Author Topic: Mortgage Payoff Club!!  (Read 473622 times)

eyePod

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Re: Mortgage Payoff Club!!
« Reply #300 on: January 29, 2015, 08:15:03 AM »
We made an extra principal payment of $1,536 in January.  Our balance is now $117,899.54. 

I am going to double check our contributions to retirement and kids' college accounts -- we want to save in multiple areas, but our surplus after those things will go to mortgage pay down.  It is slightly pleasing to see us under $120k.   

I am going to look at selling some stuff to make a few extra dollars to throw at the mortgage.

My aggressive goal is to have it done in 5 years, but we can flex a little, it may take longer  If we had gotten a 15 year at the start, our mortgage would be done by now.  But we refinanced a few times and now have 11 years on regular schedule left. 

I think my reasonable target should be a balance of $105,000 at the end of the year.  Stretch goal would be $100,000 at the end of the year.

We are right along with you (just add 100k to your numbers). We got the house last year and have put 9400 toward principal since June last year. Another ~2k will go in this month since it's a three paycheck month for us.

Definitely feels good. We're currently paying PMI right now, but we'll be out of that soon enough. Would love to be below 80% by the end of the year. Just being below 200k will be a big monument in my mind. Feels like such a dark mark on my net worth. :-/

RNwastash

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Re: Mortgage Payoff Club!!
« Reply #301 on: January 29, 2015, 08:47:51 PM »
Paid extra $400, down to $132,800.  Will keep plugging along.

Bolshevik Artizan

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Re: Mortgage Payoff Club!!
« Reply #302 on: January 30, 2015, 12:56:29 PM »
Paid mine off in 2007 at 37. As I always say to people starting on that journey, just remember it's only one building block of the entire FI package - no debt is great, but real invested capital is also vital and just as hard to come by. for me, invested capital always came after being debt free, and that's how I did it - but when I look back now, I wish I'd invested outside of my 401(k) schemes etc much earlier, and hung on to the capital instead of using it to pay down the mortgage. We're fine now, but I repeat - going from "mortgage free" to FI is just as much of a journey as going from hair on fire to mortgage free. Just saying... BA

Groovin Old Hippie

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Re: Mortgage Payoff Club!!
« Reply #303 on: January 31, 2015, 11:10:27 PM »
Medinaj2160 - Whoo hoo!!!  Congratulations on "graduating" from the club!  Such an incredible job.  You are so inspiring to us.  We are just joining today.

Our starting balance January 1, 2015: $26,881
Payoff goal date:  December 2015

It will be super tight for us to reach our goal but we are going to throw every extra penny at this thing.  My husband is 61 and he wants to retire!  We're looking forward to all of the support this group offers  :)

Here's our one month update.  Tracking all purchases has been key this month.  Hope to get the February payment to $2,500.

Paid in January: $2,441.90
Balance February 1, 2015:  $24,439.10

Alfred J Quack

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Re: Mortgage Payoff Club!!
« Reply #304 on: February 02, 2015, 01:13:28 PM »
Also did 6K on mine, 46.8K to go...

Alrighty, did another double whammy and totalled the payof to 10k and change. Current remaining balance 42.250, monthly mortgage is now less then what most families pay per month on health insurance... I've got the momentum, now to keep hold of it with steady monthly payments!

serious_pete

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Re: Mortgage Payoff Club!!
« Reply #305 on: February 03, 2015, 08:22:45 AM »
I'm in! 122,000 left to go on a 128,000 mortgage. Interest rate set at 4.99% So far made a grand total of 1000 overpayments so got quite a way to go. The plan is to overpay by 500 per month to start with and change mortgage deal in December.

Now down to 116,500 and interest rate is now down to 3.09% as of January. Still working on 500 overpay per month. Slow but steady!

As of today mortgage stands at 114, 975.

gluskap

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Re: Mortgage Payoff Club!!
« Reply #306 on: February 03, 2015, 12:58:52 PM »
How do people feel about a hybrid strategy?  Refinancing to a 15 year loan to get a low interest so saving on interest payments.  Then just making the minimum payment and saving any extra money in a brokerage account.  Then when the brokerage account has grown enough to payoff the mortgage then selling it in tax efficient lots and paying off the mortgage then.  That way if something happens and say someone lost their job, you would still have some safety as you could sell off some stocks to make your monthly mortgage.  But you also have the higher returns from the brokerage account versus just prepaying the mortgage.  If you can time the mortgage pay off with your retirement date, it serves the extra purpose of lowering your monthly expenses when you retire so you can withdraw less from your retirement accounts and thus be in a lower tax bracket.  It also maximizes your mortgage interest deduction when you are working because you are paying the interest then but when you are retired and have no income, it makes no sense to deduct mortgage interest.  This seems to me the best win win strategy.

asauer

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Re: Mortgage Payoff Club!!
« Reply #307 on: February 10, 2015, 11:00:30 AM »
Woohoo!  Was able to drop a $5,000 bomb on the mortgage this month!  Down to $150k!

frugalJD

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Re: Mortgage Payoff Club!!
« Reply #308 on: February 12, 2015, 12:14:20 PM »
Woohoo!  Was able to drop a $5,000 bomb on the mortgage this month!  Down to $150k!

