Goodbye PMI, and then some

[Freedom2016]

DH and I are having a very good year financially due to a big client contract that I landed last fall. The income from that project is catapulting us way forward on our financial goals. Here's what we've done or is on tap for 2014:

PMI: We threw 37k toward the mortgage and starting May 2014 no longer pay PMI. Yayyyyy! We will never make that dumb mistake again.
Emerg Fund: It had gotten way depleted - down to 5K or so. We were able to bump it back up to 20K.
Loan from mother-in-law: We will pay off the 8K balance on a loan DH's mother gave him before we were married. It's a 0% interest loan but it will feel psychologically good, and right, to make her whole ASAP.
Student loan: We will pay down or pay off the $34K balance on my grad school loan. It's a low interest rate (3.125%) so we're debating what to do with it.
401K: We will maximize my solo 401K for 2013 ($51K) and 2014 ($54K).

My income after this year will likely go back down to "normal" levels so we're not expecting to replicate these big leaps in the future, but it is so great to clean up the bad financial decisions from the past and get on solid savings footings going forward!



 

[boyerbt]

That's awesome, well done!

[Gray Matter]

That's AWESOME!  I added up these figures and you're closing in on the 200K mark in just the past year in savings/investments/debt paydown.  That has got to feel good (I can only imagine)!

[Freedom2016]

Thanks boyerbt and Gray Matter!

We're expecting Baby #2 in October and feel really fortunate to be able to shore our finances up so much before the family expands.

[spoonman]

Excellent progress!

[reginna]

Impressive course11! Congratulations on your superb progress and baby #2!

[dorkus619]

Awesome to hear you eliminated your PMI! That's one of my biggest goals right now. It looks like you are on a great course and have good goals for the next year.

One question, based on some past PF blog posts I've read (maybe one by MMM if I remember correctly?) Why have 20k in the emergency fund when you have debts to be paid? I definitely think having the E.F. is necessary to prevent future debt if something happens, but maybe you only need 10-15k and you can get a jump start on the Student/MIL loans?

Good Luck!

[Freedom2016]

Hi Dorkus619, it's a good question. <scratches head to ponder>

I guess it's because our cash flow is so strong right now. Practically speaking we are able to pay the debts off almost simultaneously as bumping the e-fund - i.e. we just paid off the mother-in-law loan, and within the next month we should be able to knock out the student loan in one fell swoop. It's true that we're not optimizing our finances by paying student loan interest for an extra month or two; I guess the psychological comfort that a fully-funded e-fund gives me makes that tradeoff bearable. It really stressed me out that the e-fund got so low...

 

[dorkus619]

we just paid off the mother-in-law loan, and within the next month we should be able to knock out the student loan in one fell swoop.

Well then. CONGRATULATIONS!!!!! That's amazing!

[FIRE2034]

We will be getting rid of our PMI this summer.  I cannot wait!  We will never have PMI again.

Great work on getting rid of that debt/maximizing your savings!

[aglassman]

Great work!  My wife and I are attacking the PMI as well.  Any money our 10k emergency fund at the end of the month goes towards principal.  So far, we've gotten over 4k in there!  It's fun to actually see the principal drop vs the sad, slow crawl you get with monthly payments.

[MayDay]

We are working on PMI as well.  We could have swung a 20% down payment, but being a 1 income family, and having had job losses in the past, we weren't willing to deplete cash reserves (although we could have pulled from a Roth in a true emergency). 

Anyway, we are hoping to have PMI gone in one year.  Can't wait!

[Freedom2016]

Good luck to everyone working on getting rid of that evil PMI!

On our continued trek, last week we paid off my last student loan.