Discussion in 'Mortgage Payoff Diaries' started by San Jose 5 Year Guy, Jan 27, 2016.
What part of the country are you?
Nevermind... haha... it's in your username.
I'm so glad we didn't buy the condo we made an offer on in 2006.... it was almost as expensive as the house we finally bought in 2009 after the crash... I'm sure we'd still be underwater.
Mortgage balance down to $73k, paid until August. I added a little to the payment so that the principal would be ~$1000 so I can stay on satisfyingly even increments. Today was a payday, which was nice. Market has been kind of rocky recently, but I don't buy or sell or anything. I just hold. I'm still building up the cash reserve. This post is written from Manila, where I've been visiting a friend for the past week while working during the day in a $16/night place. Honestly, the place is actually pretty nice. Has everything I need anyway, except for my cats. I've been really productive this week, work wise. The trip has been fun, but it's also been a reminder of the crushing poverty so many millions of people are living in around the world. Poverty so great and impacting so many people that it's not possible it was their fault. They were all born into it. And I was born into wealth. Yeah, I work hard to try and maintain / increase that wealth, but I was born into it. Should I feel guilty for that? No. But just like it's incumbent on me to maintain the independence and options given to me, it's incumbent on me to think about what I can do... not to make the world more fair. The world will never be fair. That's not the point. But simply, when I look at what's happening in the world, and I bring my values to the table, I need to clearly define what I'm going to actually consume and get benefit from. And the rest needs to eventually go in some form to reducing suffering.
I say in some form because leaving a pile of cash marked with "reduced suffering" behind is good but not great. Great is when you leave behind an organization of people who have methods and systems in place to move toward a big goal while self sustaining. Money is just the residue of productivity. Leaving the productivity behind is the real gift.
Mortgage is down to $72k now. This was the last month of minimum mortgage payment / build up cash. My job situation has also stabilized a little more. The rest of the year should go smoothly / cheaply. I'm on a family vacation (but still working some). I'm in the middle of a bunch of travel. Returned from the Philippines, in South Carolina. Soon to be in Florida, then back to California, then to Burning Man. At $72k, the mortgage is now "only 12 easy payments of $6000!" What a deal!
A relative died, so we just had a ceremony this morning at the beach where we said some words and tossed his ashes into the ocean. He was a really good guy, but now he's white powder and a memory. He's not around to hear what everybody said about him. I can still remember him from past years at this same beach. Someday we'll all be white powder for somebody to throw around.
Balance should be around $46,871 by January 1st, then I focus on 401(k) again, then back to the mortgage in April 2017. Maybe I should change the title of the thread? Is that even allowed? Overall, I think I can predict this year I made half the mortgage progress I wanted to make, but I did that while going on some trips, maxing my retirement, and maintaining a healthy savings level. Not bad.
I had a dream last night about a high school friend I hadn't seen in a long time. I don't remember the dream. I just remember waking up, and the dream reminded me of a book she borrowed, a hard to find book, so I did a price check on the book, found a good copy, and bought it.
She gave me rides. She'd pay for ice-cream for me. We had a fight once because she had a job and was using her money for these things, but I didn't. We took AP Chemistry together. Went to the same elementary school, same middle school, same high school etc. She was very Christian, and I was not. She married a high school classmate and they both went to pharmacy school together. Graduated, bought a house by a lake, thinking about a family. I get home tonight, and I read that she died yesterday.
Which kind of puts the whole thing in perspective. For her, money was only relevant for 31 years. As it turns out, those books I loaned, if I don't get them back (fat chance, right?), well who cares, because they're probably only relevant for another 60 years anyway. My stepdad mentioned to me, "I remember when I reached the age where friends of mine started dying." This friend isn't the first for me. It's still weird. All the material stuff in our life is attached to a timer. Everything is a rental. Our friends, our family, cars, houses, pets, phones -- it all has a beginning and an end.
When I pay off the condo, it's not really the condo I own. The condo is just a rental no matter what the legal paper says, because I'm gonna die. That's when the rental ends. I'm just manipulating time. When I pay off the condo, I either don't have to spend time earning money to pay the mortgage, or the money that would've have been paid into the mortgage is invested and purchases some other future time. It's my choice whether I want to take the freed up time when I'm younger or when I'm older.
Just paid my September mortgage (I guess technically it's August, but the bill is Sept. 1). About $5946 on principal and $190ish on interest. Should be at around $66k now ($66,042.57). I want to be below $50k by the end of the year. It's going to be tight. I built a computer for $2000 and bought a bunch of home office stuff (used chair, extra monitor, etc.) for another $1000. So along w/ the vacations, it's not like I've been super disciplined. I need to focus! I did $5000 because that's the limit for paying down principal online, and the extra $50 didn't seem worth messing with the phone bullshit.