Great job!  We're right behind you at $165k!  I estimate 3.5 years to go for us.  Maybe a few months less.

-JD

The knitter

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Re: Mortgage Payoff Club!!
« Reply #309 on: February 14, 2015, 07:11:43 AM »
We're going to make 2015 the year we pay down enough to get rid of PMI and refinance to a 15 year loan.

Just threw an extra 1,000 payment toward the principal.

Once that payment registers we'll owe $197,027.50.

I'm in this challenge for the next 11 months. After that, we plan to divert the extra into investments, including possibly a second rental property. (The first is our two-family home, where we live and rent out one unit.)



Neustache

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Re: Mortgage Payoff Club!!
« Reply #310 on: February 17, 2015, 05:17:59 PM »
That's great, IowaStache!  I accidentally sold my car and rented my house that way (not intending to, but people wanted what I had!)


FunkyStickman

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Re: Mortgage Payoff Club!!
« Reply #311 on: February 18, 2015, 01:31:04 PM »
I went back in and re-did the math on my mortgage, and if I put all my tax returns AND extra payments, I'll be done around 5 years from now, or sooner. Previously, I had estimated around 7, but was way off.

I told my wife that, and her jaw hit the floor.

Here's to financial freedom!
Currently at $62,600 and dropping rapidly.

Money Badger

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Re: Mortgage Payoff Club!!
« Reply #312 on: February 18, 2015, 05:54:26 PM »
Mrs. Indentured and I have the goal of payoff in 5 years on a $249k mortgage without gutting our current stash. 

Working the plan, enjoying selling and clearing some clutter and putting other investment dividends towards the beast.  The March payment will get it to $245,500.  That's more than $3K farther along than we would have been.  Under $210K by year-end or bust!

aj_yooper

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Re: Mortgage Payoff Club!!
« Reply #313 on: February 19, 2015, 07:56:28 AM »
I went back in and re-did the math on my mortgage, and if I put all my tax returns AND extra payments, I'll be done around 5 years from now, or sooner. Previously, I had estimated around 7, but was way off.

I told my wife that, and her jaw hit the floor.

Here's to financial freedom!
Currently at $62,600 and dropping rapidly.

Good on the pay down!  Your tax return refund means you are losing the mortgage interest rate on that money for about half a year.  I would take a look at withholding amounts and work to get to $0 tax refunds.

hdatontodo

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Re: Mortgage Payoff Club!!
« Reply #314 on: February 19, 2015, 11:37:42 AM »
We got the mortgage down from 166K to 99K in 2014.  I sent extra this Feb; we are down to $84K.

I sold some items (several $K) and I should get my annual bonus on Feb 27, maybe $5K), so in March I should be able to send in another $10K.

Unfortunately the Mrs is having neck surgery and will be out of work for months, and her place doesn't pay disability until after 30 days.

If everything goes perfectly this year, maybe with the extra monthly principal, we'll have it down to around $30K.

There are a couple of wild cards like layoffs and such. Off to a good start nonetheless.

MarciaB

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Re: Mortgage Payoff Club!!
« Reply #315 on: February 19, 2015, 05:46:49 PM »
I'm in the club and will be done this year (October, or maybe a month or two sooner). Woot!

My situation is a little different though because my house sits on 44 acres of property (with an income producing vineyard) and no one will touch the mortgage with a refi. Meaning I'm stuck with the 5.75% rate...and am throwing cash at it madly. There wasn't a question for me about paying it down vs. investing because at that rate it just seemed the most prudent thing to do.

I'll end up paying this big 30-year bastard off in 8-1/2. I feel like Super Woman.

aj_yooper

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Re: Mortgage Payoff Club!!
« Reply #316 on: February 19, 2015, 08:26:04 PM »
I'm in the club and will be done this year (October, or maybe a month or two sooner). Woot!

My situation is a little different though because my house sits on 44 acres of property (with an income producing vineyard) and no one will touch the mortgage with a refi. Meaning I'm stuck with the 5.75% rate...and am throwing cash at it madly. There wasn't a question for me about paying it down vs. investing because at that rate it just seemed the most prudent thing to do.

I'll end up paying this big 30-year bastard off in 8-1/2. I feel like Super Woman.

