Author Topic: Mortgage Payoff Club!!  (Read 426798 times)

BlueHouse

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Re: Mortgage Payoff Club!!
« Reply #1600 on: April 30, 2018, 12:07:38 PM »
Woot!  I joined the club twice in the last three years!

...

There is also the value of not having debt, in terms of flexibility in how I live, where I live, and how I spend my time and mental energy.  Those are very valuable to me, and directly relate to my mental health, and thus my physical health.  My sensitivity to that may well be a result of the childhood trauma of losing a house, but it is part of who I am.  Hah! I guess I'm doing some exposure therapy for that, with the short mortgage I had, and now I am opening a HELOC as a supplemental emergency fund.

...

Anyways, that's why I was so happy to join the club, twice 8^)

Congratulations @verfrugal!  That is extremely motivating to me.  I, too, am using my personal and rental residence as a way to diversify.  I don't invest in REITs, so my vast property holdings (all one and a half of them) represent that portion of my portfolio.  I'm also trying to reduce expenses post-FIRE, so I can avoid capital gains taxes in some years (I know it won't be possible every year).

On a personal note, congratulations on being able to take care of your mom.  Great karma right there!  :) 
Sometimes nothing can be a real cool hand

couponvan

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Re: Mortgage Payoff Club!!
« Reply #1601 on: April 30, 2018, 12:21:47 PM »
Another $4k hit to the principal balance, now under $90k!

Great job! It's in the sub $100K now where things start to pick up speed.
Why the hell are we going shopping? Buy sh*t, return other sh*t, go through sh*t and donate sh*t. Complain about having too much sh*t. Repeat. (Bracken Joy 2/17)




Trifele

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Re: Mortgage Payoff Club!!
« Reply #1602 on: May 01, 2018, 04:40:04 AM »
Another $4k hit to the principal balance, now under $90k!

Great job! It's in the sub $100K now where things start to pick up speed.

Yep!  And when the balance gets lower you start to find ways to pay it off even quicker!  Great job Birdman!

birdman2003

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Re: Mortgage Payoff Club!!
« Reply #1603 on: May 01, 2018, 07:53:38 AM »
Thanks for the encouragement.  It would be awesome to pay it off in 2018 but we definitely want it gone by this time next year.

littlelykke

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Re: Mortgage Payoff Club!!
« Reply #1604 on: May 01, 2018, 08:49:37 AM »
We collected our change for the last 4 months in an old jam jar. When I counted it today, it was 300 euros. Used it to make an extra payment on our mortgage. The result: 30 euros off our monthly payments. Permanently. Yeah! Small steps. But we'll get there.

frizzywhiskers

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Re: Mortgage Payoff Club!!
« Reply #1605 on: May 03, 2018, 08:51:53 PM »
May update.....$59,575.... waiting patiently for husbands bonus to come in.  21 more weeks at max until payoff - hopefully less. 

indentured4now

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Re: Mortgage Payoff Club!!
« Reply #1606 on: May 03, 2018, 09:13:56 PM »
Way to go @frizzy and carry on!   Our situation sounds similar (now down to $44K as of 5/1 and hoping for a good bonus late June to really accelerate towards the goal line).   It's GO time!

Megs193

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Re: Mortgage Payoff Club!!
« Reply #1607 on: May 04, 2018, 04:32:26 PM »
For those of you who stared with larger mortgage balances, how did you stay motivated in the beginning?  Our current balance is 493k so even if I pay an extra 2,000 a month I am still 10 years away from paying it off.  Did you set mini goals or just put a set amount towards it every month and forget about it? 

couponvan

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Re: Mortgage Payoff Club!!
« Reply #1608 on: May 04, 2018, 04:59:27 PM »
For those of you who stared with larger mortgage balances, how did you stay motivated in the beginning?  Our current balance is 493k so even if I pay an extra 2,000 a month I am still 10 years away from paying it off.  Did you set mini goals or just put a set amount towards it every month and forget about it?

Mostly we did a set amount extra each month that would take us to 10 years max (with a 30 year mortgage), and then as our EFund grew over $5K more than our planned amounts we moved chunks over at a time.  Bonus payments were the main mortgage kicker for us. I think it took a little over 5 years to pay off the mortgage. 

