Author Topic: Mortgage Payoff Club!!  (Read 625871 times)

K-ice

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Re: Mortgage Payoff Club!!
« Reply #1750 on: November 13, 2018, 01:08:47 PM »
Someone I don't know well but who rents made a comment to me the other day.
"You probably own your own house."

Shrugged and lied, "Well the bank does."  I wouldn't comment to most people that our place is paid off.

We technically still have a HELOC with balance approaching zero but that is all for a rental property. I am also playing in the Don't pay off your mortgage club with that loan. 

We were able to pay off our primary residence in about 6y. You Mustacian's are really the only people we can talk to about this.  ;) 

couponvan

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Re: Mortgage Payoff Club!!
« Reply #1751 on: November 13, 2018, 06:16:56 PM »
Paid off via sale $250k is now in investments. Rent is high though at $2,500+ for a fancypants corporate apartment in VA. Our lake FIRE house in IL is paid off for when we FIRE in 4 years.
« Last Edit: November 19, 2018, 08:32:51 AM by couponvan »

Megs193

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Re: Mortgage Payoff Club!!
« Reply #1752 on: November 15, 2018, 11:36:03 AM »
We made another $10,000 principal payment in addition to our regular monthly payment so our balance is down $333k. I would love to get it below $300k for a nice mental boost and Iím considering taking it out of our savings which is probably about 2 years of expenses right now. Does anyone see a downside to this?

Nederstash

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Re: Mortgage Payoff Club!!
« Reply #1753 on: November 16, 2018, 07:51:41 AM »
We made another $10,000 principal payment in addition to our regular monthly payment so our balance is down $333k. I would love to get it below $300k for a nice mental boost and Iím considering taking it out of our savings which is probably about 2 years of expenses right now. Does anyone see a downside to this?

Keep 6 months emergency fund in savings, otherwise, go nuts!

Money Badger

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Re: Mortgage Payoff Club!!
« Reply #1754 on: November 16, 2018, 09:17:27 PM »
+1!   Every dollar you sit on in the bank beyond a 6 month emergency fund, they are loaning to some other sukka at ~5% for a 30 year ankle iron.   Either put it on the mortgage with very low risk or invest it.   Otherwise, straddling the cash financial fence is painful.

K-ice

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Re: Mortgage Payoff Club!!
« Reply #1755 on: November 19, 2018, 11:33:58 AM »
We made another $10,000 principal payment in addition to our regular monthly payment so our balance is down $333k. I would love to get it below $300k for a nice mental boost and Iím considering taking it out of our savings which is probably about 2 years of expenses right now. Does anyone see a downside to this?

Keep 6 months emergency fund in savings, otherwise, go nuts!

Agreed! Or if you have a HELOC and can easily use your house as "springy debt" and a 1-2 month emergency fund might even be enough.

http://www.mrmoneymustache.com/2011/04/22/springy-debt-instead-of-a-cash-cushion/


paulkots

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Re: Mortgage Payoff Club!!
« Reply #1756 on: November 27, 2018, 08:32:09 AM »
Decided to really go for it with house payments. Emergency fund won't be touched and Roth IRA will always be maxed but everything else is going towards the house. More principal was paid off in the last 2 months then the previous 18 months. Feels good seeing the number go down, stretch goal is 5 digit loan by end of 2019.

BlueHouse

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Re: Mortgage Payoff Club!!
« Reply #1757 on: November 27, 2018, 09:26:09 AM »
We made another $10,000 principal payment in addition to our regular monthly payment so our balance is down $333k. I would love to get it below $300k for a nice mental boost and Iím considering taking it out of our savings which is probably about 2 years of expenses right now. Does anyone see a downside to this?

I agree with others that when you're sitting on that much cash, and aren't going to invest it otherwise, then paying off the mortgage is better than letting it sit in the bank. 
The one thing I will recommend is this:  See if your mortgage company allows for a free recast.  If so, pay down as much as you want, then have the bank re-amortize.  It will lower the required payments, but spread it out over the remaining term of the loan.  This way, you can choose to keep prepaying, or you can choose to have a payment that doesn't scare you.