Would you be eligible for a mortgage through a farm agency?

MarciaB

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Re: Mortgage Payoff Club!!
« Reply #317 on: February 19, 2015, 08:31:20 PM »
I'm in the club and will be done this year (October, or maybe a month or two sooner). Woot!

My situation is a little different though because my house sits on 44 acres of property (with an income producing vineyard) and no one will touch the mortgage with a refi. Meaning I'm stuck with the 5.75% rate...and am throwing cash at it madly. There wasn't a question for me about paying it down vs. investing because at that rate it just seemed the most prudent thing to do.

I'll end up paying this big 30-year bastard off in 8-1/2. I feel like Super Woman.

Would you be eligible for a mortgage through a farm agency?

That's where I've got a mortgage now (NW Farm Credit Services). In this area they're the only ones who deal with acreage and agricultural property. And they wouldn't lower the rate either (I asked maybe once or twice a year...nope). I'm thrilled to just jettison this altogether.

aj_yooper

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Re: Mortgage Payoff Club!!
« Reply #318 on: February 19, 2015, 08:45:07 PM »
Well then, you are making a wise move! and in a very short time to finish it.  Congrats.

Rural

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Re: Mortgage Payoff Club!!
« Reply #319 on: February 20, 2015, 06:19:52 AM »
I'm in the club and will be done this year (October, or maybe a month or two sooner). Woot!

My situation is a little different though because my house sits on 44 acres of property (with an income producing vineyard) and no one will touch the mortgage with a refi. Meaning I'm stuck with the 5.75% rate...and am throwing cash at it madly. There wasn't a question for me about paying it down vs. investing because at that rate it just seemed the most prudent thing to do.

I'll end up paying this big 30-year bastard off in 8-1/2. I feel like Super Woman.

Would you be eligible for a mortgage through a farm agency?

That's where I've got a mortgage now (NW Farm Credit Services). In this area they're the only ones who deal with acreage and agricultural property. And they wouldn't lower the rate either (I asked maybe once or twice a year...nope). I'm thrilled to just jettison this altogether.


We did something very similar; you got a good rate on a farm loan at 5.75%.


Ours was was 7.5%, so we took out a 15 year loan and paid it off in four. :-)


Good for you!

FunkyStickman

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Re: Mortgage Payoff Club!!
« Reply #320 on: February 27, 2015, 08:42:46 AM »
Just dropped my tax return on principal, now we're down under $60K.

Groovin Old Hippie

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Re: Mortgage Payoff Club!!
« Reply #321 on: March 02, 2015, 10:58:05 AM »
Medinaj2160 - Whoo hoo!!!  Congratulations on "graduating" from the club!  Such an incredible job.  You are so inspiring to us.  We are just joining today.

Our starting balance January 1, 2015: $26,881
Payoff goal date:  December 2015

It will be super tight for us to reach our goal but we are going to throw every extra penny at this thing.  My husband is 61 and he wants to retire!  We're looking forward to all of the support this group offers  :)

Here's our one month update.  Tracking all purchases has been key this month.  Hope to get the February payment to $2,500.

Paid in January: $2,441.90
Balance February 1, 2015:  $24,439.10

Well, we didn't get our February payment to $2500.  DH car needed a repair and our dishwasher broke.  But we still made the minimum amount to meet our payoff goal on December 31, 2015

Paid in February: $2200
Balance March 1, 2015:  $22,292.02

asauer

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Re: Mortgage Payoff Club!!
« Reply #322 on: March 11, 2015, 06:37:31 AM »
Another $1,200 extra on the mortgage in Feb.  Less than I wanted, but still...it's something. 

sansimeon

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Re: Mortgage Payoff Club!!
« Reply #323 on: March 14, 2015, 08:37:00 PM »
Been following along for some time now.  Really enjoyed all the inspiration. Time to post now...

Feb 2013 Original loan amount = 226k
Mar 2015 Current balance = 167k
Expected payoff = Sep 2019

I remember telling someone close to me about the roughly 6 year plan right after I bought the house.  They did that condescending partial laugh - unspoken meaning:  "That's impossible and naive, but good for you for trying."

dabears847

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Re: Mortgage Payoff Club!!
« Reply #324 on: April 02, 2015, 07:50:48 PM »
Feel free to punch holes in this worksheet attached. I've been paying down the mortgage for the last five years and our balance is down to $75,000. The worksheet compares investing vs paying down our house and rentals from our perspective three years ago.