We don't include bonuses in our monthly spending/saving budget, so when they come we can put all of them to goals. DH's bonus can be 30-60% of his salary, so it's a big chunk that varies from year to year. Big enough of a chunk that I don't want an EMERGENCY just because he didn't get a bonus that we got used to spending.
Why the hell are we going shopping? Buy sh*t, return other sh*t, go through sh*t and donate sh*t. Complain about having too much sh*t. Repeat. (Bracken Joy 2/17)




BlueHouse

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Re: Mortgage Payoff Club!!
« Reply #1609 on: May 04, 2018, 05:56:59 PM »
For those of you who stared with larger mortgage balances, how did you stay motivated in the beginning?  Our current balance is 493k so even if I pay an extra 2,000 a month I am still 10 years away from paying it off.  Did you set mini goals or just put a set amount towards it every month and forget about it?
I put $2k extra toward my loan too and it seems too slow too.  And every once in a while I get a big distribution from my company (I think of it like a bonus) and rather than putting it into my investments, I put it toward the house.  Better than spending it on furniture or a car though.  I am really aiming to get under $130k, then I'll forget about it.  But until then, I'm itching to get it paid. 
Sometimes nothing can be a real cool hand

indentured4now

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Re: Mortgage Payoff Club!!
« Reply #1610 on: May 04, 2018, 07:10:18 PM »
@Megs193,  I remember the "the debt is too big, so why bother" early days...   The banks rely on this psychological response to keep you a slave paying them to stay in business for doing nothing other than letting you borrow someone else's equity.   Like BlueHouse said, it's a combination of discipline "chipping away" and then those chances to put "big chunks".    While the math remains constant, the change really happens once you reach 50% through the debt...  At that point, psychology kicks in and you just believe and find ways to kill the mortgage.   Selling things, reducing expenses to pay principal, increasing income, you name it.  It's not a number, it's believing... every blessed day.   

Trifele

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Re: Mortgage Payoff Club!!
« Reply #1611 on: May 05, 2018, 05:58:52 AM »
@Megs193 -- I used a strategy similar to the others.  I set a minimum number each month for the extra payment, and then also threw any extra chunks/windfalls/bonuses at it.  The third thing I did was play mental games with myself, trying to get below a certain number. So say if my balance was 193k, and my monthly minimum extra payment would have gotten me to $190,800, I would find a little extra to throw at it to get it below 190k, just so I could see that 8 on my balance. Then when I chewed it down to say $184k, I would find some way to throw a little extra at it, so I could get below $180, and see that delicious 7

It was kind of like the strategy long distance runners use when they are struggling -- looking for shorter-term goals, rather than the far goal.  "I don't feel great right now, and I don't know if I can run another 10 miles.  But I know I can run one more mile, so I'll just do that and then see how I feel."  Rinse and repeat.

Good luck! You will get there.
« Last Edit: May 05, 2018, 06:25:50 AM by Trifele »

aperture

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Re: Mortgage Payoff Club!!
« Reply #1612 on: May 05, 2018, 06:19:23 AM »
@Megs193
...It was kind of like the strategy long distance runners use when they are struggling -- looking for shorter-term goals, rather than the far goal.  "I don't feel great right now, and I don't know if I can run another 10 miles.  But I know I can run one more mile, so I'll just do that and then see how I feel."  Rinse and repeat.

Yes - I love this advice.  An unfortunate side effect of understanding how to plan, and use a spreadsheet is that you can make life look super predictable and the monthly or q2 week deposits into the mortgage can seem like they have no impact at all.  I would encourage you to not look at the end - you will burn yourself out. Look at 3 months or 6 months or a year and make it a game. Maybe your minimum payments would get you to $480K this year and your expected extra payments will get you to $460K.  Make it a personal challenge to find a way to get to $450.  Look for the proverbial nickels in the couch, side hustle, room mate, bike to work, skip the lunch the coffee, sell it on eBay - do something to shake a few extra $s loose to throw at the mortgage.

If that does not appeal, then I would find a way to execute your mortgage plan on auto-pilot without ever having to look at a statement again. Again - the bottom line is refocus your attention away from the date 10 years from now when you are out from under that loan.  You have to live now and cannot defer living until then. 

BTW - I have done a bad job of following my own advice.  In the last three years, I have had a calendar spreadsheet at work where I counted down the days, weeks, mondays, mortgage payments, 403b contributions, pension accumulation, etc etc etc ad nauseam until June 29, 2018 when I FIRE. Best weeks of that time has been when I never looked at the calendar and just put my head into the work. Worst weeks were surprisingly last Fall when the last 5% of my working life seemed to stretch out like a WW1 battlefield - ready to sink me in mire and crush me.  It was a slog and I counted down to Thanksgiving, then counted down to Christmas then to a Spring vacation, then 25 day increments (almost to 50 days now...). Still counting, but THE DAY grows near. 

Best wishes, aperture.
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K-ice

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Re: Mortgage Payoff Club!!
« Reply #1613 on: May 05, 2018, 10:22:17 AM »
Iím not sure if this belongs here or in relatives who just donít get it.

Anyway, I found out a relative has about $9000 remaining on a rental property & over $100,000 on their own personal home.

They have been making extra payments to the rental property & will have it paid off within a year or 14years total.

I know that a paid off home is usually cause for celebration around here, but the extra payments were directed at the wrong property.

Unfortunately, in Canada, you can only deduct mortgage interest on rental properties. They will have about $6000 more in taxable income next year.

They should have dragged out the rental mortgage as long as possible and paid off the personal home first.

Just a warning, for Canadians in the ę mortgage payoff club Ľ with more than one property. Be sure you are focusing your extra payments correctly.

