Author Topic: Mortgage Payoff Club!!  (Read 407530 times)

cheddarpie

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Re: Mortgage Payoff Club!!
« Reply #1300 on: August 15, 2017, 02:03:05 PM »
I did it!! Paid off about a month ago. At first a little anti-climactic, but now feels Pretty Darn Good as I just got the official documentation. I came in just under 5 years. My focus now will be building up more of a stash -- and I'm pretty close to FI at this point with rental and side gig income, woohoo!! Still likely many years from retirement because I love my job, but it feels SO GOOD to know the job is not the absolute necessity it once once.

This forum is the only place I've told -- so nice to have a place to celebrate! Thanks for all the support and encouragement over the years. I don't give a flying rat about the maths, freedom is what it's all about!


frizzywhiskers

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Re: Mortgage Payoff Club!!
« Reply #1301 on: August 15, 2017, 09:51:57 PM »
I did it!! Paid off about a month ago. At first a little anti-climactic, but now feels Pretty Darn Good as I just got the official documentation. I came in just under 5 years. My focus now will be building up more of a stash -- and I'm pretty close to FI at this point with rental and side gig income, woohoo!! Still likely many years from retirement because I love my job, but it feels SO GOOD to know the job is not the absolute necessity it once once.

This forum is the only place I've told -- so nice to have a place to celebrate! Thanks for all the support and encouragement over the years. I don't give a flying rat about the maths, freedom is what it's all about!

Congratulations!! Super exciting news!  I am about one year behind you in this journey!

iluvzbeach

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Re: Mortgage Payoff Club!!
« Reply #1302 on: August 15, 2017, 09:55:58 PM »
Congrats, cheddarpie!! Getting that paperwork in the mail sure is an awesome feeling. Relish the moment.
Planning to be FIREd in 2020!

Philodendron

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Re: Mortgage Payoff Club!!
« Reply #1303 on: August 15, 2017, 10:15:22 PM »
I did it!! Paid off about a month ago. At first a little anti-climactic, but now feels Pretty Darn Good as I just got the official documentation. I came in just under 5 years. My focus now will be building up more of a stash -- and I'm pretty close to FI at this point with rental and side gig income, woohoo!! Still likely many years from retirement because I love my job, but it feels SO GOOD to know the job is not the absolute necessity it once once.

This forum is the only place I've told -- so nice to have a place to celebrate! Thanks for all the support and encouragement over the years. I don't give a flying rat about the maths, freedom is what it's all about!

Congratulations!! Couldn't agree more ^

SAfAmBrit

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Re: Mortgage Payoff Club!!
« Reply #1304 on: August 15, 2017, 10:47:19 PM »
I did it!! Paid off about a month ago. At first a little anti-climactic, but now feels Pretty Darn Good as I just got the official documentation. I came in just under 5 years. My focus now will be building up more of a stash -- and I'm pretty close to FI at this point with rental and side gig income, woohoo!! Still likely many years from retirement because I love my job, but it feels SO GOOD to know the job is not the absolute necessity it once once.

This forum is the only place I've told -- so nice to have a place to celebrate! Thanks for all the support and encouragement over the years. I don't give a flying rat about the maths, freedom is what it's all about!
I have to agree it is very anti climatic and I keep thinking I have missed paying something because of the mortgage payment + extra not coming out! I do struggle sometimes when work gets annoying not to walk away because I could technically leave now.

I agree on the freedom too! As long as I want it I have a home - if I don't I can sell. Love it!

theadvicist

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Re: Mortgage Payoff Club!!
« Reply #1305 on: August 17, 2017, 07:36:48 AM »
Congrats Cheddarpie!!

LittleTree

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Re: Mortgage Payoff Club!!
« Reply #1306 on: August 20, 2017, 12:35:41 PM »
To the comment about using your HELOC as an emergency fund I wouldn't recommend it. Remember what happened in 2008 when we got letters from our HELOC banks saying our accounts were being frozen. I learned from that experience to have an emergency fund.

talltexan

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Re: Mortgage Payoff Club!!
« Reply #1307 on: August 20, 2017, 01:10:34 PM »
Thanks K-ice for the information.
I think I understand better now. I looked quickly at HELOC rates in my area and can't find anything close to what my interest rate on mortgage is, 2.75. Most HELOC rates are 4.5 and up. It sounds like the HELOC rate has to be lower than mortgage for this to work.

Of course the lower the HELOC interest rate the better but actually I tested it with $100,000 borrowed at 2.75% for 30y and a $10,000 HELOC at 4.5% paid off at $1,000/month and it still works.

How? Because the $10,000 immediately changes the mortgage principal to $90,000. And you pay the HELOC off in a very short period of time, not amortized over 30y.

I tested 2 scenarios plugging numbers into this calculator:
https://www.vertex42.com/Calculators/home-mortgage-calculator.html

Option 1,
Regular mortgage $100,000 borrowed at 2.75% for 30y.
The interest paid on the first year in the mortgage is $2723.