Please note I created this today with about two hours of work on the spreadsheet so it is not perfect. 


asauer

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Re: Mortgage Payoff Club!!
« Reply #325 on: April 03, 2015, 09:03:46 AM »
Yay!  Another $5k on the mortgage this month. 
Original loan amount November 2011= 249,900
April 1 balance= 143,458. 
Best part is that we're on track for a 2016 payoff!

frizzywhiskers

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Re: Mortgage Payoff Club!!
« Reply #326 on: April 03, 2015, 11:19:17 AM »
I'm in on this mission, super excited and focused on getting this done as soon as possible.  Both my husband and I are feeling done with the 9 to 5 world.  Been at it for over 20 years and are ready for a new focus.  Being mortgage free will give us the freedom to choose what we want to do with our time.  Going to hang on in the corporate world until this baby is gone!

Purchased a new home in September 2013 for $655,000 (no judging - it's expensive where I live!)

- Starting mortgage = $435,000, 5 year term @ 3.26% (starting Sept. 30, 2013)
- Making weekly payments of $800
- Goal:  Make additional payments averaging $2700 a month = $32,400/yr.
- Realistic Mortgage Free Date:  March 2020
- Long Shot Mortgage Free Date:  September 2018 - the end of our current 5 year term.  Depending on bonuses received over the next few years and staying focused on the budget we actually have a shot at making this happen.

- Current Mortgage:  $407,500

And go.........!

Update on this mortgage payoff madness!

- 3 years 10 months left on term @ 3.26%
- Increased weekly payments to $900
- Revised monthly payment increase goal to $2333 a month = $28,000/yr (reduced due to increase monthly payment)
- Still shooting for Long Shot Mortgage Free Date:  September 2018 - the end of our current 5 year term.  Depending on bonuses received over the next few years and staying focused on the budget we actually have a shot at making this happen.

- Current Mortgage:  $394,537.49

End of the year update:

Mortgage amount as of December 25, 2014:  $380,819.42  Making some great progress!

Goal for 2015 - to break the $300's and get into the 200's!

First quarter update!  Mortgage amount as of April 2, 2015 - $359,144.  On track to see the $200's by the end of the year. :o)

frizzywhiskers

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Re: Mortgage Payoff Club!!
« Reply #327 on: April 03, 2015, 11:20:03 AM »
Yay!  Another $5k on the mortgage this month. 
Original loan amount November 2011= 249,900
April 1 balance= 143,458. 
Best part is that we're on track for a 2016 payoff!

Awesome!  You are making some great progress!

hdatontodo

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Re: Mortgage Payoff Club!!
« Reply #328 on: April 03, 2015, 02:13:18 PM »
Still chipping away at ours.

Came into the year at $99K and got it down to $70K. I got the Mrs to pitch in some money and we just mailed off a check for $21K.

We'll keep paying extra each month as planned, but I won't have any more windfalls except the extra check in July and end of Dec.

I'm hoping we'll have the mortgage gone by the end of 2015, but it might end up being Jan or Feb since the calculators didn't take payment used to replenish escrow into account. After today's check clears, I'll run their extra monthly payment calculator and see how it works out.

Heckler

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Re: Mortgage Payoff Club!!
« Reply #329 on: April 04, 2015, 08:39:08 AM »
1996: bought a brand new house  for $145k in Ontario
2000: sold it for $145k, pulled out $20k equity
2000-2003: rented in Vancouver BC because we knew we shouldn't afford a ridiculously priced place.
2003: bought a 35 year old townhouse in Vancouver BC for $279k and what I thought was a 25 year mortgage.  Scary times! Paid twice as much as our brand new house.
2015: similar units in the same complex selling for $540+.  But we will buy and hold, because we won't afford a house we don't need.  Good times!

Wife increased payments anytime we could afford it, and we pay biweekly.

Low and behold, we are less than a year from being 100% debt free!   Look how our savings rate will increase in a year from now!  We almost cut that baby in half. 
« Last Edit: April 04, 2015, 08:57:56 AM by Heckler »

Heckler

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Re: Mortgage Payoff Club!!
« Reply #330 on: April 04, 2015, 08:48:17 AM »
This tells me we saved $54,000 in interest by paying off in 13 years instead of 25.  Badass!

Stachesquatch

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Re: Mortgage Payoff Club!!
« Reply #331 on: April 04, 2015, 06:28:51 PM »
Chapter closed for us!

I've been a long term reader of these forums.  We just paid off our mortgage, it didn't seem real until the letter from the mortgagee came in stating that the loan was closed paid in full.  A couple years ago I envisioned framing this letter when it arrived but now that the time has come it just went in a file with other documents.  It's still listed as a loan in good standing on Credit Karma, but I'm fine with this as long as it shows good standing.  We literally don't have any other debt to show on the credit report other than paid in full every month revolving balances on our credit cards.