Threshkin

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Re: Mortgage Payoff Club!!
« Reply #1614 on: May 05, 2018, 11:24:41 PM »
Paying off your mortgage before FIRE is very mustachian IMO.  Especially for aggressive early retirees.

If you are looking at a long retirement, potentially 60+ years you need to maximize your investment returns.  A common to do this is heavy equity exposure.  Unfortunately this exposes you to a larger sequence of returns risk.  Having a mortgage in the early years of FIRE increases the impact of sequence of returns risk because you have a large fixed expense, the mortgage payment.  You can cut discretionary expenses but it is harder to cut a mortgage payment.

FIRE smart and pay of your mortgage early!

For reference (and lots of math)  check out this ERN blog post on the subject:  https://earlyretirementnow.com/2017/10/11/the-ultimate-guide-to-safe-withdrawal-rates-part-21-mortgage-in-retirement/

Rowellen

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Re: Mortgage Payoff Club!!
« Reply #1615 on: May 06, 2018, 01:34:53 AM »
Iím not sure if this belongs here or in relatives who just donít get it.

Anyway, I found out a relative has about $9000 remaining on a rental property & over $100,000 on their own personal home.

They have been making extra payments to the rental property & will have it paid off within a year or 14years total.

I know that a paid off home is usually cause for celebration around here, but the extra payments were directed at the wrong property.

Unfortunately, in Canada, you can only deduct mortgage interest on rental properties. They will have about $6000 more in taxable income next year.

They should have dragged out the rental mortgage as long as possible and paid off the personal home first.

Just a warning, for Canadians in the ę mortgage payoff club Ľ with more than one property. Be sure you are focusing your extra payments correctly.

It works the same way in Australia.

QuillScroll

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Re: Mortgage Payoff Club!!
« Reply #1616 on: May 15, 2018, 09:43:45 AM »
For those of you who stared with larger mortgage balances, how did you stay motivated in the beginning?  Our current balance is 493k so even if I pay an extra 2,000 a month I am still 10 years away from paying it off.  Did you set mini goals or just put a set amount towards it every month and forget about it?

I so much identify with it. Our balance is around 395K (we just purchased home about 6 months ago), I have no motivation to make additional payments because the number just seems so large. Let alone a dent, I feel like not even scratching the surface by making any additional payments.

But at the same time, I want to see this mortgage melt away. So I have made up my mind that no matter how I feel, I'm going to make some additional payments in the range of $500- $1000 each month.

Any bonus or unexpected cash returns get divided 50-50 between investments and mortgage.

littlelykke

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Re: Mortgage Payoff Club!!
« Reply #1617 on: May 15, 2018, 11:22:38 AM »
For those of you who stared with larger mortgage balances, how did you stay motivated in the beginning?  [...] Did you set mini goals or just put a set amount towards it every month and forget about it?

I so much identify with it. [...]

But at the same time, I want to see this mortgage melt away. So I have made up my mind that no matter how I feel, I'm going to make some additional payments in the range of $500- $1000 each month.

Any bonus or unexpected cash returns get divided 50-50 between investments and mortgage.

Our mortgage is not as high as yours, but I still feel the same way. The other day I made an extra payment of 300 euros, but that's just so little. Unfortunately, we can't pay down an additional 1000 euros each month. But we do what we can. Any bonuses also get divided 50-50 :)

However I made a spreadsheet, which is highly motivating for me. I wrote down our leftover amount of mortgage on the 31st December of each year for the next 30 years. My goal for this year is to beat this years number by October.
I'd like to beat next years number in June, etc. So I'm just making yearly goals, this way it feels do-able. Also makes me feel like I'm competing against myself, which works really well for me. This year we have a lot of renovating to do, so we can't make huge additional payments. Hopefully next year we'll be able to pay down some more.

BlueHouse

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Re: Mortgage Payoff Club!!
« Reply #1618 on: May 15, 2018, 12:10:05 PM »


However I made a spreadsheet, which is highly motivating for me. I wrote down our leftover amount of mortgage on the 31st December of each year for the next 30 years. My goal for this year is to beat this years number by October.
I'd like to beat next years number in June, etc. So I'm just making yearly goals, this way it feels do-able. Also makes me feel like I'm competing against myself, which works really well for me. This year we have a lot of renovating to do, so we can't make huge additional payments. Hopefully next year we'll be able to pay down some more.

I like this approach.  This can work for so many other things too.  !!
Sometimes nothing can be a real cool hand

frizzywhiskers

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Re: Mortgage Payoff Club!!
« Reply #1619 on: May 15, 2018, 07:53:35 PM »
For those of you who stared with larger mortgage balances, how did you stay motivated in the beginning?  Our current balance is 493k so even if I pay an extra 2,000 a month I am still 10 years away from paying it off.  Did you set mini goals or just put a set amount towards it every month and forget about it?