I had a >$600K loan and paid it down and recast so that now my payments are small enough that I can afford them even if I only have a "regular" job (I'm currently overpaid).  Once I did that, I stopped worrying about the amount of the outstanding balance.  I have about $200k left on the loan now and I'm not in a big rush to pay it off (although I am still working to pay it off prior to retirement so that I can keep retirement expenses lower). 

dollarchaser

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Re: Mortgage Payoff Club!!
« Reply #1758 on: November 27, 2018, 06:07:55 PM »
Congrats to everyone on their journey. The outside world just doesn't understand.

frizzywhiskers

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Re: Mortgage Payoff Club!!
« Reply #1759 on: November 27, 2018, 08:06:29 PM »
Our mortgage was paid off in August of this year.  The last few months have been stress free and itís been great fun to be able to put more money into investments.  The unexpected has happened though where I actually miss the mortgage payoff?! Wtf!?  Ha ha!  I did not expect that, but it was our main focus for five years, so to have it just gone still feels very strange!  Iím trying to shift the excitement to reaching our FI number so hopefully that will give us a new mission to focus on! 😁. Anyway!  Interesting side effect!

Money Badger

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Re: Mortgage Payoff Club!!
« Reply #1760 on: November 27, 2018, 09:05:05 PM »
@Frizzy...  Guess "It's the journey, not the destination" or such some psychological BS of having unmet goals... 

So onward and upward... What's the number and should we look for you in the FIRE 20XX thread of choice?

frizzywhiskers

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Re: Mortgage Payoff Club!!
« Reply #1761 on: November 28, 2018, 08:50:09 PM »
Something like that @Money Badger!  😁 I am currently hanging out in the 2021 fire cohort with ambitions to make it one less year!  We will see how it goes! Onward and upward!

Money Badger

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Re: Mortgage Payoff Club!!
« Reply #1762 on: December 07, 2018, 08:17:53 PM »
Go Frizzy, awesome to be with you in the same 2021 and done plan!   News flash is that our house closing date is set and we're through due diligence.   So God willing, the mortgage is officially gone Jan 17th PLUS we walk away with a nice check at closing for the FIRE plan.   We've also found a perfect, smaller place with a nice country farmhouse vibe, but also with biking trails literally 2 driveways down the street with easy access to the grocery stores and restaurants we like less than 1/3rd mile either way.   So if we don't grow it ourselves, we can buy it or have it served as well ;-)   Wish us luck on the usual drama of closing(s), but had to share it with you all after years working toward this!

Trifele

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Re: Mortgage Payoff Club!!
« Reply #1763 on: December 08, 2018, 02:28:58 AM »
Go Frizzy, awesome to be with you in the same 2021 and done plan!   News flash is that our house closing date is set and we're through due diligence.   So God willing, the mortgage is officially gone Jan 17th PLUS we walk away with a nice check at closing for the FIRE plan.   We've also found a perfect, smaller place with a nice country farmhouse vibe, but also with biking trails literally 2 driveways down the street with easy access to the grocery stores and restaurants we like less than 1/3rd mile either way.   So if we don't grow it ourselves, we can buy it or have it served as well ;-)   Wish us luck on the usual drama of closing(s), but had to share it with you all after years working toward this!

Congratulations @Money Badger !  Your new place sounds perfect.  What a way to celebrate the new year!

Nederstash

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Re: Mortgage Payoff Club!!
« Reply #1764 on: December 08, 2018, 02:44:28 AM »
Go Frizzy, awesome to be with you in the same 2021 and done plan!   News flash is that our house closing date is set and we're through due diligence.   So God willing, the mortgage is officially gone Jan 17th PLUS we walk away with a nice check at closing for the FIRE plan.   We've also found a perfect, smaller place with a nice country farmhouse vibe, but also with biking trails literally 2 driveways down the street with easy access to the grocery stores and restaurants we like less than 1/3rd mile either way.   So if we don't grow it ourselves, we can buy it or have it served as well ;-)   Wish us luck on the usual drama of closing(s), but had to share it with you all after years working toward this!