Keep up the good work everyone, for me the self set 'milestones' in the mortgage payoff process made the progress seem tangible.  The investment accounts are getting a huge bump every month now, the next goal is FIRE.

dabears847

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Re: Mortgage Payoff Club!!
« Reply #332 on: April 04, 2015, 07:06:38 PM »
Quote
In 188 months your mortgage would be 0 if you made extra payments of $1,500  per month or it would be $367,000 if you paid $0 extra. 

And after 188 months you would be "saving" about $2000-$3000/month by not having a mortgage payment..plus the extra $1500/month extra you were paying.. Shouldn't that count for something???

No, because the math already takes this into account. If your portfolio was averaging greater than 3.5%, then your portfolio would be so big that you could liquidate a part of it, pay off the mortgage and have a sizable chunk left over. In an early chart I show the net benefit at various investment returns. At 8% you would be ahead by $151,000. If you can earn more than 3.5% then you are better off keeping the mortgage. If you can't earn 3.5%, then your safe withdrawal rate would be 1% or less based on age as you most likely will not be exceeding inflation.

I understand the psychological effect of paying down the mortgage, but mathematically it is a worse answer if you can hit 4% or more in your portfolio.

The government is giving away free money to jump start the economy. This is a once in the lifetime event. Those who pay it down faster are giving back the free money. If the choices are pay down the mortgage or blow your money, then obviously pay down the mortgage. If you are disciplined then invest in Vanguard and statistically you will be ahead.
The Cash Flow is everything as long as the extra cash once the mortgage or rental is paid off is used accordingly. ie. apply the same rate of return on all funds for the 30 years in the 7-11% range.

I'm worried for my own calculations that I'm missing something here but if I pay off my house 10 years early and then apply those extra payments to the Market with normal P&I and extra previous payments, the compounding comes very close to equal to investing the funds.

dabears847

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Re: Mortgage Payoff Club!!
« Reply #333 on: April 04, 2015, 07:37:09 PM »
Quote
In 188 months your mortgage would be 0 if you made extra payments of $1,500  per month or it would be $367,000 if you paid $0 extra. 

And after 188 months you would be "saving" about $2000-$3000/month by not having a mortgage payment..plus the extra $1500/month extra you were paying.. Shouldn't that count for something???
I agree with this... Take the 189 to 360 payments, extra cash flow and invest the cash to see the net comparable difference.

REAL WORLD EXPAT

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Re: Mortgage Payoff Club!!
« Reply #334 on: April 05, 2015, 07:21:00 AM »
Finding this thread a little late but I'm in, I only have 2 more payments left and it will be paid off in just under 11 years since we bought it. I hear all the arguments against paying it off and investing but I was able to invest too and considered the additional payments as safe returns (eventually), had my E-fund, maxed retirements accounts each year so paying it off made sense to me.

Plus the feeling of owning my home will be great! Still the nearly $10k in taxes are a kicker but once we get to FIRE we'll move.
« Last Edit: April 05, 2015, 07:33:49 AM by RW-Expat »

dabears847

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Re: Mortgage Payoff Club!!
« Reply #335 on: April 05, 2015, 09:28:35 AM »
Quote
Quote from: MrMurphy on April 15, 2013, 02:13:45 pm
Quote
In 188 months your mortgage would be 0 if you made extra payments of $1,500  per month or it would be $367,000 if you paid $0 extra.

And after 188 months you would be "saving" about $2000-$3000/month by not having a mortgage payment..plus the extra $1500/month extra you were paying.. Shouldn't that count for something???

No, because the math already takes this into account. If your portfolio was averaging greater than 3.5%, then your portfolio would be so big that you could liquidate a part of it, pay off the mortgage and have a sizable chunk left over. In an early chart I show the net benefit at various investment returns. At 8% you would be ahead by $151,000. If you can earn more than 3.5% then you are better off keeping the mortgage. If you can't earn 3.5%, then your safe withdrawal rate would be 1% or less based on age as you most likely will not be exceeding inflation.

I understand the psychological effect of paying down the mortgage, but mathematically it is a worse answer if you can hit 4% or more in your portfolio.

The government is giving away free money to jump start the economy. This is a once in the lifetime event. Those who pay it down faster are giving back the free money. If the choices are pay down the mortgage or blow your money, then obviously pay down the mortgage. If you are disciplined then invest in Vanguard and statistically you will be ahead.

Oh, Ok, i get it, because 188months is 15.5 yrs.. So, if you then invested the $3,500 for 14.5yrs after paying it off (total 30yrs) you'd still be ahead of investing $1500 for 30yr.. because that is the argument/misconception is that after it's paid off you'll have $xx extra to invest/catch up.

Is there a time frame, say if you could payit off in 2 yrs or 5yrs vs 15.5.. Would that make a diff?? Or does the interest rate make a diff?