I so much identify with it. Our balance is around 395K (we just purchased home about 6 months ago), I have no motivation to make additional payments because the number just seems so large. Let alone a dent, I feel like not even scratching the surface by making any additional payments.

But at the same time, I want to see this mortgage melt away. So I have made up my mind that no matter how I feel, I'm going to make some additional payments in the range of $500- $1000 each month.

Any bonus or unexpected cash returns get divided 50-50 between investments and mortgage.

We bought a new house in September 2013 and our starting mortgage balance was $435,000.  We made a plan to pay it off in 5 years, stuck with it and our mortgage balance is now at $57,000 and will be paid off by September 2018.  We used all the options the bank allowed us to, regular weekly payments, increased our weekly amount once a year and added top ups as frequently as we could - including bonuses, tax returns etc.  Stick with it, it can be done!  And even if it takes 10 years, its better than 25 years! Your future self will thank you! :-)

QuillScroll

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Re: Mortgage Payoff Club!!
« Reply #1620 on: May 16, 2018, 08:37:21 AM »
@frizzywhiskers  that's incredible!!! Can you provide more input on how did you manage investment during this period? I'm not sure if I could pay off my mortgage in 5 years even after throwing all my spare money at it. Although, I would never do that as I'm just starting my investing life and am probably doing 70%-30% investment vs additional mortgage payment.

Paying $435000 in five years is stellar achievement in my opinion. Congrats!!!

frizzywhiskers

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Re: Mortgage Payoff Club!!
« Reply #1621 on: May 16, 2018, 08:25:06 PM »
@frizzywhiskers  that's incredible!!! Can you provide more input on how did you manage investment during this period? I'm not sure if I could pay off my mortgage in 5 years even after throwing all my spare money at it. Although, I would never do that as I'm just starting my investing life and am probably doing 70%-30% investment vs additional mortgage payment.

Paying $435000 in five years is stellar achievement in my opinion. Congrats!!!

Thanks @QuillScroll , it's been a long haul but we are excited for the finish line!  We waffled back and forth many times over the years but my husband ended up getting laid off this year so it just feels right to know we can afford life on one salary.  We are in Canada, but investment wise we both maxed out our work pensions during this time to achieve full company match as well as contributed an additional 15% into RRSP's.  We were investing/paying down mortgage with 70% of our income and living off the 30%.  Once the mortgage is fully paid off that full 70% will go into investments for a few years and we should be able to FIRE in 2021.

Your approach sounds like a great start!  Best of luck to you!

Megs193

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Re: Mortgage Payoff Club!!
« Reply #1622 on: May 17, 2018, 08:29:54 AM »
For those of you who stared with larger mortgage balances, how did you stay motivated in the beginning?  [...] Did you set mini goals or just put a set amount towards it every month and forget about it?

I so much identify with it. [...]

But at the same time, I want to see this mortgage melt away. So I have made up my mind that no matter how I feel, I'm going to make some additional payments in the range of $500- $1000 each month.

Any bonus or unexpected cash returns get divided 50-50 between investments and mortgage.

Our mortgage is not as high as yours, but I still feel the same way. The other day I made an extra payment of 300 euros, but that's just so little. Unfortunately, we can't pay down an additional 1000 euros each month. But we do what we can. Any bonuses also get divided 50-50 :)

However I made a spreadsheet, which is highly motivating for me. I wrote down our leftover amount of mortgage on the 31st December of each year for the next 30 years. My goal for this year is to beat this years number by October.
I'd like to beat next years number in June, etc. So I'm just making yearly goals, this way it feels do-able. Also makes me feel like I'm competing against myself, which works really well for me. This year we have a lot of renovating to do, so we can't make huge additional payments. Hopefully next year we'll be able to pay down some more.

I love this idea!  I would find this highly motivating too and I am definitely making a spreadsheet tonight.  I just made an extra $3,000 payment on my mortgage today but since the balance is $491k it still feels like a very small change. If I had a yearly goal to meet I think these payments would be a lot more motivating.

Threshkin

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Re: Mortgage Payoff Club!!
« Reply #1623 on: May 17, 2018, 10:49:21 PM »
The way I looked at it when my mortgage principal was high was to think in terms of how many extra months of principal payments I had just made.  For back of the envelope calculation I reduced the number of months remaining on my mortgage by the extra principal I was paying.

Example (totally made up):

Balanced owed: $300K
Amount of regular payment applied to principal: $300
Extra payment: $3,000

Extra principal pay down: 1%  (Ho hum)
Months of mortgage term reduced: 10 (Whoot!)

I knew this was not totally accurate because the amount of principal paid increases every month but it was enough to get me motivated to make those extra payments.

Trifele

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Re: Mortgage Payoff Club!!
« Reply #1624 on: May 18, 2018, 04:17:51 AM »
The way I looked at it when my mortgage principal was high was to think in terms of how many extra months of principal payments I had just made.  For back of the envelope calculation I reduced the number of months remaining on my mortgage by the extra principal I was paying.