Option 2,
 If you can borrow $10,000 from your HELOC and immediately pay it towards your mortgage
The interest paid on the first year in the mortgage is $2468.
You also save a total of  11,430.48 and 4.5years off the life of your mortgage.
Of course you still have a $10,000 HELOC to pay down at 4.5%. So your quick calculation may say this is $450 in interest.  However, remember, your monthly surplus, assuming $1000 goes to pay this off so the total interest is only $211.  Add that to the mortgage interest and $2679 is still < $2723.

It is still surprisingly better even with the different interest rates. Is it worth the hassle when the difference is now less than $100 per year?


When you repeat this process every year, your 30y loan will be paid off in only 7 years-1 month. With a total interest savings of $37,000 compared to no early payments.

Option 3 is also quite good and what many people on this thread are doing.  That is stash the money and pay $10,000 every year at the end of the year.  You will pay off your loan in 8y with a total savings of $35,000.   

So the Numbers are better with the HELOC method even with the mortgage at 2.75% and the HELOC at 4.5%.  It is now a question of psychology.   I am pretty disciplined and had a regular checking account, savings account and my HELOC just sitting there unused for a few years.  But my savings would build up and I hated it not working for me.  I also feel like my HELOC is “hair on fire” debt and I feel I pay it off faster than I would save $10,000.   

As they said in the podcast.  They just started with $5000 and paid that off in a few months. Their income is admittedly high. If it takes you 2 stressful years to pay down the $5000 stay away from the HELOC. However, if you can easily pay back the $5000, rinse and repeat a few times and you will really start to see your HELOC working for you.
Taking money out on a 4.5% heloc to pay a 2.75% mortgage is dumb. You could just as easily pay the monthly surplus each month on the mortgage without waiting to do an annual lump sum and pay even less interest.

Having a heloc available in case of emergency might be a good idea, you could then stop keeping an emergency fund while keeping the heloc balance at 0 allowing you to put all your money to work pasting the mortgage, but the moment you take out anything from the heloc you are paying more interest until it's back to zero. Only do so in a true emergency. If you can pay it off the next month even your credit card is a better option as if you have a zero monthly balance (and you shouldn't be pre paying mortgage if you don't) you will pay NO interest.

I think I understand the method as involving using the emergency fund to pay down the mortgage immediately, while having the POTENTIAL to use the HELOC if you need funds at the higher rate. So the spread isn't 1.75%, it's discounted by the chance of needing to use the funds.

If the chance of such an emergency is only 10%/year, then you're really at a spread of just 0.175%, which could easily be covered by the one month lag in interest amortization.

indentured4now

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Re: Mortgage Payoff Club!!
« Reply #1308 on: August 27, 2017, 08:37:18 PM »
End of July indentured update... Sold some stuff on craigslist and chipped in to principal a full 1% this month to just over 100K.   The 5 digit club is squarely in my gunsights!

End of August...  5 digit club at last!   $99.9K.   After trimming recurring bills and shifting some things around, the goal is to pay down 1% or more a month on average from here...

frizzywhiskers

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Re: Mortgage Payoff Club!!
« Reply #1309 on: August 28, 2017, 06:59:23 PM »
End of July indentured update... Sold some stuff on craigslist and chipped in to principal a full 1% this month to just over 100K.   The 5 digit club is squarely in my gunsights!

End of August...  5 digit club at last!   $99.9K.   After trimming recurring bills and shifting some things around, the goal is to pay down 1% or more a month on average from here...

Nice work! :)

Indio

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Re: Mortgage Payoff Club!!
« Reply #1310 on: August 28, 2017, 07:09:07 PM »
When you break down the barrier into the 5 digits, it's a great psychological boost that reinforces that paying it off really is possible.

When I got under 100k, I was still very motivated but started to feel discouraged around 80k or when another expense came up and I couldn't put as much toward it as I would like. Just kept plodding along. When I was paying more in principal than interest, that was another motivation to keep going.

SAfAmBrit

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Re: Mortgage Payoff Club!!
« Reply #1311 on: August 28, 2017, 10:44:52 PM »
End of July indentured update... Sold some stuff on craigslist and chipped in to principal a full 1% this month to just over 100K.   The 5 digit club is squarely in my gunsights!

End of August...  5 digit club at last!   $99.9K.   After trimming recurring bills and shifting some things around, the goal is to pay down 1% or more a month on average from here...
Congrats and keep going - it is worth it in the end.

Rowellen

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Re: Mortgage Payoff Club!!
« Reply #1312 on: August 31, 2017, 10:15:58 PM »
June 16 $200,813

Apr 17 $151,412
May 17 $144,681
June 17 $139,075
July 17 $136,332
Aug 17 $131,585

We decided to take our rental unit off the market so it's unlikely well have this paid off within 2 years as planned so thinking it will be time to start investing elsewhere for a while.