Oh my god, that sounds perfect! And not a payment in the world... congratulations, you've done exceptionally well! Any ideas/dreams what your new life is going to look like?

frizzywhiskers

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Re: Mortgage Payoff Club!!
« Reply #1765 on: December 08, 2018, 08:40:17 AM »
Congrats @Money Badger!  Mortgage free in a great new place!  Well deserved!  Look forward to hitting the home stretch with you!

AlexMar

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Re: Mortgage Payoff Club!!
« Reply #1766 on: December 08, 2018, 10:32:41 AM »
Go Frizzy, awesome to be with you in the same 2021 and done plan!   News flash is that our house closing date is set and we're through due diligence.   So God willing, the mortgage is officially gone Jan 17th PLUS we walk away with a nice check at closing for the FIRE plan.   We've also found a perfect, smaller place with a nice country farmhouse vibe, but also with biking trails literally 2 driveways down the street with easy access to the grocery stores and restaurants we like less than 1/3rd mile either way.   So if we don't grow it ourselves, we can buy it or have it served as well ;-)   Wish us luck on the usual drama of closing(s), but had to share it with you all after years working toward this!

This is awesome.  Great job!

Money Badger

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Re: Mortgage Payoff Club!!
« Reply #1767 on: December 08, 2018, 06:56:36 PM »
Thanks y'all!!   We certainly received an interesting mix of comments...  A few totally supportive from friends we respect...  But more than a few snarky remarks, particularly amusing ones from the self-absorbed spendy type neighbors (usually with 2 or more exotic cars and lots of flashy lifestyle choices) that would be worthy of the "Anti-Mustachian Hall of Fame" threads...   

Glad this contrarian MMM community exists that "Get's it" to motivate folks to follow the fiscal debt and spending discipline over time it takes to FIRE when there's so much temptation otherwise out there!

Comar

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Re: Mortgage Payoff Club!!
« Reply #1768 on: December 10, 2018, 02:52:39 AM »
40k left!

Askel

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Re: Mortgage Payoff Club!!
« Reply #1769 on: December 10, 2018, 07:36:09 PM »
Escrow surplus check received. 

And a tax bill for roughly the same amount. :/ 

It's kinda starting to feel paid off. :D 

Just need a lien release now. 

Megs193

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Re: Mortgage Payoff Club!!
« Reply #1770 on: December 18, 2018, 08:59:21 AM »
My major stretch goal was to get my mortgage under $300,000 this year and I just made an extra payment to get it to $299,841. I would love to be mortgage free in 2 years which is definitely possible if I keep up our current pace. We bought our house before discovering fire so our payment is $5,600 a month which makes up over 50% of our expenses so this would be an incredible mental boost.

   My husband isnít currently interested in retiring early but Iím hopeful that once the mortgage is paid off it may change his mind set. I work per diem and was recently talking about switching to a higher paying job and he told me he didnít see how a more stressful job would be worth it considering we wonít have a mortgage in 2 years.  Now I just need him to apply the same logic to his own life.

talltexan

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Re: Mortgage Payoff Club!!
« Reply #1771 on: December 18, 2018, 12:52:32 PM »
Megs-
is there some asset you'd sell to knock out your mortgage that quickly? Two years to slay $300,000 wouild require something like $13,000/monthly.

If your monthly expenses are truly in the neighborhood of $6,000, I cannot imagine why you don't think your husband is on-board with early retirement, it seems as though you've already geared your household towards a 65% savings rate.

Megs193

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Re: Mortgage Payoff Club!!
« Reply #1772 on: December 18, 2018, 02:09:26 PM »
Megs-
is there some asset you'd sell to knock out your mortgage that quickly? Two years to slay $300,000 wouild require something like $13,000/monthly.

If your monthly expenses are truly in the neighborhood of $6,000, I cannot imagine why you don't think your husband is on-board with early retirement, it seems as though you've already geared your household towards a 65% savings rate.