I'm not trying to be an ass, i'm just trying to learn. I don't have a mortgage but big student loans.

Or you can see my situation here:
http://www.mrmoneymustache.com/forum/ask-a-mustachian/should-we-change-sl-repayment-plans/

I'd love any advice!!
Take a look at this updated worksheet. I worked  on Tomsang's sheet and found two primary concerns. I was seriously considering cutting back on mortgage pay down now that I'm under $100,000 balance but now I'm not so certain anymore. If I'm wrong, I'll probably shift more to Vanguard but I'm not seeing the risk reward.

1. Future Cash Flow is not calculated accurately for the accelerated Payoff club, not including the normal payment and extra payment once paid off.
2. The Investment rate is not applied to extra cash once the mortgage is paid off.

I added columns to the math and input sheet to show the differences. Notice the big swing in the compounding at the end of the cashflow. We went from lossing money paying off the house early of by 1.9Million and now we are making $550,000 by compounding the future cash flow.

D - C   Compounding Future Cash Flow         
   with Mortgage Paid Off         
Benefit (Loss)   7% Future Cash Flow 7038.56, year 6         
Investing vs.   Without Tax Gain Holdings         
Paying Down             
Mortgage   Neg Loss with Payoff, Positive Gain Compounding Future Cash flow         
 $669.26     $(904.81)   12   Tax Difference   
 $20,829.02     $(27,784.76)   60   Tax Difference   
 $245,687.97     $(97,661.48)   120   Tax and Compounding   
 $550,993.38     $(160,632.72)   180   Tax and Compounding   
 $925,475.73     $52,826.56    240   Tax and Compounding   
 $1,391,028.37     $203,111.20    300   Tax and Compounding   
 $1,977,557.12     $505,474.90    360   Tax and Compounding   

FIRE me

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Re: Mortgage Payoff Club!!
« Reply #336 on: April 06, 2015, 02:16:39 AM »
Finding this thread a little late but I'm in, I only have 2 more payments left and it will be paid off in just under 11 years since we bought it. I hear all the arguments against paying it off and investing but I was able to invest too and considered the additional payments as safe returns (eventually), had my E-fund, maxed retirements accounts each year so paying it off made sense to me.

Plus the feeling of owning my home will be great! Still the nearly $10k in taxes are a kicker but once we get to FIRE we'll move.

Paid mine off in 7 years. Now my savings rate is 70%.

Those are some awful property taxes, mine is less than 1K annual.

tomsang

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Re: Mortgage Payoff Club!!
« Reply #337 on: April 06, 2015, 09:36:08 AM »
Quote
Quote from: MrMurphy on April 15, 2013, 02:13:45 pm
Quote
In 188 months your mortgage would be 0 if you made extra payments of $1,500  per month or it would be $367,000 if you paid $0 extra.

And after 188 months you would be "saving" about $2000-$3000/month by not having a mortgage payment..plus the extra $1500/month extra you were paying.. Shouldn't that count for something???

No, because the math already takes this into account. If your portfolio was averaging greater than 3.5%, then your portfolio would be so big that you could liquidate a part of it, pay off the mortgage and have a sizable chunk left over. In an early chart I show the net benefit at various investment returns. At 8% you would be ahead by $151,000. If you can earn more than 3.5% then you are better off keeping the mortgage. If you can't earn 3.5%, then your safe withdrawal rate would be 1% or less based on age as you most likely will not be exceeding inflation.

I understand the psychological effect of paying down the mortgage, but mathematically it is a worse answer if you can hit 4% or more in your portfolio.

The government is giving away free money to jump start the economy. This is a once in the lifetime event. Those who pay it down faster are giving back the free money. If the choices are pay down the mortgage or blow your money, then obviously pay down the mortgage. If you are disciplined then invest in Vanguard and statistically you will be ahead.

Oh, Ok, i get it, because 188months is 15.5 yrs.. So, if you then invested the $3,500 for 14.5yrs after paying it off (total 30yrs) you'd still be ahead of investing $1500 for 30yr.. because that is the argument/misconception is that after it's paid off you'll have $xx extra to invest/catch up.

Is there a time frame, say if you could payit off in 2 yrs or 5yrs vs 15.5.. Would that make a diff?? Or does the interest rate make a diff?

I'm not trying to be an ass, i'm just trying to learn. I don't have a mortgage but big student loans.

Or you can see my situation here:
http://www.mrmoneymustache.com/forum/ask-a-mustachian/should-we-change-sl-repayment-plans/

I'd love any advice!!
Take a look at this updated worksheet. I worked  on Tomsang's sheet and found two primary concerns. I was seriously considering cutting back on mortgage pay down now that I'm under $100,000 balance but now I'm not so certain anymore. If I'm wrong, I'll probably shift more to Vanguard but I'm not seeing the risk reward.