Example (totally made up):

Balanced owed: $300K
Amount of regular payment applied to principal: $300
Extra payment: $3,000

Extra principal pay down: 1%  (Ho hum)
Months of mortgage term reduced: 10 (Whoot!)

I knew this was not totally accurate because the amount of principal paid increases every month but it was enough to get me motivated to make those extra payments.

Love this Threshkin!  I also did that.  Another thing that motivated me was seeing the monthly interest amount drop.  Sometimes it was a really small number -- but it seemed special somehow, because that was real, hard money that I got to keep this month.

talltexan

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Re: Mortgage Payoff Club!!
« Reply #1625 on: May 18, 2018, 08:39:41 AM »
FYI, if you forgot some of the math surrounding calculating these payments, go to http://wolframalpha.com and their mortgage tool (under "Finance") will show you the annual amortization table, so you can quickly see how far ahead you are on your mortgage, time-wise.

Need2Save

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Re: Mortgage Payoff Club!!
« Reply #1626 on: May 18, 2018, 10:16:38 AM »
I have been partial to this excel mortgage calculator that I found over ten years ago and have used for several refinances to track original loan amount, interest rate, and the effect of extra payments I made along the way (or planned to make for modeling purposes).  To keep me motivated (and our last loan started around $443k) was to focus on the total amount of interest saved over the life of the loan and also the number of years to pay off.  We refinanced to a 15 year loan, planned to pay it off in ten, but now are aiming for just under 8 years. Watching the monthly interest paid go down over time has been motivating as someone mentioned above. It started over $1k a month, and now is under $400 a month.  PLUS, since we won't be deducting this interest from federal taxes now - I'm really glad it's more than half of what it once was.

Also, modeling the what if I throw xxx$ at the loan now? (using the extra payments column)  How much will I save in interest overall if I do that is quite fun. Most calculators only allow you to put in limited inputs that remain static over the life of the loan, but I can change the monthly 'extra payments' for each and every month if I so choose to match perhaps growing income, anticipated bonuses, or other fluctuations to see what that looks like.

https://www.vertex42.com/Calculators/mortgage-calculators.html

littlelykke

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Re: Mortgage Payoff Club!!
« Reply #1627 on: May 18, 2018, 01:02:58 PM »
I have been partial to this excel mortgage calculator that I found over ten years ago and have used for several refinances to track original loan amount, interest rate, and the effect of extra payments I made along the way (or planned to make for modeling purposes).  [...]

Also, modeling the what if I throw xxx$ at the loan now? (using the extra payments column)  How much will I save in interest overall if I do that is quite fun. Most calculators only allow you to put in limited inputs that remain static over the life of the loan, but I can change the monthly 'extra payments' for each and every month if I so choose to match perhaps growing income, anticipated bonuses, or other fluctuations to see what that looks like.

https://www.vertex42.com/Calculators/mortgage-calculators.html

Oh yes, how could I forget this! I also do this, such fun. If I can pay an extra 3000 this year, what does it do? Hours of fun are to be had with this tool :P
I used this one btw: https://www.daveramsey.com/mortgage-payoff-calculator But i'm gonna check yours out as well.

cdub

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Re: Mortgage Payoff Club!!
« Reply #1628 on: May 18, 2018, 02:14:49 PM »
The Mortgage Payoff Club has been relaunched and it is now at http://mortgagepayoff.club/.

We also had our first member pay off his house! :)
Join the Mortgage Payoff Club:
http://mortgagepayoff.club/

Irishtache

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Re: Mortgage Payoff Club!!
« Reply #1629 on: May 18, 2018, 04:32:29 PM »
Hi All,
This post ejected from the 'Don't Payoff....' thread!

We paid off our mortgage a few months early last Tuesday. We did that as my wife has 'pre-tired' and her income has halved so it is a debit we didn't need coming out of our account on the 1st of each month. Also, although the interest is very low, the mortgage protection is a lot higher and we are saving that. It was, in fairness, a small enough amount left to pay. Just wanted to tell someone. It's a bit anticlimactic and, this week, our beloved cat died, the fridge freezer packed in same day  and a rad in the rental house has been leaking(unknown to us) for 2 months and those are all extra expenses this week! I miss the cat. All else is just stuff! IT

Blindsquirrel

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Re: Mortgage Payoff Club!!
« Reply #1630 on: May 18, 2018, 05:01:37 PM »
   Sorry for the loss of your cat. Love the little buggers. Remember, a problem is something you can't write a check to solve. If you can solve it with a check, it is not a true problem.
Even a blind squirrel finds a nut once in awhile.

couponvan

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Re: Mortgage Payoff Club!!
« Reply #1631 on: May 18, 2018, 06:25:37 PM »
Hi All,
This post ejected from the 'Don't Payoff....' thread!