Philodendron

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Re: Mortgage Payoff Club!!
« Reply #1313 on: September 01, 2017, 06:13:13 PM »
End of August...  5 digit club at last!   $99.9K.   

Yay!! Congrats! It feels like it shrinks very quickly after this point, in my experience.

pdxmonkey

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Re: Mortgage Payoff Club!!
« Reply #1314 on: September 11, 2017, 07:27:16 PM »
Still making steady progress. I too am looking forward to having more flexible cash flow in the not too distant future.

Jan. 2015 - ~100k
Oct. 2015 - ~$67500
Dec.3, 2015 - ~$60k
Feb. 5, 2016 - $52,108.53
March 7, 2016 - 49,774.21
April 11, 2016 - 48,700 to go. Had to pay taxes this month.
May - failed to report in
June - $42,853.69
July - $41,597.20
August 2016 - 38,000
September 2016 - $36,230.88
October 2016 - $34,250. Now down to April 2020 at minimum payments.
November 2016 - $32,211 and some change.
December 2016 - $29,990 and change. Under 30k to end the year.
January 2017 - $28,200
February 2017 - $24800
March 2017 - $23k+ as of today. Going to push this down to a bit under $20k with the bulk of my tax refund.

Lets fill in some recent history:

April - ??
May - $16,551
June - $13,335 , then $12,300 after second payment
July - $10,629.47
August - $6733
September - $3187.88

As I get closer to the end I've been drawing down the CASH emergency fund a bit to accelerate the payoff as I could now easily complete the remaining mortgage payments even on unemployment insurance. Plus I've built up a fairly sizeable taxable account that could be tapped in an emergency as well making me more comfortable with a smaller CASH emergency fund.

iluvzbeach

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Re: Mortgage Payoff Club!!
« Reply #1315 on: September 11, 2017, 08:43:22 PM »
You are so close! Great job.
Planning to be FIREd in 2020!

SAfAmBrit

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Re: Mortgage Payoff Club!!
« Reply #1316 on: September 11, 2017, 09:13:52 PM »
Still making steady progress. I too am looking forward to having more flexible cash flow in the not too distant future.

Jan. 2015 - ~100k
Oct. 2015 - ~$67500
Dec.3, 2015 - ~$60k
Feb. 5, 2016 - $52,108.53
March 7, 2016 - 49,774.21
April 11, 2016 - 48,700 to go. Had to pay taxes this month.
May - failed to report in
June - $42,853.69
July - $41,597.20
August 2016 - 38,000
September 2016 - $36,230.88
October 2016 - $34,250. Now down to April 2020 at minimum payments.
November 2016 - $32,211 and some change.
December 2016 - $29,990 and change. Under 30k to end the year.
January 2017 - $28,200
February 2017 - $24800
March 2017 - $23k+ as of today. Going to push this down to a bit under $20k with the bulk of my tax refund.

Lets fill in some recent history:

April - ??
May - $16,551
June - $13,335 , then $12,300 after second payment
July - $10,629.47
August - $6733
September - $3187.88

As I get closer to the end I've been drawing down the CASH emergency fund a bit to accelerate the payoff as I could now easily complete the remaining mortgage payments even on unemployment insurance. Plus I've built up a fairly sizeable taxable account that could be tapped in an emergency as well making me more comfortable with a smaller CASH emergency fund.
All most done - congrats

channtheman

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Re: Mortgage Payoff Club!!
« Reply #1317 on: September 15, 2017, 05:17:00 AM »
After reading/skimming through the entire thread I'd like to post my situation as well and officially join the club!

My wife and I bought our first (and hopefully last) home for 267k.
10% down and 4.875% rate. 

Rate is high because I went with lender credits to pay for the closing costs.  The plan has been to pay down as much as possible and refinance somewhere around 200k in January at hopefully a 4% or less rate.  I want my income to easily cover all of our expenses as my wife will be going part time when our first child is born in April 2018. 

We are currently at 213k owed and putting about 3k extra per month.  Factor in the "bonus" 3rd checks we both get in October this year and another bonus check I have from getting a certification at work and we should easily be sub 200k when we refinance.  After we refi, I hope we can continue to put about $1000 extra per month with a final payoff in July 2027 when I turn 36.  I think we will be able to find ways to do it faster, but that's the plan. 

Now, why pay off mortgage instead of invest?  Easy answer.  DW has to be on board with the plan and she is very risk averse.  Probably more than most people.  She's not particularly happy about the 401k but understands the company match is free money.  In this situation, paying down the mortgage is the best possible use of our money and it is also risk free savings on interest.  My wife is happy, and I'm happy that she's happy.  Is it the most optimal, no.  But not everything is about the most optimal case.  Emotions and "sleeping at night" play a large role in everyone's decisions.  It's funny how investment advice always says to use an investment strategy that plays to your individual risk tolerance but then automatically ignores it when it comes to paying down a mortgage.   In our situation, when the house is paid off, my wife will not have to work at all if we don't want her to.  We plan an having 4-5 children and will value her being at home raising them.