Made the next payment. $6k on principal (and principle!), so the balance is down to $60,070.66. Only 2 more payments left (November/December) until I hit my $50k goal for the year.
Made my next payment. $5400 extra. $6536 total, with about $6400 toward principal. $53702 remaining. Here's a chart showing my past performance and future (optimstic) projection.
Future projection ruined! lol. Well, I'm going to hit my $50k goal for 2016, but several things have come up that are going to drain away my mortgage killing powers. I'm switching my health insurance to an HSA, so I can contribue ~$7k to that for 2016 and 2017. I also need to max out my 401k and 2017 IRA. I already maxed the 2016 retirement stuff (yay). I also had to replenish my emergency fund. I'm aiming for $9000 but might end up with $11,000. Probably I should just chill out and keep the extra $2k liquid. Wednesday will be the December mortgage payment to get me down to $51k even. Then Dec 30 will get me to $50k even w/ $11k emergency fund.
Pay day. Next payment made. $51k mortgage balance, e fund up to $4871. *$50,978.74 to be exact.
Pay day. Emergency fund +$4k, up to $8871. Mortgage still holding at $51k, waiting for the Dec 30. payment. Spending the holidays with family in Atlanta, so hopefully spending so much time in my mom's basement will be cheap. Dec 30 still looking to have the emergency fund at $11k and the mortgage paid down <$50k.
Just FYI, I've moved much of my financial management to Betterment. My company switched its 401(k) to Betterment, and I'd wanted to get my IRA out of Edward Jones for over a year. The EJ guy had half of my IRA in cash, and that was just... absurdly bad money management. Betterment also has an emergency fund account with 60% bonds and 40% stock, trying to get better returns than a CD or savings account. I've moved $5k of my emergency fund to that, and maybe the whole thing in time.
My company also offered an HSA plan this year, and I can max out 2016 and 2017 if I contribute 2016 before April 15, 2017. I'm thinking about using Patelco for the HSA b/c I don't think my bank or Betterment offers an HSA. I consider HSA to be part of my health insurance plan, so it is very high on the list of priorities to max. I put it below the 401(k) simply b/c I can quickly max out the 401(k) b/c I get a $5k bonus in January.
Obligations in order of priority:
401(k) 2017 $18,000
HSA 2016 $3,350
HSA 2017 $3400 (if I switch jobs, this HSA money is ??)
IRA 2017 $5,500
[optional: ROTH IRA conversion. (maybe i should not make this option and just git er done), requires about $15000]
Total: $30,250 ($45k w/ conversion)
It takes about 6 months to complete the $30k plan. $95,400 is approximate take home pay for the year. $47,700 for 6 months. Total savings for 6 months is about $30k above + $6k mortgage paydown = $36k. That would be a 75% savings rate. Actual savings rate is typically like 50% for the year. I will review later what will throw me off track.
Jan 13: $3,910+$4,800+$292 = $9,052. I need to cover the second half of the month, so I should contribute $8000 to 401(k) and keep $1000 for expenses. I also need to start studying for interviews in case I need to switch jobs in the first half of 2017.
Jan 31: $3,910. I need to cover the mortgage and the first half of the month. Keep $1900 for that. $2,000 for the 401(k). $10,000 for the 401(k).
Feb 15: $1,000 for the second half of the month. $2,900 for the 401(k). Now at $12,900.
Feb 28: $1,900 for mortgage + expenses. $2,000 for 401(k). $14,900 total.
Mar 15: $800 for second half of month. $3,100 for 401(k). $18k total. Auto insurance $400
Mar 31: $1,900 for mortgage. $2,000 for 2016 HSA.
April 14: $1,000 for second half of month. $1,350 to replenish savings for 2016 HSA. $1,550 for 2017 HSA.
April 28: $1,900 for mortgage + expenses. $1,850 for 2017 HSA. $150 for 2017 IRA.
May 15: $1,000 for expenses. $2,900 for 2017 IRA. $3,050 for ira total.
May 31: $1,900 mortgage + expenses. $5,050 for IRA total.
June 15: $1,000 expenses. $450 IRA, $5500 total. $2,450 for June mortgage. home insurance here… $1k
June 30: $45 mortgage starting. $44k after regular mortgage payment. – $3,450 = $40k. Christmas ticket bought here, $300.
July 31: $40k mortgage – $6k = $34k.