We paid off our mortgage a few months early last Tuesday. We did that as my wife has 'pre-tired' and her income has halved so it is a debit we didn't need coming out of our account on the 1st of each month. Also, although the interest is very low, the mortgage protection is a lot higher and we are saving that. It was, in fairness, a small enough amount left to pay. Just wanted to tell someone. It's a bit anticlimactic and, this week, our beloved cat died, the fridge freezer packed in same day  and a rad in the rental house has been leaking(unknown to us) for 2 months and those are all extra expenses this week! I miss the cat. All else is just stuff! IT

Congratulations on the payment- I am truly sorry the cat passed away.
Why the hell are we going shopping? Buy sh*t, return other sh*t, go through sh*t and donate sh*t. Complain about having too much sh*t. Repeat. (Bracken Joy 2/17)




K-ice

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Re: Mortgage Payoff Club!!
« Reply #1632 on: May 18, 2018, 08:51:19 PM »

https://www.vertex42.com/Calculators/mortgage-calculators.html

Iíve had so much fun with that spread sheet too. I actually find the start the most exciting because your payments make such a big dent.

Iím struggling with the final stretch.

For example $10,000 at the start of a big mortgage can save you over 10K in interest.

Itís a few years later when I see that $10K is only saving $6K that itís sometimes hard to keep motivated.

Our max total mortgage debt was over $650K for our primary residence & 2 rentals. Now weíre down to $75K on one rental.

We could be done in under 2 years. But now I want to stretch it out & stop neglecting other investments. My partner is firmly in the mortgage payoff club but Iím struggling. 


Irishtache

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Re: Mortgage Payoff Club!!
« Reply #1633 on: May 19, 2018, 01:39:53 PM »
Hi All,
This post ejected from the 'Don't Payoff....' thread!

We paid off our mortgage a few months early last Tuesday. We did that as my wife has 'pre-tired' and her income has halved so it is a debit we didn't need coming out of our account on the 1st of each month. Also, although the interest is very low, the mortgage protection is a lot higher and we are saving that. It was, in fairness, a small enough amount left to pay. Just wanted to tell someone. It's a bit anticlimactic and, this week, our beloved cat died, the fridge freezer packed in same day  and a rad in the rental house has been leaking(unknown to us) for 2 months and those are all extra expenses this week! I miss the cat. All else is just stuff! IT

Congratulations on the payment- I am truly sorry the cat passed away.
   Sorry for the loss of your cat. Love the little buggers. Remember, a problem is something you can't write a check to solve. If you can solve it with a check, it is not a true problem.

Thank you for your condolences. You're right, the other 'problems' were solved with money!

KBecks

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Re: Mortgage Payoff Club!!
« Reply #1634 on: May 20, 2018, 08:49:27 AM »
Our balance is at $48,300.  I just looked at our liquid assets and we could write a check and pay it off, but it would mean selling some stocks and taking short term gains, which I'm not sure of.  I will discuss it with my spouse and we'll see.  If we go slow, it could take 3 - 5 years, if we go fast, we could pay it off at the end of this year.  I will probably wait for some of the short term cap gains to age into long term cap gains and if we go for it it would be more toward the end of the year.

plainjane

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Re: Mortgage Payoff Club!!
« Reply #1635 on: May 21, 2018, 03:25:36 PM »
I don't think it's fair to describe their motivations in that way on a thread they've been told not to post on.

I think of this like a weight loss forum where a group of people decided to walk for 15 minutes every day, and other folks kept on pointing out that running would burn more calories. Or the ongoing argument about those who go for a snowball debt repayment vs. the mathematically proper 'highest interest rate first'. Mathematically one is better the majority of the time. But maybe doing the other way helps create great habits and pretty good outcomes.

I love that we have a bunch of people here who are aiming for a financial goal that excites them and that they have a lot of control over. Let's focus on that.
Using procrastination to my advantage since 2001.

CM*TO Is a thing!! We have a few bunks left - join us in September.

indentured4now

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Re: Mortgage Payoff Club!!
« Reply #1636 on: May 28, 2018, 06:45:23 AM »
@plainjane,   Love the walking vs running analogy...   The life change in behavior is more likely by walking...  even for those who say they ďloveĒ running.

@KBecks,  We are mulling the same sort of decision at the low-40s level FWIW...   Basically taking the approach that all cash on hand (minus 6 month emergency fund) plus any new income ďchunksĒ go to debt payoff given the age of the bull market and interest rate upward pressure versus equities)...  Perhaps a Dave Ramsey moment will help in the mental calculus... Would you borrow money today to put in the market if your house were paid off?   In 2009, such risk usually made sense for depressed real estate purchase (if a bank would even lend)...  but today, seems not so much.   Best of luck either way!


Megs193

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Re: Mortgage Payoff Club!!
« Reply #1637 on: May 29, 2018, 11:55:48 AM »
I was able to pay an extra $7,000 towards the mortgage this month!  We still owe 486k so iíve set a goal of paying an extra 50k towards the mortgage each year to keep myself motivated.  Even that seems like it will take forever but we have only owned the house for 1 year so if we can pay it off in 10 years I will be happy.