1. Future Cash Flow is not calculated accurately for the accelerated Payoff club, not including the normal payment and extra payment once paid off.
2. The Investment rate is not applied to extra cash once the mortgage is paid off.

I added columns to the math and input sheet to show the differences. Notice the big swing in the compounding at the end of the cashflow. We went from lossing money paying off the house early of by 1.9Million and now we are making $550,000 by compounding the future cash flow.

D - C   Compounding Future Cash Flow         
   with Mortgage Paid Off         
Benefit (Loss)   7% Future Cash Flow 7038.56, year 6         
Investing vs.   Without Tax Gain Holdings         
Paying Down             
Mortgage   Neg Loss with Payoff, Positive Gain Compounding Future Cash flow         
 $669.26     $(904.81)   12   Tax Difference   
 $20,829.02     $(27,784.76)   60   Tax Difference   
 $245,687.97     $(97,661.48)   120   Tax and Compounding   
 $550,993.38     $(160,632.72)   180   Tax and Compounding   
 $925,475.73     $52,826.56    240   Tax and Compounding   
 $1,391,028.37     $203,111.20    300   Tax and Compounding   
 $1,977,557.12     $505,474.90    360   Tax and Compounding

Here is the updated workbook.  I placed it here 

Since I believe you posted a modified workbook that doubles up the mortgage returns, I wanted to post the correct one here as well.  Check it out and let me know if anything needs to be updated.

Neustache

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Re: Mortgage Payoff Club!!
« Reply #338 on: April 06, 2015, 10:16:52 AM »
This is all super duper interesting....and I want to discuss....shall I start a new thread for it?  That way we can high five over here for mortgage payoff progress....and discuss the particulars elsewhere?  'Cause I just ran some rough numbers, and it looks like it's close to a wash for me, personally, which I find very interesting.  But I wonder, too, if it's very specific to numbers in a case by case basis?  Basically, our FI is not extended by much because I still need extra income to pay for my mortgage if I don't pay it off first.  I'm talking...work a few months extra to make up the difference. 

tomsang

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Re: Mortgage Payoff Club!!
« Reply #339 on: April 06, 2015, 10:43:59 AM »
This is all super duper interesting....and I want to discuss....shall I start a new thread for it?  That way we can high five over here for mortgage payoff progress....and discuss the particulars elsewhere?  'Cause I just ran some rough numbers, and it looks like it's close to a wash for me, personally, which I find very interesting.  But I wonder, too, if it's very specific to numbers in a case by case basis?  Basically, our FI is not extended by much because I still need extra income to pay for my mortgage if I don't pay it off first.  I'm talking...work a few months extra to make up the difference.

I would be interested in hearing about your situation and agree about clogging up the High Five page.  I just posted the calculator as I feel like the calculator that was by posted by dabears847 of my calc was not calculating correctly. 

We are discussing lots of mortgage related topics over on this thread:
http://forum.mrmoneymustache.com/investor-alley/paying-off-mortgage-early-how-bad-is-it-for-your-fi-date/

dabears847

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Re: Mortgage Payoff Club!!
« Reply #340 on: April 06, 2015, 04:12:03 PM »
I'll check out the other thread and maybe we need a new thread to reflect all the new information gathered. Also, I've checked the numbers on all three sheets posted and the greatest concern is missing the key elements I posted recently about future cash flow and applying the investment rate to future earnings.   

Balance on the House $75,900 and two rentals next.

tomsang

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Re: Mortgage Payoff Club!!
« Reply #341 on: April 06, 2015, 04:52:10 PM »
I'll check out the other thread and maybe we need a new thread to reflect all the new information gathered. Also, I've checked the numbers on all three sheets posted and the greatest concern is missing the key elements I posted recently about future cash flow and applying the investment rate to future earnings.   

Balance on the House $75,900 and two rentals next.

All the cash flows and investment rates are working properly in the updated worksheet.  I think you are not following how the calculator works.  It calculates a mortgage to term, it calculates it with a loan pay down(switching to investing when the loan is paid off), and it calculates a pure investment account.  It then figures out the benefit of investing vs. paying off the mortgage by month.  The summary page is just capturing different years. 

You are better off keeping your mortgage if your investment returns exceed your mortgage rate.  IE if you are getting 7% by investing or saving 4% by paying off your mortgage, you will be better off from month one through the 30 years by keeping the mortgage.  Let's take further discussions to the other thread.  I just wanted to clear that up that the calculator is taking into account the current and future cash flows or balances.

asauer

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Re: Mortgage Payoff Club!!
« Reply #342 on: April 07, 2015, 07:37:39 AM »
Awesome!  Think of all that $ you can save now.  Can't wait to be in your shoes soon.
Chapter closed for us!