Aug 31: $28k
Sep 29: $22k [property tax and auto insurance due here, $3k]
Oct. 31: $19k
Nov 30: $13k
Dec 29: $7k
Sad that I can't kill the mortgage by the end of 2017. I need more income to solve this. That either means side work or a new job, and my experience is that I'm best at focusing on one thing at a time, so new job might be it.
Paid the next mortgage payment. Balance is now $49,974.98. Emergency fund is down by $1137, but now out of the next paycheck I save more like $3937 instead of $2800. Still on track for finishing the year with $11,800 emergency fund, but anything above $11k is gravy.
[update] - finished the year with $11,400 in emergency fund and first half of January covered.
$48,968 balance and $17,500 in savings. The savings are in 60% bond 40% stock fund, so it should beat the 3.125% mortgage interest hopefully, and I'll have some flexibility depending on whatever comes up in the next 5 months. Goal is for the fund to be > $44k in 5 months, then I can just pay off the mortgage all at once. Tax refund is projected at around $5000, so on a per month basis it'll be like $5k, $10k, $5k, $5k, $5k which would put me at around $47.5k. It'll be less than that b/c of paying some big insurance bills, but it's not too bad.
I've been delayed some by putting $3350 into my 2016 HSA. But money in reserve for healthcare isn't the worst prioritization.
I'm watching "A Serious Man" tonight, the second time I've ever watched it. Anyhow. Good news today! First, I'll give a little background. when I planned 2017, I assumed $3k from the tax refund. When I filed, it said more like $5700. An extra $2700, that's cool. More background. I had bought $700 of company shares a few jobs ago, because I quit and you have to exercise your options or you lose them. In early 2015 the company was sold, and I got an email saying I needed to provide all kinds of annoying information and forms. But the thing is - the company was being sold b/c it was in trouble. I got an email saying there was a balance of $250 in escrow, and I needed to fill out some forms. So bummer, I lost money, but that's normal with that kind of bet. I procrastinated sending back the forms. I hate doing that stuff, and they required me to mail something, and I didn't have any stamps.
Anyhow, now that I'm in 2017 hermit mode, things are boring, so I finally decided to take the time to finish filling out and sending those forms. Then they emailed me for even more stuff to be scanned and signed. I figured maybe they got to keep the money if I didn't respond, and that's why they made it so hard. Today I got a wire transfer for $250. Yay! Then I get a wire transfer for $1750. What!? A mistake? No, it turns out that the deal was actually profitable, so I'm now $4700 ahead of schedule, which is almost a whole month. So yeah, that's it. Hooray. It bumped me up to around $20k savings. By the end of Feb, I should have about $30k in savings from my paychecks and income tax return, and the balance on my loan will be $48k, leaving a gap of $18k, or only about 3 months of mortgage + excess income.
Payday. Made the next mortgage payment. Balance is down to $47,959.60 . Savings for paydown is up to $30919.60. Difference is $17,040. Since the tax refunds have already arrived, it should take three months to reach a difference of zero. Probably 4 months until I pay it off, so I won't become completely broke by writing the check. No extra money so it'll just be slogged from the paycheck. Woohoo.
Still at least a day away from payday, but I'm inspired now, so I'll write it up. I'm in the mood, so I put on some old trance (). Friday paycheck should bring me to $37k in savings. Mortgage balance will be down to $47k. I've really been throwing everything I can at it, so I'm about $1000 ahead of where I thought I would be (as well as some random stuff happening like my work giving me $250 in Safeway gift certificates, eating as much free food at work as possible, eating random stuff from old cans in the pantry, transfers from cash produced by my poorly performing P2P lending account, etc.). The market has done well since I opened the Betterment Safety Net fund, so it's made about $500 in just 3 months, keeping up with the mortgage interest. By the days until responsible buffered with emergency cash, I'm only about halfway done. In 60 days, the balance on the mortgage will be $45k, and assuming the markets stays where it's at, the money will be at $47k. June 1. I've started to think that maybe paying off the condo isn't the best idea. Part of it is pressure to do an (evening) MBA and come up with the money for that. Another part of it is that I've been dating a med student, and she'll start a residency somewhere random in 2018, and if I think I'm going to move, then I'd want the money to handle selling expenses. I suspect my personality will just pay the damn thing off and leave it up to future me to figure out everything else.
Holy crap! What a twist. I just checked my lotto numbers for the 29 March drawing, and I didn't win the jackpot, but I did win the 5 number match. $43k! I think the state tax on prize winnings is 50% ish, so it's really only $21k, but who cares? That puts me over the top. Woohoo!
Gotta prepare the payoff request for Monday.
Well, we all knew the April Fools lottery winnings couldn't last. I blew them all on Faberge Eggs. Back to the grind!
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