My mortgage must die

#1
Hi all, I joined the FI bandwagon last June and I'm currently trying to fast track my mortgage payments so I can be mortgage free by 2022.

I bought my property 6 years ago for 230,000. Because of the booming housing market in ontario, It's currently worth around 370-400k. I'm hoping to sell it in 5 years for 450-500k, invest it, and retire to costa rica. A few years ago developers bought the field across from me and built a bunch of houses, and the farm behind me is going for sale soon, so I'm hoping I can sell it to a developer for a high price.

Anyway, my mortgage is currently $140,300. I just payed an extra $9000 in january to bring it to that amount. I don't want to increase my monthly payments because the overtime I'm working might dry up, but I'll pay as many lump sum payments as I can, up to the maximum. The mortgage is up for renewal in 2019, so I can put some extra in then too.

I really want to make this work because I really hate my job, and I don't like living in Canada. If I can pay off my mortgage, and then save some as I try to sell my house... I hope that will be enough.
 
#2
The title to your thread is awesome. Sorry you hate your job, keep working your plan to freedom! I assume you have checked out FIRECALC.com by your user name reference and plans, but if not you should utilize this free resource. Maybe we will see you on house hunters international one day!
 
#3
Thanks for the compliments MTorrez! I have tried out FIRECALC before, and if I keep my spending low (in costa rica it's possible to live off of 1000 per month if you live as a minimalist) then I have a 100% chance of success. That's if I just rent and don't buy, but if I buy a place my expenses will go down so I should still be ok.

I'd love to go on house hunters international! They could take me all around the country, showing me fancy houses... and I'll buy the little shack in the woods, lol!

Edit* I just realized I had been calculating with US dollars. If I convert to Canadian dollars, I only have an 82% chance of success. Still pretty good, though I might just work another year to increase my odds (one more year syndrome kicking in already...)
 
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#4
When I paid off my mortgage, at first I made the extra payments, but then when I had around 6 months left, I wasn't 100% sure I wasn't going to just sell (for a bunch of different reasons). I saved money into a stock/bond fund, and once it got high enough I paid off the mortgage. If there had been a major downturn, I'd have a big pile of cash to buy things at a discount. If the market did well... then I'd still get the equity gain in the property. About the only way you'd come out ahead by paying down the mortgage is if you had a high interest rate, and in that case the obvious thing is to try and refinance... It worked for me to keep paying off the mortgage in front of me as something motivating and concrete, a visible target, but the flexibility of having at least $25k in conservative investments guarantees you can adapt to anything, and there isn't a bunch of opportunity cost to it.

In your case, it sounds like you might come out ahead financially by building up the cushion so you can work your way into a job you feel better about. Easier to make more money when you like the work...
 
#5
Thanks San Jose, I do have a nice cushion saved up of 10k (index invested), and I'm trying right now to move into a different department at work. I've tried before, but this time I have a little more seniority so hopefully it works. It's not just my job that makes me want to move, I live in Canada and I have seasonal affective disorder, so I'm basically depressed for half the year. So selling my house is guaranteed.

I know in theory investing the money is the better choice, but seeing the mortgage balance going down and knowing I'm saving tons on interest just feels a lot better to me. Like a goal I can actually reach, instead of being at the mercy of the market.
 
#6
I was using a fund mix of 60% bond and 40% stock, so in the event of a big market crash, I'd still retain most of the money. For me it was more about the advantage of having the liquidity than any market return I could get. I'd have that much more liquid in case anything worrisome happened during a crash, like in case I had a longer period of unemployment than expected, etc. I ended up making around ~$500 on around $46k in ~5 months. Not life changing. Probably about the same as the mortgage interest. No big deal. I was using the mortgage as my measuring stick, so by keeping a chart comparing how much I had left compared to that account balance, I felt like I was paying it off. Also, I was thinking maybe I should just go ahead and sell, and having that much more liquid to handle fixup / closing costs let me keep my options open. I ended up deciding against selling, but I don't regret having the option, because there were really good reasons to seriously consider it (prices in my neighborhood are 3X what they were when I bought, and I'm close to FI, so I really worry about diversification).
 
#7
That makes sense. Despite my complaints about my job, I doubt I would get laid off in a crash because we make medical supplies. People will stop buying things in a pinch, but they'll never stop getting sick. So I feel more comfortable having a little less in liquid assets. The 10k I have saved will last me 5 months, so still a pretty good cushion.

I'm impressed that house prices have tripled since you bought your house! How long have you had it? I've had mine for 6 years and the price has almost doubled. It's fascinating to see how quickly the price goes up.
 
#8
With as quickly as you are on track for paying off your house it probably doesn't make sense to invest it only to pay off the house. If you had a 7-10 year time horizon, then it might make more sense to bother investing. You would be kicking yourself if you had saved enough to pay off the house by 2022 only to have to wait for a market recovery. I am impressed by your ability to stretch your dollars, living 5 months off of 10K is something a lot of people would struggle to do.
 
#9
Thanks! 6 years ago, I was only making $12/hr ($9.30 in US dollars) but I was bound and determined to buy my own house. I did buy one, but I had to be very frugal to make ends meet and pay the bills. I learned a lot about what you really need and what you can do without during that time. Now I spend a little more, but being frugal is just a habit. A $2000 per month budget isn't so daunting when you know you can do it, because you've done it many times before.