Author Topic: Feels like my mortgage will never get paid off despite it will in 8 years  (Read 1837 times)

kevj1085

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I know it sounds silly since I am progressing towards it, but does anyone else ever feel like they're throwing everything they've got at it and it's STILL so far away? Personally I don't know of anyone in person that we know of that could come close to what we have paid in the last 3 years and yet it seems we have so much left. Some numbers...

Mortgage was 275k in November 2014
55k down payment

By end of 2015 it was down to 199k

By October 2016 we refinanced from a 30 to 15 year mortgage at 2.875% at 179k

So far in 2017 we have added an extra 26k to the principal and are down to 144k.

I most likely won't add anymore extra until 2018 because I want to build our savings back up a bit. Looking at it, 144 STILL seems like so much on top of the fact that it seems like we have added so much over these 3 years. I feel we have put serious money down but still have 144 which seems still daunting.

Anyone else feel this way? Its crazy to me that with a 55k down payment, 10-15k extra, then 26k extra on top of 3 years of monthly payments we are still not even half way paid off with it. 😕

aperture

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I hate when math bites you in the ass like that.   Seriously though, my numbers are surprisingly similar to yours and I get it - totally feels like a dark hole we throw all our money down. 

Suggest you put on some good music, maybe BBQ up some yummy meat (I made burnt ends) and enjoy your pad with some friends.  Best wishes, ap.

RWD

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You have a mortgage at 2.875% and you're considering throwing extra at it? Inflation is sometimes higher than that! Consider joining the club:
https://forum.mrmoneymustache.com/throw-down-the-gauntlet/dont-payoff-your-mortgage-club/

kevj1085

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Yeah for sure. I'm very thankful to have the means TO pay it off, it's just 8 years being aggressive is a long time to stay motivated. If it was a 3 year goal I could see staying on target for it that long, but as it stands every now and then I may let other purchases get in the way of what could be going towards the house because I think "well if it's 5 more years away, what's 5 years and 3 months? If it was the difference between 1 year and 1.5 years I might buckle down more". Thankfully I'm not typically the kind of person who buys anything that isn't necessary or something I wouldn't use a ton.

marty998

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Always look at net assets.

Ever heard of the concept of Jaws? It's a measure of success used by management of companies to explain their results. What you want is positive Jaws - the % growth in your revenue should be greater than the % growth in your expenses.

Even if the % growth in your income is the same as the % growth in your expenses, you should be growing in absolute dollar terms.

In order to do this one could argue that you need your asset base to grow faster than your liability base. In some respects it doesn't matter if your debt actually grows, provided your asset base grows faster, AND the ability of your assets to generate an income (rate of return) is also higher than the cost of your debt.

For what its worth, I have over a million in mortgage investment debt, which is being paid off very very slowly. So long as the asset base grows, I know I'm coming out ahead.

kevj1085

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You have a mortgage at 2.875% and you're considering throwing extra at it? Inflation is sometimes higher than that! Consider joining the club:
https://forum.mrmoneymustache.com/throw-down-the-gauntlet/dont-payoff-your-mortgage-club/

I get it and have looked into this before considering to pay it off. I'm just not one to take risks. I may once the house is paid off invest in CD's so that once we have say 600k-1 mil it'd earn us 15-20k a year on top of a rental bringing in 12k a year. That's sufficient enough of a risk for me.

NoNonsenseLandlord

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I have been paying $6K a month in extra principle for over two years.  I know the feeling.  It's simple math, but $6K, plus the regular payment, is a lot of cash.

waltworks

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FWIW, paying off your house is not less "risky" than not paying it off (at least at your 2.75% interest rate), by most reasonable standards. You want *all* (or nearly all) of your NW sunk into a fixed illiquid asset stuck in one spot? Fine by me. But that's not what avoiding "risk" is about.

-W

kevj1085

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FWIW, paying off your house is not less "risky" than not paying it off (at least at your 2.75% interest rate), by most reasonable standards. You want *all* (or nearly all) of your NW sunk into a fixed illiquid asset stuck in one spot? Fine by me. But that's not what avoiding "risk" is about.

-W

Do I want it to be? No, but it will be eventually right? So why not avoid thousands in interest? As long as I don't cut into emergency fund or required savings, it seems it's getting all the closer to avoiding risk.

waltworks

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No, it will never be less "risky" to have a ton of money sunk in a fixed asset you can't easily sell, especially when the interest rate is ~1/3 of the historical return of the stock market, and well below the historical average rate of *inflation*.

-W

kevj1085

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No, it will never be less "risky" to have a ton of money sunk in a fixed asset you can't easily sell, especially when the interest rate is ~1/3 of the historical return of the stock market, and well below the historical average rate of *inflation*.

-W

I get it. I've seen all the math and proof, I guess when it comes down to it I just want to ensure my kids always have a roof over their heads. That and I set this as a goal and don't feel like flip flopping constantly between goals.

SwordGuy

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No, it will never be less "risky" to have a ton of money sunk in a fixed asset you can't easily sell, especially when the interest rate is ~1/3 of the historical return of the stock market, and well below the historical average rate of *inflation*.

-W

I get it. I've seen all the math and proof, I guess when it comes down to it I just want to ensure my kids always have a roof over their heads. That and I set this as a goal and don't feel like flip flopping constantly between goals.

That's why I have 3 rental properties that are fully paid for, and one with just a $34,000 HELOC on it.
I'm not worried about not having a place to live if I can't pay the mortgage on my home.  Plus, my renters are paying my mortgage (and my utilities) so I won't have to. :)

Capt j-rod

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I do the same... I have a goal of being debt free when we fire. I have rentals that are paid off, rentals with liens, my home mortgage. I invest in vanguard, rentals, and I reduce debt. I feel your pain on the home mortgage. I have fixed 3.5 for 30. It is not a heavy priority to pay it off, but I still send extra to insure that it hits my fire date.