Also, a note about the mortgage interest deduction.  For us it doesn't do a dang thing.  Even if we calculate the years interest at the highest amount we ever paid (appx $900 in one month), our yearly total is only $10800 (it's actually lower than this, and after the refinance will be even less in subsequent years).  The standard deduction for us as a married couple is $12,600.  So, unless we have a couple thousand more dollars to itemize, we're better off taking the standard deduction.

indentured4now

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Re: Mortgage Payoff Club!!
« Reply #1318 on: September 18, 2017, 06:09:35 PM »
End of August...  5 digit club at last!   $99.9K.   

Yay!! Congrats! It feels like it shrinks very quickly after this point, in my experience.

Thanks @allsummerlong and everyone for the kind words!   Let it be written... so let it be done!!

channtheman

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Re: Mortgage Payoff Club!!
« Reply #1319 on: September 21, 2017, 10:00:09 AM »
...

Also, a note about the mortgage interest deduction.  For us it doesn't do a dang thing.  Even if we calculate the years interest at the highest amount we ever paid (appx $900 in one month), our yearly total is only $10800 (it's actually lower than this, and after the refinance will be even less in subsequent years).  The standard deduction for us as a married couple is $12,600.  So, unless we have a couple thousand more dollars to itemize, we're better off taking the standard deduction.

You get to deduct your property taxes as well.  In most places that will have you itemizing based on the stated home value.

Good to know.  Ours are pretty cheap (about 1300 this year), but maybe with our charitable giving we can itemize for a couple of years.

farmecologist

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Re: Mortgage Payoff Club!!
« Reply #1320 on: September 21, 2017, 02:21:39 PM »
...

Also, a note about the mortgage interest deduction.  For us it doesn't do a dang thing.  Even if we calculate the years interest at the highest amount we ever paid (appx $900 in one month), our yearly total is only $10800 (it's actually lower than this, and after the refinance will be even less in subsequent years).  The standard deduction for us as a married couple is $12,600.  So, unless we have a couple thousand more dollars to itemize, we're better off taking the standard deduction.

You get to deduct your property taxes as well.  In most places that will have you itemizing based on the stated home value.

Good to know.  Ours are pretty cheap (about 1300 this year), but maybe with our charitable giving we can itemize for a couple of years.


I kind of chuckle when people get excited about the mortgage interest deduction.  Yes, you 'get to' deduct it.  However, most folks that 'get to' deduct it are also paying staggering amounts of interest to the bank...only receive a small chunk back in the form of a deduction.  That's not exactly 'good' in my book. 

I found this article to be interesting :  http://www.thetruthaboutmortgage.com/why-are-mortgage-payments-mostly-interest/

If you plan to keep your loan full term...then the math does work.  However, for the general population, that's usually not how it works.  People tend to move, etc..and a new loan 'resets the clock'....and you are back to continually paying staggering amounts of interest to the bank.  And continually thinking the mortgage interest deduction is a 'good thing'.

Now I have good faith that the population here knows better.  However, it is really quite disturbing the number of people that fall into this loop...and never end up paying down their mortgage.  Yet another reason why paying it down *can* be a good thing, depending on your situation.

« Last Edit: September 21, 2017, 02:26:39 PM by farmecologist »

pdxmonkey

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Re: Mortgage Payoff Club!!
« Reply #1321 on: September 21, 2017, 04:22:49 PM »
People also pretend they get the whole deduction as a discount when only the difference between the standard deduction and the itemized deductions matters. $13000 in deduction vs $12300 standard. Great you just got 700 in extras deductions. In the 25% bracket you just spent $13k on taxes and interest to save yourself $175...

Debts_of_Despair

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Re: Mortgage Payoff Club!!
« Reply #1322 on: September 21, 2017, 04:53:50 PM »
People also pretend they get the whole deduction as a discount when only the difference between the standard deduction and the itemized deductions matters. $13000 in deduction vs $12300 standard. Great you just got 700 in extras deductions. In the 25% bracket you just spent $13k on taxes and interest to save yourself $175...

LOL, so true!  I occasionally talk to people who don't do their own taxes (or otherwise don't understand them) and they think the "write off" for their mortgage interest is equal to a tax credit.  Think again!
« Last Edit: September 21, 2017, 04:59:39 PM by Debts_of_Despair »

farmecologist

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Re: Mortgage Payoff Club!!
« Reply #1323 on: September 22, 2017, 09:27:42 AM »
People also pretend they get the whole deduction as a discount when only the difference between the standard deduction and the itemized deductions matters. $13000 in deduction vs $12300 standard. Great you just got 700 in extras deductions. In the 25% bracket you just spent $13k on taxes and interest to save yourself $175...

LOL, so true!  I occasionally talk to people who don't do their own taxes (or otherwise don't understand them) and they think the "write off" for their mortgage interest is equal to a tax credit.  Think again!


