So here’s the deal. I really don’t want to have a mortgage anymore ;) We have $350,196.93 in mortgage debt, and I want it gone in 10 years. It’s time to get serious about “retirement” and not thinking about money any more! (I know I know, *everyone* wants to to do that — but today I actually DO SOMETHING about it ;))
I alluded to this grand epiphany last week when I was muttering about financial minimalism and cutting down our expenses, and this is the one major thing we have left to really tackle. We’ve gotten rid of a lot of nonsense already in our lives, but these damn mortgages keep popping back up and it’s driving us loco! They’re holding us back, baby! So today we finally jump on a game plan and knock these suckers out.
I present to you, Operation Kill Our Mortgages
I’ve been alluding to it for weeks on end, but after some good soul searching and sifting through all the advice from everyone – including you! – we have finally come up with a good plan that I really think will will do wonders if we can stick to it every month. It’s the only thing left in our financial lives that we have utterly avoided (with the exception of refinancing earlier), and it’s time for that to end! Operation Mortgage Pay Off is now in full effect!
Here’s what this means:
- Going forward, I, J. Money, will pay off an additional $2,000 EVERY MONTH towards our mortgages, no matter what. I don’t care if I have to take from savings, or start an 8th job — I’m gonna kill that debt once and for all.
- How? By applying all extra money I make on top of my normal “day job.” I’ve been consistently bringing in a little more than we need to live this entire year so far, so now anything OVER that amount (roughly $5,000/mo) will go directly to our mortgages. I’m already in talks with launching some new projects that could do the trick, but outside of that it’ll also mean no more investing unless I’ve met my $2k/mo goal. And now that I’m done w/ my $1,000/mo loan as well, I can apply that 100% toward this debt too – since I’m already used to not having it. That’s 1/2 the amount of money I need right there! (Though I’m still gonna miss the crap out of it).
My goal is to be MORTGAGE-FREE in 10 years. That would put me at 41 (yikes), but the happiest 41 y/o around ;) I don’t know what’s around the corner from today, or where we’ll even be in life just 3 years from now, but as it stands that’s the game plan. I’ll stick to it for as long as it make sense.
What this looks like
As of this second, we have a total of $350,000 in mortgage debt. And I’m not gonna lie – this $hit’s gonna be hard. But freedom aside, this will also save us a TON of money!! And when I say a TON, I mean well over $200,000!!! All by changing the payments of the same loan we already have.
Here’s a visual of what’s in store for Mortgage #1 (our 30 year fix):
If we leave everything as-is, we pay more than $300,000 in INTEREST on that mortgage. That’s on top of the $288,439 we also owe. But if we apply this extra $2k every month, going forward – we can not only pay it off faster, but also save $220,000!!! I honestly can’t get over it. And I’ve run the numbers over and over again for the past 3 months just waiting to get started, haha… I highly recommend playing around with one of these calculators – it really sheds the light! (One of my favorites is that one above by Bank Rate, minus the doodles ;))
As you know though, that only covers one of our mortgages. The other one is at $61,758.47, and is technically a maxed out Home Equity Line of Credit with a variable 2.8% interest. This one only requires us to pay the interest on the debt each month, and the rest is up to us until the maturity date comes around – a good 15 years away ;) (We also have the option of converting any portion to a fixed-rate loan w/ a current rate of 4.85% too, if we choose.) So the question I posed to y’all over a month ago was WHICH mortgage to start paying off first? The huge one with a much higher interest rate, or the smaller guy with 1/2 the interest, but the much shorter pay off time?
The overwhelming response was to play it financially smart and go for the 1st one. But I know myself way too well, and I have to go with the better likelihood that I’ll continue staying motivated and keep pushing through. And quite honestly waiting 8 years to pay off ONE of the mortgages completely bores me to DEATH. So, I’ll be sticking with my gut and going for the more *emotionally-based* decision in this case. Paying off the smaller, quicker loan, first.
(Which will take about 2 1/2 years to get rid of, saving us a cool $24,000 in the long run! To calculate this guy, we used Bank Rate’s interest-only mortgage calculator, which allows for entering scheduled extra payments).
It’ll still take us 8 or so years to pay off that 1st one once we’re done with this 2nd mortgage (well, actually closer to 7 since then I’d have an additional $200 to apply towards the principal too!) but I’ll be a helluva lot more EXCITED and confident now moving forward. Not to mention the added benefit of being able to refinance a lot easier w/ just the one mortgage on the books if we wanted to down the road. But this stuff really comes down to personal decision making. Only YOU know what’s best for you and your family, and sometimes that means going against the grain or the common cents if it happens to come out that way. In the end you still accomplish the same goals, it just might take a little bit longer than the other route. And as long as you’re okay with that, you’re good to go :)
Other things for us to consider
There are other things for us to consider too, especially as more time passes on earlier into the plan:
- The Mrs. will eventually go back to work and start earning a full-time salary again! We’re still a year or two away, but when she’s out of grad school she’ll have a killer PHD in hand for artillery! Gotta like like that :) Any salary will be better than her $13,000 she’s currently earning from her school T/A’ships
- Over the next two years I should also be making more money if I continue hustling. Not that I want to become one of those hardcore workaholics forever (thus the dream of freedom in 10 years!), but if I can work my ass off now for a few years, and reap the rewards for the rest of my life to come, then I’m all about it. The whole end goal here is to need LESS money to live on down the road and continue being happy w/ my current lifestyle. And right now, that means I need to keep on pounding away at it until all that debt is gone and I can go sit back and enjoy the spoils :) Or even keep on working, but at my own super slow pace!
So that’s the plan!! We’re about to kick some ass and blow these dang mortgages right out the door. It may be a little hardcore, and probably not wise for some others out there, but for right now it makes total sense for us. Our emergency fund is on lock. Our savings accounts are somewhat plump. And our investment portfolio is decent enough until we can start building it back up with anything extra that comes outside of this $2k allotment. It’s gonna take a LOT of work, and I’m sure I’ll be bitchin’ about it in no time, but you better believe I’m ready to start!
If all goes well, we’ll be officially mortgage-free by June 23, 2022 :) (And will have saved over $250,000 in interest!!) It’s a few months off from my master goal of 10 years, but something tells me if we work hard enough we’ll be able to shed those bad boys in no time… the hardest part is always starting!
PS: Anyone want to join me? :) Maybe create our own “Mortgage Pay Off Club” to help each other stay motivated and keep track of everything? I know some of you already got your Millionaire Club card from back in the day, but you better believe this will help steer that ship too. Can you imagine what not your net worth would look like without a mortgage on it??
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!