Jose 5 Year Guy Member

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    End of March, end of Q1. Job situation is still uncertain so I'm trying to chill out without letting go of too much cash. I'm continuing to max the 401k through the entire month of April and most of May. I overspent this month by something stupid... Maybe $1440. Net savings around $4000. All stuff I didn't need. I wasted about 25% of my surplus. Not the end of the world, but after a relatively frugal previous 4 months, it was a reminder that, even though I've been working on this for over 2 years, my discipline is still dependent upon constant reinforcement. When I go back to old shopping habits, I go back to old spending habits. I had to close a bunch of shopping tabs before I started writing this. At least I hadn't bought anything from them... Yet.

    I made a detailed 2 year budget that includes a bunch of spending I normally ignore - large yearly lump sums related to taxes, travel and insurance. I also added maxing the 2017 401k, end result being a delayed mortgage payoff date until fall 2017, mostly due to the retirement maxing. It pushes me in the direction of trying to make more money, and I guess that's a good thing.

    The other day I read that rich people read non fiction way more than poor people. The biographies of accomplished people. Poor people tend to watch tv and read fiction. I have an awesome setup for TV, and I play things a fair amount, but I find I'm usually unable to focus on the show. I feel guilty. But I haven't been systematic about my non fiction reading. I listen to books on my commute or on long weekend walks. I don't want to be poor, so maybe I should identify my prime tv wasting time and replace 1 hour of it with reading. I can still watch tv... But it will probably be during weird times when I'm busy with other things. I don't have cable. I don't watch any commercials.
     
    Last edited: Mar 30, 2016
  17. San Jose 5 Year Guy

    San Jose 5 Year Guy Member

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    Payday today. Except that I won't see it reflected in the account for another week b/c the 401k company is slow. Today I learned about the "mega backdoor roth" in which a person can put $53k total in a single year into a roth IRA. Pretty awesome. I don't think my company supports it, but I sent an email to check.
     
  18. cdub

    cdub Club Founder Staff Member

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    I've added a new feature to the site where everyone's total mortgage debt, interest saved, and pre-paid principal gets added up and totaled on the main page of the site in the widget below:

    Screenshot 2016-05-02 at 10.46.24 PM.png

    You enter your information in your profile page. No commas or decimals. If you don't want to include your info put "0"
     
  19. San Jose 5 Year Guy

    San Jose 5 Year Guy Member

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    Maxed out my 401(k) at $18k. Mortgage is down to $74k. I'm pausing on everything to save up cash. I depleted my emergency fund to pay for a bunch of travel... and yo-yos. The travel is worth it (time with family / friends). Nothing too luxurious. The yo-yos were ridiculous ($4000ish)... but a couple of them were models in the #1 spot on my want list. The whole thing delays me by maybe 45 days. Can't keep doing that! (obviously). I don't regret any of it. And maxing my retirement makes me feel "responsible"... even though that standard of responsibility doesn't really get me free, which is the ultimate goal.

    If I'd put the 401(k) money in the mortgage instead, it'd be down to $56k. Man, that would be great! But oh well. I'll get there eventually anyway. My savings are around $7k right now. I want it to be more like $15k+. I redid my budget to account for all this new spending.
     
    Last edited: May 15, 2016
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  20. San Jose 5 Year Guy

    San Jose 5 Year Guy Member

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    I'm watching Twin Peaks, episode 2. Mortgage balance is the same. I have a plan to be up to $12k cash savings by the end of the month. I've been very focused on writing the code for a payment stats system. Building the framework is a bit tedious... But when it's finally finished I'll be able to answer some interesting business questions. I like building flexible tools where people can ask their own questions and find their own answers. But in this case the number of factors to analyze is so large that the best I've been able to think of is to isolate the actual db queries and summations into a single function... The framework handles storing the analysis, graphing it, importing the most recent data, etc. I wish I could come up with a good interface to help people manipulate many variables and find their own patterns, but to do that, it would be most convenient if the stored data had more symmetry... Instead, its shape probably more closely reflects the chaos of real life.

    The value of my condo has risen very dramatically in the last 3 months. About $20k, so much that I don't believe Zillow's model... Or to believe that the model will drop the value of the condo suddenly in the near future. What goes up must come down. It's so fun seeing the value rise that I have to remind myself of how normal bubbles are - they will happen. Rather than focusing on the current sales price, I need to appreciate how affordable it is and has been, and on how I'm going to take advantage of that affordability to start a productive enterprise.
     

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