Yep, that is spot on...I forgot to add that tidbit.   It is just funny to me when people ( mostly coworkers ) excitedly tell me how much they 'saved' by deducting mortgage interest.  These are obviously people with obscene mortgages.  It goes to show you that even people that are smart and successful in other areas are not necessarily smart with taxes/finances.

Again, I think the crowd here is smarter financially than the 'average joe'...so I hope we all know better....but who knows.
« Last Edit: September 22, 2017, 09:29:30 AM by farmecologist »

plainjane

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Re: Mortgage Payoff Club!!
« Reply #1324 on: September 22, 2017, 09:28:36 AM »
DW has to be on board with the plan and she is very risk averse.  Probably more than most people.  She's not particularly happy about the 401k but understands the company match is free money.  In this situation, paying down the mortgage is the best possible use of our money and it is also risk free savings on interest.  My wife is happy, and I'm happy that she's happy.  Is it the most optimal, no.  But not everything is about the most optimal case.  Emotions and "sleeping at night" play a large role in everyone's decisions.

I think I've mentioned here that my SO was also pretty risk averse. But once we had paid down more of the house, investing felt less risky, because regardless of what happened, we had our home. Now that the house is paid off, all that money plus some is going into investments.
Using procrastination to my advantage since 2001.

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

farmecologist

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Re: Mortgage Payoff Club!!
« Reply #1325 on: September 22, 2017, 09:30:27 AM »
DW has to be on board with the plan and she is very risk averse.  Probably more than most people.  She's not particularly happy about the 401k but understands the company match is free money.  In this situation, paying down the mortgage is the best possible use of our money and it is also risk free savings on interest.  My wife is happy, and I'm happy that she's happy.  Is it the most optimal, no.  But not everything is about the most optimal case.  Emotions and "sleeping at night" play a large role in everyone's decisions.

I think I've mentioned here that my SO was also pretty risk averse. But once we had paid down more of the house, investing felt less risky, because regardless of what happened, we had our home. Now that the house is paid off, all that money plus some is going into investments.

That is exactly what we did...and it has turned out great!


crispy

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Re: Mortgage Payoff Club!!
« Reply #1326 on: September 22, 2017, 12:50:22 PM »
Mine will be paid officially paid off on October 1st!  I am ridiculous excited!  As a very risk averse person, my mortgage has felt like an albatross around my neck for years.  It feels good to be free!

iluvzbeach

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Re: Mortgage Payoff Club!!
« Reply #1327 on: September 23, 2017, 07:22:18 AM »
Crispy, it's stuff like paying off the mortgage that helps put you in the position to stand up to the office bully. Nicely done!
Planning to be FIREd in 2020!

crispy

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Re: Mortgage Payoff Club!!
« Reply #1328 on: September 23, 2017, 12:57:05 PM »
Crispy, it's stuff like paying off the mortgage that helps put you in the position to stand up to the office bully. Nicely done!

Exactly right!

pdxmonkey

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Re: Mortgage Payoff Club!!
« Reply #1329 on: October 05, 2017, 07:31:50 PM »
Down to....one cent. Super annoying. I can't pay it off through their site because they require certified funds for the last cent + the fees.

You know....probably so the interest doesn't accrue/get out of whack on my 1 cent during the delay to confirm my non-certified cent has cleared.

birdman2003

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Re: Mortgage Payoff Club!!
« Reply #1330 on: October 06, 2017, 10:36:08 AM »
Down to....one cent. Super annoying. I can't pay it off through their site because they require certified funds for the last cent + the fees.

You know....probably so the interest doesn't accrue/get out of whack on my 1 cent during the delay to confirm my non-certified cent has cleared.

I just had a visual of somebody at the payment processing company opening an envelope to find a penny inside.

talltexan

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Re: Mortgage Payoff Club!!
« Reply #1331 on: October 09, 2017, 07:03:14 AM »
You could let that one cent grow and compound until...your original mortgage has completely regenerated!

Zombie mortgage ftw!

pdxmonkey

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Re: Mortgage Payoff Club!!
« Reply #1332 on: October 10, 2017, 07:24:34 PM »
Too late for that. It is DONE!

Next month will be there first month with no payment at which point I'll get to celebrate again. And at some point before or after I'll get the paperwork.  2 celebrations to go.

Blindsquirrel

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Re: Mortgage Payoff Club!!
« Reply #1333 on: October 10, 2017, 07:53:13 PM »
  Good for you! Losing debt is freeing!
Even a blind squirrel finds a nut once in awhile.

wauske

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Re: Mortgage Payoff Club!!
« Reply #1334 on: October 12, 2017, 12:21:22 PM »
11k plus legt, bank is being annoying by requiring me to contact them every time I want to pay down extra in stead of the tried and true method of sending them extra by regular bank transfer.
So I called them this week and asked them to shorten the remaining term to 15 months. This means we are done by January 2019 unless we pay down more (which we will definitely do!).