I've been a long term reader of these forums.  We just paid off our mortgage, it didn't seem real until the letter from the mortgagee came in stating that the loan was closed paid in full.  A couple years ago I envisioned framing this letter when it arrived but now that the time has come it just went in a file with other documents.  It's still listed as a loan in good standing on Credit Karma, but I'm fine with this as long as it shows good standing.  We literally don't have any other debt to show on the credit report other than paid in full every month revolving balances on our credit cards.

Keep up the good work everyone, for me the self set 'milestones' in the mortgage payoff process made the progress seem tangible.  The investment accounts are getting a huge bump every month now, the next goal is FIRE.

Money Badger

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Re: Mortgage Payoff Club!!
« Reply #343 on: April 11, 2015, 12:50:11 PM »
Mrs. Indentured and I have the goal of payoff in 5 years on a $249k mortgage without gutting our current stash. 

Under $210K by year-end or bust!
Ugh, took a hit on $1K net tax bill that slowed progress.   The tax benefit of our mortgage coincidentally is just $1K per year for the privilege of throwing away another $6k net in interest.   New balance as of April 1 is $244880...   Hoping a bonus will knock $5k off that to get to the $230-ish range.   Also sold another $500 of junk towards the cause recently and have another $1k in clutter for sale to beef up the emergency/maintenance fund as well.   

hdatontodo

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Re: Mortgage Payoff Club!!
« Reply #344 on: April 11, 2015, 07:01:11 PM »
Update on trying to pay off the $99K mortgage balance this year.

I used bonus money, motorcycle sale proceeds, OT, $8K from the Mrs, money from selling a cabinet full of expendables from certain outdoor sport, and monthly extra principal payments, to reduce the balance to about $40K. Not bad for a little more than four months.

We will send about $2K extra each month ($18K). I have two 3-check months ($6K). I have about $500+ per month extra ($5K). I will have some OT this year.

I am a bit impatient thinking about the 150-some workdays left to get it done.

I will be 55 this year and might get laid off next year when a contract is over. My wife's salary can cover most of our expenses if our 15-year mortgage is gone.

Side note. She seldom spends money on clothes, jewelry, hair, etc but just bought a $3K mountain bike. Ouch.


Neustache

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Re: Mortgage Payoff Club!!
« Reply #345 on: April 12, 2015, 06:36:54 AM »
@hdatontodo - SO CLOSE!!  Rooting for ya! (and for everyone else!)

Emerald

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Re: Mortgage Payoff Club!!
« Reply #346 on: April 15, 2015, 12:18:45 PM »
Compared to y'all, I'm moving a little slower.  I just crossed the 50% mark, so now I officially own more of my house than the bank does.  I'm on track to pay it off completely by the end of 2017.

sequim

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Re: Mortgage Payoff Club!!
« Reply #347 on: April 17, 2015, 02:51:28 PM »
Our home listed for sale today and we are hoping in this market we can accept an offer and closed before the end of May.  Once our mortgage gets paid off from the proceeds, we will be headed to Salt Lake where we just bought a home for cash.  And then we'll be officially FIREd (or free to do what we want) and mortgage-free.  Can't believe I first posted only once almost exactly one year ago with hopes of becoming a mustachian but the "plan" wasn't in place quite yet.  And here we are a year later with that plan having been mostly executed.  Feels like sliding into home base...

Such a good feeling yet it seemed so overwhelming to contemplate in the beginning.  Will love having more time to read this forum and connect with like-minded people.

Frugalite

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Re: Mortgage Payoff Club!!
« Reply #348 on: April 18, 2015, 02:02:56 PM »
I have been a long time lurker, but am not quite cool enough to join the group yet, LOL. In January hubby and I paid off the last of our student loans, and now are working diligently at the last bit of a car loan we have. Projecting having it paid off by July and then we are going to begin chipping away at our modest mortgage of about $115,000. :) Looking forward to joining you all soon- in the meanwhile, good luck and keep soldiering on!

KBecks2

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Re: Mortgage Payoff Club!!
« Reply #349 on: April 20, 2015, 06:15:21 AM »
I have started sucking at this a little bit.  But I have been working on putting more into our kids' college savings.  Where is the balance? I'm not that sure.  But I paid an extra $300 this month, an extra $513 in March, and an extra $1,500 in January.

Our mortgage balance is currently at $115,000. 

I might make small swipes at this for a while. I am also debating investing vs. paying down mortgage, and I may try to split our contributions between the two.  I think no mortgage will be a huge emotional load off my husband though, moreso than an investment total.  However, I expect our investments can / will gain 7+% annually at a minimum.