Finntastic

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Re: Mortgage Payoff Club!!
« Reply #1638 on: May 30, 2018, 04:10:05 AM »
Ok im in. Got about 120,000$ to pay and goal is to pay that off in 3 years

shinn497

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Re: Mortgage Payoff Club!!
« Reply #1639 on: June 04, 2018, 10:43:29 AM »
Hey I have a question for you guys. Does "pay for your house in cash" fall under this group? I don't see that anywhere. I'm not saying I'm going ot do this. I mean I want to. But I'm just curious.

Bird In Hand

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Re: Mortgage Payoff Club!!
« Reply #1640 on: June 04, 2018, 03:42:17 PM »
For those of you who stared with larger mortgage balances, how did you stay motivated in the beginning?  Our current balance is 493k so even if I pay an extra 2,000 a month I am still 10 years away from paying it off.  Did you set mini goals or just put a set amount towards it every month and forget about it?

I calculated the extra amount we'd have to pay every month to cut the mortgage in half.  You can do this by doubling the principal payment each month, but that way the extra payments start off tiny and end up huge.  We wanted consistent payments, which would eventually feel smaller over time due to increased salaries.

We set up our auto payments to include this fixed extra amount, and it's been hands-off since.

Well, kind of hands off.  I also spent a bunch of my free time writing increasingly sophisticated mortgage calculators, and I still use them to compare what-if scenarios.

One mental hack early on in the mortgage is to pretend that each extra multiple of the current principal payment knocks off that many months from the end of the mortgage.  This is a fun game to play early on because the principal payment is lowest at the beginning.  It's awesome to be able to say "I just paid $1,500 extra on my $2,350 P&I mortgage and knocked 2 months off the end of it!"
"Overcoming the inertia of procrastination since tomorrow"

plainjane

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Re: Mortgage Payoff Club!!
« Reply #1641 on: June 04, 2018, 04:31:21 PM »
Hey I have a question for you guys. Does "pay for your house in cash" fall under this group? I don't see that anywhere. I'm not saying I'm going ot do this. I mean I want to. But I'm just curious.

It would fall into this group probably, but it is by its nature a one-time thing, so would be many fewer posts compared to the people who are updating milestones or emotions over a period of time.
Using procrastination to my advantage since 2001.

CM*TO Is a thing!! We have a few bunks left - join us in September.

shinn497

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Re: Mortgage Payoff Club!!
« Reply #1642 on: June 04, 2018, 06:58:34 PM »
Hey I have a question for you guys. Does "pay for your house in cash" fall under this group? I don't see that anywhere. I'm not saying I'm going ot do this. I mean I want to. But I'm just curious.

It would fall into this group probably, but it is by its nature a one-time thing, so would be many fewer posts compared to the people who are updating milestones or emotions over a period of time.

Good point! So what is your story. How did you do it?

Megs193

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Re: Mortgage Payoff Club!!
« Reply #1643 on: June 04, 2018, 08:34:00 PM »
For those of you who stared with larger mortgage balances, how did you stay motivated in the beginning?  Our current balance is 493k so even if I pay an extra 2,000 a month I am still 10 years away from paying it off.  Did you set mini goals or just put a set amount towards it every month and forget about it?

I calculated the extra amount we'd have to pay every month to cut the mortgage in half.  You can do this by doubling the principal payment each month, but that way the extra payments start off tiny and end up huge.  We wanted consistent payments, which would eventually feel smaller over time due to increased salaries.

We set up our auto payments to include this fixed extra amount, and it's been hands-off since.

Well, kind of hands off.  I also spent a bunch of my free time writing increasingly sophisticated mortgage calculators, and I still use them to compare what-if scenarios.

One mental hack early on in the mortgage is to pretend that each extra multiple of the current principal payment knocks off that many months from the end of the mortgage.  This is a fun game to play early on because the principal payment is lowest at the beginning.  It's awesome to be able to say "I just paid $1,500 extra on my $2,350 P&I mortgage and knocked 2 months off the end of it!"

I like this idea!  I am working on a spreadsheet that will tell me how many months of payments I have left.  It will be exciting to see how many months it decreases by with each payment.  I just paid an extra 5k towards the mortgage and calculated that it took an extra 3 months off the end of my mortgage!

Lmoot

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Re: Mortgage Payoff Club!!
« Reply #1644 on: June 05, 2018, 03:30:55 AM »
Congratulations everyone! I only have $40k left on my mortgage (just under 9 years in), but I took myself out of the prepay game after prepaying a few chunks several years ago, in order to focus on real estate investing, which requires a lot of capital. After I get my second property (hopefully by end of next year), I'll go back to paying it off. It's very tempting to just pay it off in a year, but I'll be patient just a while longer and in the meantime live vicariously through this thread.

plainjane

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Re: Mortgage Payoff Club!!
« Reply #1645 on: June 05, 2018, 07:51:20 AM »
Good point! So what is your story. How did you do it?