Our mortgage started in 2012, being done next year was a bit later than planned but surely better than the full 27 years!
Everything I say is my personal opinion which is based on my subjective experience.

indentured4now

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Re: Mortgage Payoff Club!!
« Reply #1335 on: October 14, 2017, 05:20:20 AM »
@wauske,  Stay strong.   I'd imagine that Dutch bankers would have some quirks to say the least in the banking rules from hundreds of years of being fierce lenders.   The United States is still paying on Dutch loans and/or bonds issued from the 1700s!   

Use their annoying nature to motivate you both to save more... Then smile sweetly when you pay off those parasites.

boarder42

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Re: Mortgage Payoff Club!!
« Reply #1336 on: October 14, 2017, 05:47:18 AM »
People also pretend they get the whole deduction as a discount when only the difference between the standard deduction and the itemized deductions matters. $13000 in deduction vs $12300 standard. Great you just got 700 in extras deductions. In the 25% bracket you just spent $13k on taxes and interest to save yourself $175...

LOL, so true!  I occasionally talk to people who don't do their own taxes (or otherwise don't understand them) and they think the "write off" for their mortgage interest is equal to a tax credit.  Think again!


Yep, that is spot on...I forgot to add that tidbit.   It is just funny to me when people ( mostly coworkers ) excitedly tell me how much they 'saved' by deducting mortgage interest.  These are obviously people with obscene mortgages.  It goes to show you that even people that are smart and successful in other areas are not necessarily smart with taxes/finances.

Again, I think the crowd here is smarter financially than the 'average joe'...so I hope we all know better....but who knows.

It's staggering to me that you think you're making the best financial decision paying down a low fixed interest loan when it's not the best way to use your dollars. Now your coworkers are likely normal people and spending their extra but not paying down a mortgage and investing the extra capital shows a true understanding of finances.

My property and state taxes max out the standard deduction and all of our mortgage interest is then tax deductible. But the size of the interest paid is not relevant. It's the return that money could be making vs the interest rate on your loan.

KBecks

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Re: Mortgage Payoff Club!!
« Reply #1337 on: October 14, 2017, 07:18:46 AM »
I have been losing some momentum on the pay down, just putting a couple hundred extra the last few months.  My husband's summer income was on the low side, but now in the Fall it's high.  We have some home improvements that we would like to do and so we may funnel some cash into making our home a little nicer.  I am reluctant to spend money but it's OK when there is good value for what we spend.

Our balance is about $56k, so soon we should graduate into the balances under $50k club.  That's something too look forward to.


Debts_of_Despair

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Re: Mortgage Payoff Club!!
« Reply #1338 on: October 15, 2017, 01:13:57 PM »
People also pretend they get the whole deduction as a discount when only the difference between the standard deduction and the itemized deductions matters. $13000 in deduction vs $12300 standard. Great you just got 700 in extras deductions. In the 25% bracket you just spent $13k on taxes and interest to save yourself $175...

LOL, so true!  I occasionally talk to people who don't do their own taxes (or otherwise don't understand them) and they think the "write off" for their mortgage interest is equal to a tax credit.  Think again!


Yep, that is spot on...I forgot to add that tidbit.   It is just funny to me when people ( mostly coworkers ) excitedly tell me how much they 'saved' by deducting mortgage interest.  These are obviously people with obscene mortgages.  It goes to show you that even people that are smart and successful in other areas are not necessarily smart with taxes/finances.

Again, I think the crowd here is smarter financially than the 'average joe'...so I hope we all know better....but who knows.

It's staggering to me that you think you're making the best financial decision paying down a low fixed interest loan when it's not the best way to use your dollars. Now your coworkers are likely normal people and spending their extra but not paying down a mortgage and investing the extra capital shows a true understanding of finances.

My property and state taxes max out the standard deduction and all of our mortgage interest is then tax deductible. But the size of the interest paid is not relevant. It's the return that money could be making vs the interest rate on your loan.

It's staggering to me that you think you will never have to face unemployment and/or have to keep a large emergency fund to keep making mtg payments the event of unemployment. 

I paid off my mtg in about a year.  I wake up everyday with a more confident future.  That mortgage payment now goes into tax advantaged retirement accounts.  Zero regrets.

farmecologist

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Re: Mortgage Payoff Club!!
« Reply #1339 on: October 16, 2017, 10:01:49 AM »
People also pretend they get the whole deduction as a discount when only the difference between the standard deduction and the itemized deductions matters. $13000 in deduction vs $12300 standard. Great you just got 700 in extras deductions. In the 25% bracket you just spent $13k on taxes and interest to save yourself $175...

LOL, so true!  I occasionally talk to people who don't do their own taxes (or otherwise don't understand them) and they think the "write off" for their mortgage interest is equal to a tax credit.  Think again!


Yep, that is spot on...I forgot to add that tidbit.   It is just funny to me when people ( mostly coworkers ) excitedly tell me how much they 'saved' by deducting mortgage interest.  These are obviously people with obscene mortgages.  It goes to show you that even people that are smart and successful in other areas are not necessarily smart with taxes/finances.

