Three Years Out -- Light at the end of the tunnel

Discussion in 'Mortgage Payoff Diaries' started by A Bird In Hand, May 12, 2017.

  1. A Bird In Hand

    A Bird In Hand New Member

    Joined:
    May 12, 2017
    Messages:
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    Mortgage Debt:
    $102997
    Interest Saved:
    $14283
    Principal Pre-Paid:
    $103024
    We got our ~$290k 30-year mortgage in 2007. I don't remember the rate, but in the fall of 2010 we refinanced to $274k with a 20 year term at 4.25%. We always intended to pay it off early, and just to have a concrete goal we decided to pay it off in 1/2 the time. The simplest way to do that is to double up the principal portion of each payment. But I didn't like the idea of the extra payments getting larger over time, so I calculated the number that would allow us to pay the same amount every month -- a little more than $1,100.

    After paying that extra principal amount for seven years, our mortgage balance is now about $103k. It would have been $206k had we not made the extra payments. If we continue the extra payments, it should be paid off in just over three years.

    It will to be challenging to keep up the accelerated payoff while maintaining savings and continuing to fully fund 401k's and IRAs. But we're going to keep it up as long as possible. When the mortgage is gone, our yearly expenses will drop by close to $35k, which is huge for us. That will enable lots of options, including building up our taxable investments and/or switching to part time work.

    The best part about the last 7 years of 'forced savings' is that it forced us to live below our means. That should continue to pay dividends indefinitely, and make our goal of FIRE or ESR much easier to attain.
     
  2. chela2002

    chela2002 New Member

    Joined:
    May 8, 2017
    Messages:
    8
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    Mortgage Debt:
    $126819.25
    Interest Saved:
    $0
    Principal Pre-Paid:
    $438.56
    Bird,
    This is freakin' awesome!! Wow a balance of $206k already after 7 years. That is definitely motivating to see, especially since you all are still contributing to retirement funds and whatnot! We put those on pause for the time being, but are dedicating roughly $2400 a month towards the principal ourselves, starting next month. It'll force us to buckle down a bit and stretch out the rest of our money every month, but I like what Dave Ramsey says: "Live like no one else so that one day you can live like no one else." Once our mortgage is gone, we will resume retirement fund contributions, but fortunately, we also have my hubby's pension from the military to help once he retires in four years. Big blessings all around. Anyway, congrats and keep at it! BTW, like your art for the profile pic.
     
  3. A Bird In Hand

    A Bird In Hand New Member

    Joined:
    May 12, 2017
    Messages:
    6
    Likes Received:
    3
    Mortgage Debt:
    $102997
    Interest Saved:
    $14283
    Principal Pre-Paid:
    $103024
    Thanks for the kind words chela2002! Actually our balance is $103k after (almost) 7 years. It would have been $206k had we not made (almost) $95k in extra payments in that time. :eek:

    It has been challenging to continue maxing out retirement accounts while paying down mortgage principal, sending kids to private school, etc., and we've lived a fairly austere life because of it. We actually "spend" about $15k more than we earn every year, but that includes > $14k/year in extra mortgage payments and $11k in IRAs. We've only been able to fund everything by drawing down our large savings account that resulted from a lot of tax-free equity after selling our last house. But now it's a race to pay off the mortgage vs running out of savings -- both are on track to happen in around 3 years. Ironically our high savings rate is killing our savings. :confused:

    While I'm not sure we'd be willing to stop retirement savings like you did to pay off the mortgage, you do have the upcoming pension, so that adds a lot of financial security. We might have to take a hiatus on our IRAs for a couple years to keep on track with our mortgage payoff. Anyway, keep up the good work on your end as well!

    Credit for my avatar image: A Bird in Hand
     
    chela2002 likes this.

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