To put everything in context, I live in Canada, where 5 year term mortgages with a 25 year amortization to start was the default - these are also known as balloon mortgages in the US. We put down 25% to avoid mortgage insurance, plus 5k because the lender was concerned we had overpaid. Our first mortgage was 5 year fixed (5.25%) on a 25 year amortization, and our second mortgage was a 5 year variable (tended to be around 2.25%) with maybe a 10 year amortization (perhaps 15?).

TLDR: we bought the house with a mortgage payment that we knew we could carry with our existing lifestyle: it was what we'd been paying in rent + amount we'd been saving for the downpayment. We ended up with better cash flow because of raises, and then had some helpful bonuses in the 10-20k range, most of which got redirected to the house instead of lifestyle inflation. I had internalized the script about paying down the mortgage from my parents who did that in the 80s, and at some point I decided I didn't want to have a mortgage when I was 40.

The long story:
To start out, all we did was to pay our mortgage biweekly because we received pay checks biweekly. So 26 payments a year instead of 24. We were also paying back the 40k we had borrowed from RRSPs quite aggressively. I am pretty sure we paid back ourselves before we started prepaying the mortgage beyond the biweekly payments.

IIRC that mortgage provider allowed for a single lump sum payment every year, so after we paid back the RSP Homebuyer's withdrawal, we would send them my bonus or the tax refund as a physical cheque, and eventually through a phone call. We were also putting in the maximum of my annual RSP room for retirement investing, but not the SO's (because they are at a lower marginal tax bracket, so I'd do a spousal contribution). My documentation is on another computer, but think in the range of 5k-15k a year.

After 5 years of kicking ourselves for having a 5%+ fixed rate mortgage when everyone else was seeing interest rates drop like a stone after 2008, we got a 5 year variable mortgage after the first term was done and dropped down the amortization to 10 or 15 years (which was basically the same base payment thanks to the lower interest rate). This one was with a much more modern institution, and we could make lump sum payments or increase the amount of our payment really easily online. My pay switched to semi-monthly around then, so we changed our payments to semi-monthly too, but at a higher amount, so we didn't lose the advantage of that 'extra month' payment that we had been doing. I think the rule was that we could prepay up to 25% annually and/or increase the amount of the regular payments by 25%.

Because it was so easy to do online, we did a mix of big lump sum payments (tax refunds, bonuses, skimming off the top of emergency funds when it felt like we were carrying too much cash), and smaller 200-500 passes when we had more money in our chequing account than needed to cover that month's bills. By that time we were maxxed out on the tax advantaged investments, and putting money into the mortgage was a delay tactic to figuring out what to do with the excess cash.

Now that we don't have mortgage payments, the lower earner puts that cash into non-registered investments. Looking back, we could have made a number of better decisions, but they were the decisions we made at the time, and we didn't end up in a bad place.
Using procrastination to my advantage since 2001.

CM*TO Is a thing!! We have a few bunks left - join us in September.

indentured4now

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Re: Mortgage Payoff Club!!
« Reply #1646 on: June 09, 2018, 05:25:00 AM »
@plainjane,  I share that ďkicking myselfĒ feeling... Itís our current smarter self realizing how dumb our past self was.   If everyone were smart, you wouldnt be winning now with a paid off house and wealth accumulation.  The economy thrives on consumption but FIRE comes from your focus on accumulation.

indentured4now

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Re: Mortgage Payoff Club!!
« Reply #1647 on: June 09, 2018, 05:35:41 AM »
OK, a small but good dilemma...  The bonus has come in and we can pay off the house with it +20K from the stache...  But we are also putting the house on the market to downsize this month... AT LAST!  Do we pay to simplify closing and to mainly finish the journey (saves a few $100s in interest) or just sit...  We have plenty in the stache to cover earnest money and moving either way...  and will pay cash for the smaller place.

Proís and Conís of paying the note?   Even interested in how this plays in real
estate transactions in other countries?

iluvzbeach

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Re: Mortgage Payoff Club!!
« Reply #1648 on: June 09, 2018, 08:01:10 AM »
I would just hang on to the money. We paid our house off one year ago today (yay us!) and it took about 6-8 weeks for everything to be processed with the lender as far as getting the note back marked paid and the lien released with the county. If your place were to go under contract quickly, you could end up causing more headache and confusion by having the payoff piece in process, than to just let it ride and go through the normal sales process cycle. Just my two cents.

Edit: typo correction
« Last Edit: June 10, 2018, 07:37:59 AM by iluvzbeach »
Planning to be FIREd in 2020!

iluvzbeach

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Re: Mortgage Payoff Club!!
« Reply #1649 on: June 09, 2018, 08:08:11 AM »
Today we celebrate one year since we wired the proceeds to payoff our house. We have no regrets about our decision and love knowing that even a sudden long-term job loss would not put us at risk of losing our house. Thereís something cool about knowing we fully own every little bit of flooring, sheetrock, granite, roofing, etc. in this structure we call home.
Planning to be FIREd in 2020!