Again, I think the crowd here is smarter financially than the 'average joe'...so I hope we all know better....but who knows.

It's staggering to me that you think you're making the best financial decision paying down a low fixed interest loan when it's not the best way to use your dollars. Now your coworkers are likely normal people and spending their extra but not paying down a mortgage and investing the extra capital shows a true understanding of finances.

My property and state taxes max out the standard deduction and all of our mortgage interest is then tax deductible. But the size of the interest paid is not relevant. It's the return that money could be making vs the interest rate on your loan.

It's staggering to me that you think you will never have to face unemployment and/or have to keep a large emergency fund to keep making mtg payments the event of unemployment. 

I paid off my mtg in about a year.  I wake up everyday with a more confident future.  That mortgage payment now goes into tax advantaged retirement accounts.  Zero regrets.

Dang..I knew 'boarder' would eventually infest this thread.  Just ignore the guy..he obviously thinks he is the supreme authority on 'finances'.  It's no use arguing with him.

Boarder...look, I think we all understand your points...but do not agree with them.  Just let the mortgage payoff crowd have this ONE thread of peace from your condescending attitude...ok?
« Last Edit: October 16, 2017, 10:06:04 AM by farmecologist »

Debts_of_Despair

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Re: Mortgage Payoff Club!!
« Reply #1340 on: October 16, 2017, 10:13:09 AM »
Yeah, we definitely all get the math behind it.  There is however more to life than just the math.

boarder42

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Re: Mortgage Payoff Club!!
« Reply #1341 on: October 16, 2017, 10:40:00 AM »
Yeah, we definitely all get the math behind it.  There is however more to life than just the math.

i dont agree that everyone here understands the math behind it. i think some do but for the most part i think many just see this giant thread here dedicated to it and fail to understand the math, b/c MMM paid his down - which made sense at the time b/c of a different lending environment than we currently have.

Quint

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Re: Mortgage Payoff Club!!
« Reply #1342 on: October 16, 2017, 11:32:28 AM »
It's a little presumptuous to say that people in this thread don't understand the math.  There are countless threads on the forum and elsewhere that explain it if they'd like to investigate.  They don't have to spend their money the way you believe is best.  Maybe just be happy they are paying down their mortgage instead of being consumer clowns.  We're all here on the forums for the same reason and there are many paths to take to the finish line.

BlueHouse

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Re: Mortgage Payoff Club!!
« Reply #1343 on: October 16, 2017, 11:39:50 AM »
Yeah, we definitely all get the math behind it.  There is however more to life than just the math.

i dont agree that everyone here understands the math behind it. i think some do but for the most part i think many just see this giant thread here dedicated to it and fail to understand the math, b/c MMM paid his down - which made sense at the time b/c of a different lending environment than we currently have.
Boarder42, I thought you had already agreed to stay out of this thread?  You set up your own thread elsewhere and you've been doing a great job dismissively patronizing people who have risk tolerance different from yours.  Go enjoy your own superiority in your own thread, but please let people who are making very sound financial decisions rejoice in their accomplishments.  Stop trying to rain on everyone's parade. 
Sometimes nothing can be a real cool hand

pdxmonkey

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Re: Mortgage Payoff Club!!
« Reply #1344 on: October 17, 2017, 06:05:14 PM »
People also pretend they get the whole deduction as a discount when only the difference between the standard deduction and the itemized deductions matters. $13000 in deduction vs $12300 standard. Great you just got 700 in extras deductions. In the 25% bracket you just spent $13k on taxes and interest to save yourself $175...

LOL, so true!  I occasionally talk to people who don't do their own taxes (or otherwise don't understand them) and they think the "write off" for their mortgage interest is equal to a tax credit.  Think again!


Yep, that is spot on...I forgot to add that tidbit.   It is just funny to me when people ( mostly coworkers ) excitedly tell me how much they 'saved' by deducting mortgage interest.  These are obviously people with obscene mortgages.  It goes to show you that even people that are smart and successful in other areas are not necessarily smart with taxes/finances.

Again, I think the crowd here is smarter financially than the 'average joe'...so I hope we all know better....but who knows.

It's staggering to me that you think you're making the best financial decision paying down a low fixed interest loan when it's not the best way to use your dollars. Now your coworkers are likely normal people and spending their extra but not paying down a mortgage and investing the extra capital shows a true understanding of finances.

My property and state taxes max out the standard deduction and all of our mortgage interest is then tax deductible. But the size of the interest paid is not relevant. It's the return that money could be making vs the interest rate on your loan.

It's staggering what a 🍆 you are and how you pay without reading my prior comments in the thread which recognize the fact the mathematical best option in theory/statistically is not paying things down. It's also staggering that you aren't 100% in Bitcoin given its statistical history.

K-ice

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Re: Mortgage Payoff Club!!
« Reply #1345 on: October 22, 2017, 01:33:20 PM »
Yeah, we definitely all get the math behind it.  There is however more to life than just the math.

