Navy Family Says, "Be Gone Mortgage"

Discussion in 'Mortgage Payoff Diaries' started by chela2002, May 8, 2017.

  1. chela2002

    chela2002 New Member

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    Hello everyone. It's nice to be a part of an awesome club such as this with other like-minded folks instead of those shouting at us from the rooftops of the foolish errors of our ways of not using that money to invest. Just a little bit of background info: I am a '03 Naval Academy grad (English major) who served on the USS Shoup but was able to get out after two years (and three deployments!) when the Navy asked some junior surface officers to get out early before fulfilling my five year obligation (blessing indeed). I got out and earned two master's degrees in education virtually free using the Hazelwood Act as a Texas resident. My hubby is from Pittsburgh who is a '04 Academy grad (naval architecture major) and who was also a prior nuke machinist mate. This month he will have 16 years in active duty as a pilot, and our plan is to retire right after he hits the 20 year mark. After retiring, we'll probably move to the San Antonio area. He has absolutely no interest in flying commercially after leaving the service, which many of his fellow pilots are already doing.

    Right now we decided as a couple to stop contributing to his Roth TSP (we had been investing 15%) to pour every available cent to pay down our 15 yr mortgage as quickly as possible. We are currently in FL. The idea being pay it off (about 128k remaining) ASAP, sell the house, and use that money to buy our forever home in TX and not have a mortgage at all- to live true financial Independence. We'd both then become substitute teachers which makes about $95 a day and basically choose to work when we want. I'm 37 and he's 38. He'll be receiving a pension from the military of about $42k a year when he retires, God willing.

    I've mentioned our plan to only a few people and immediately were a bit chastised for not investing in the stock market instead of paying off a 15 yr mortgage at 2.875%. We're paying off our car this month, and we will not have any other debt other than the mortgage, which will be paying approximately $2k towards beginning in June.

    Other financial deets: We've completely stopped all investing for the moment to pay off the mortgage; we have about $6k in an online savings acct for emergencies, $100k in combined Roth IRA's through Vanguard, $50k in his military TSP, and zero debt after paying off our car this month (woohoo). That's it in a nutshell.

    Any words of advice, concern, praise, or criticism is greatly appreciated! Thank you for reading if you made it this far!
     
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  2. cdub

    cdub Club Founder Staff Member

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    I'm still contributing to the retirement accounts, personally. I've had to put my extra mortgage payments on hold just to get our security fund back up to snuff (owed way more taxes than I thought I would - one day I'll put the right amount aside). In your case with the military pension coming up it may be just fine for you to stop the contributions... however if the employer matches any contributions not contributing would mean leaving money on the table.

    You mentioned paying of the house and then selling it? How much is the house worth? Depending on how much you may be able to sell it before paying off all your mortgage and use the remaining balance to be mortgage free. I assume housing costs in TX are cheaper than FL.

    Congrats on paying off the car! That's great.
     
  3. chela2002

    chela2002 New Member

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    Hi with the Roth TSP, there are no employer matching until 2019 when the blended retirement system goes into place for the military. Right now the house is worth roughly $204k. Housing costs are cheaper in different parts of TX vs FL but with two kids, we don't really need anything over 2000 sq ft. Thanks for your reply and best of luck replenishing the necessary funds. Baby steps...
     
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  4. cdub

    cdub Club Founder Staff Member

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    Yes baby steps! :)

    It sounds like you've got a great plan. I'm very much looking forward to being mortgage free as well.
     
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  5. chela2002

    chela2002 New Member

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    So I convinced the hubby last night to at least keep investing 15% into his TSP, as this has some of the industries lowest fees out there. He has roughly four years left to serve before retirement, and this makes me feel better for the future. We'll start that in July. I already have $2400 slated to go towards the mortgage principal for June. After that, the summer months when I'm not working as a teacher, we'll contribute $1200 and roughly $2000 once school is back in session.

    We won't pay it off at the end of this duty station (which ends in early '19), so we'll likely rent it out for roughly two years and turn around and sell it after that. Sometimes the military stinks because you just want some certainty (sigh), but that's a topic for another time.
     
  6. San Jose 5 Year Guy

    San Jose 5 Year Guy Member

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    My sister was USNA 2005 in English. At the beginning of 2017, I decided to commit 100% of my savings to paying off the condo only until July. If I didn't pay it off by July, I'd have to slow down and pay into retirement. I planned it that way b/c I wanted to make sure the 2017 retirement accounts were maxed. In the long run, you want the net worth to be diversified, so it's important to keep the equity investing within a reasonable proportion to real estate. Financial Samurai recommends 25% of net worth in real estate. I'm in California and can't really do that, but I agree w/ his concept. Emotionally, it's definitely hard b/c we want to see these bills go away. Maybe if you set a mini-goal w/ the mortgage like I did (e.g. pay it down to X amount by July), then you can switch to retirement savings on a certain date to make sure it gets done. Emotional financial planning via focused sprints.

    Recommended Net Worth Allocation By Age And Work Experience | Financial Samurai
    The Average Net Worth For The Above Average Person | Financial Samurai
    Net Worth Optimization Exercise | Financial Samurai
     
    Last edited: May 24, 2017
  7. chela2002

    chela2002 New Member

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    San Jose guy, thank you for the great recommendation. I'll have to look into the financial samurai.

    Awesome that your sister is also USNA alumni and an English major. I very much enjoyed my major.
     

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