I get the math too. But my partner is so risk adverse they will only save in a savings account or pay down the mortgage. I have put a relatively small amount aside in index funds, but the best way for us to "invest" together is to throw our extra stash at the mortgage.

Once the mortgage is paid in full I hope I can convince them that index funds are the next best way.

In the mean time, I don't think anyone will argue a huge savings account is better than paying your mortgage.

Lmoot

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Re: Mortgage Payoff Club!!
« Reply #1346 on: October 25, 2017, 05:02:40 AM »
@boarder42

Reasons why people pay off/down their mortgage:

1) Simplicity - believe it or not, not everyone wants to have a bunch of investment balls in the air; an IRA/ROTH and 401K, HSA, a few bonds, etc....is sufficient for them.

2) More options. When you have a mortgage, you are still bound by rules from the lender, for what you can and cannot do with your own property. Some lenders force you to have a certain amount of insurance coverage (even if it's more than what you want/need...I'm not talking about PMI...I was forced to pay for higher insurance b/c my bank didn't feel "safe" enough with the original option I chose). By definition, a mortgage is a LIEN on a property. Want to bulid an addition? Or otherwise alter the space or function? You need to clear it through your lien-holder.

3) You (and your ilk) give big talk about being above emotional decisions. What's more emotional than chasing maximum return...just because. If someone has determined that they have enough in investments to support their chosen lifestyle and future, and this is a preference they can afford to make...you still cannot let it go. The concept of someone having "enough" seems inconceivable. Yes, the math may show possibility of more, but that's all it records...less or more. It's not going to say if it's a enough; that's a highly personal decision that can only be made by a sentient being. Who's the boss? You or the math?

4) We all have different goals. There is nothing wrong with chasing max returns, but it's just simply not important for some people. This website espouses retiring early...not making the most money. And yes, there is a distinction. If that were the case, then we'd all just work until our 70's. After a certain point, more money doesn't mean you can retire any earlier...it just means you may have more money later in life, and after death.

5) Sometimes paying off a mortgage fits their life goals better. They might see that paying off a mortgage could affect their quality of life sooner than putting it all in the market and waiting and watching. Maybe they want to reduce how much they have to work, sooner rather than later, and perhaps the balance on their mortgage may be low enough that it wouldn't pay out enough in dividends to allow one to make decisions like quitting a job....but but paying off a mortgage balance would increase their cash flow instantaneously, and predictably.

6) To get you in a waddle
« Last Edit: October 25, 2017, 09:06:07 AM by Lmoot »

smileyface

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Re: Mortgage Payoff Club!!
« Reply #1347 on: October 25, 2017, 07:52:05 AM »
I'm new to the MMM forums, but I wanted to share our mortgage payoff story.  We are a somewhat Mustachian family of four in a HCOL area, and we paid ours off nearly five years ago.  I CAN'T TELL YOU what a game-changer it has been for us.  Life is different when you don't have this major expense hanging over you.  We didn't inflate our lifestyle at all-- we just funnel the extra money into savings and investments.  But when your expenses don't include a hefty mortgage or rent payment, you have a freedom and flexibility that most people simply don't.  I stayed home with our kids for years, and I only work part-time now--  honestly, we really don't need my part-time income, but to me it's a great way to optimize my time when the kids are both at school.  We don't worry about what we'd do if DH lost his job and was out of work for a while, or if he had to take a pay cut--  without the mortgage, these situations are totally manageable. 

Was paying off the mortgage the best investment of our money?  From a rate-of-return perspective, probably not.  From a psychological-freedom perspective, it's been the greatest money move we ever made.

talltexan

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Re: Mortgage Payoff Club!!
« Reply #1348 on: October 25, 2017, 08:15:27 AM »
The debate with Boarder42 means I should reveal myself as an active participant in the "DON'T Pay off Your Mortgage" board as well. Although I personally follow a path more like that one, I follow this thread because of the energy here and to help celebrate the achievement of you badass folks who are working toward a mortgage-free life.

I'm posting because I believe LMoot's list requires one additional item: many of us have to coordinate financial goals with a spouse, and it is often easier to convince that spouse to devote extra effort to clearing debt--like a mortgage--than it is to a vague goal like "Stuff the 401K".


farmecologist

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Re: Mortgage Payoff Club!!
« Reply #1349 on: October 25, 2017, 09:49:10 AM »
I'm posting because I believe LMoot's list requires one additional item: many of us have to coordinate financial goals with a spouse, and it is often easier to convince that spouse to devote extra effort to clearing debt--like a mortgage--than it is to a vague goal like "Stuff the 401K".

Absolutely true.  Thanks for the input.  There is often more to life then 'the math'. 

I feel a bit bad for instigating some of the debate here.  However, I really do feel like THIS thread exists to celebrate those that have made the decision to pay down their mortgage...even though that may be 'bad' in some peoples view.  Seems silly to be constantly arguing about it when most here have already made the decision.