We do have too much money in the bank but we plan on putting about $50,000-$60,000 as a one time payment when my DH gets his bonus. We put about $8,000 extra each month. My DH has a high income but he enjoys his job and thinks he would be crazy to walk away from it. I spend a lot of time alone with our 2 kids because of his work travel and I would love to convince him to retire early.

Money Badger

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Re: Mortgage Payoff Club!!
« Reply #1773 on: December 19, 2018, 05:58:22 PM »
Just updating for the end of 2018.. Down to $32,000!

New goal is to pay off by end of 2019, if not a little sooner. So overall, we've only been thrown off course by a few months.

Way to go!  At the $32K point, you just find ways to get it done.   Then strangely, life just doesn't throw you off-course as much.   Get 'er done!

Spoon

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Re: Mortgage Payoff Club!!
« Reply #1774 on: December 29, 2018, 03:38:23 PM »
Our emergency fund is in the offset account of the mortgage, we are looking to do a tree change, and build a forever home after finding the right property but am aiming to get the remaining $52K down to $0 by this time next year if we don't make any changes between now and then.

Money Badger

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Re: Mortgage Payoff Club!!
« Reply #1775 on: January 02, 2019, 06:43:50 PM »
@Spoon,  If you can pay off the $52K now from the emergency fund, you will be more motivated and successful saving to accomplish both goals by 100% focus on one goal, then the next.   We only held off due to a timing issue < 90 days from sale of our home to avoid issues with closing, but your time horizon seems longer to complete both goals.   How quickly could you replenish $52K saving with 100% focus while not paying a mortgage every month?

Threshkin

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Re: Mortgage Payoff Club!!
« Reply #1776 on: January 03, 2019, 10:54:38 AM »
@Spoon,  If you can pay off the $52K now from the emergency fund, you will be more motivated and successful saving to accomplish both goals by 100% focus on one goal, then the next.   We only held off due to a timing issue < 90 days from sale of our home to avoid issues with closing, but your time horizon seems longer to complete both goals.   How quickly could you replenish $52K saving with 100% focus while not paying a mortgage every month?

I agree.  I drew down my emergency fund significantly to pay off my mortgage (~$75K).  It was so liberating to eliminate the monthly expense it was worth it.  I was in a stable position at work at the time and were able to rebuild it in a few months. 

Everyone: After you pay off your mortgage, don't forget to pay your property tax! 

ScottsdaleSaver

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Re: Mortgage Payoff Club!!
« Reply #1777 on: January 04, 2019, 08:49:58 AM »
December 2018 - $187K. We met our goal of paying off $35K in principal this year. We're hoping 2019 is a massive year. I've set a stretch goal of breaking into 5 figures on this thing by the end of the year. Fingers crossed!

September 2018 - $196K! We met our goal of breaking $200K by the end of summer. Fighting lifestyle inflation and kicking my husband's raise into savings and/or mortgage payoff, so hopefully we start really picking up speed now...

June 2018 - $217K and I'm writing another check to principal for $5K tonight. The pay for grant work isn't in yet and the promotion happened and the higher pay rate kicks in this week (yay!). We're hoping to break the $200K mark by the end of the summer.

March 2018 - $227K  We made some good headway over the last quarter thanks to my bonus. We anticipate a couple more windfalls in the next quarter - grant work for my husband - & perhaps even a large promotion which would really speed things up. Send some good juju our way!

Jumping over here from a different mortgage payoff thread that never took off. We started the path to early payoff in earnest this June with a (free) refinance. We're on a 15-year mortgage at 3.25%, but I want to knock this thing out in 5.

Big picture - I want to time the mortgage payoff with my escape from corporate life. Our investments are where I'd like it to be at this point. We'll continue to max out our tax advantaged accounts, but everything after that is going towards this.

June 2017 - $254K
July 2017 - $251K
August 2017 - $248K
Sept 2017 - $245K
Oct 2017 - $244K
Nov 2017 - $241K
Dec - 2017 - $237K

mrmoonymartian

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Re: Mortgage Payoff Club!!
« Reply #1778 on: January 04, 2019, 09:31:41 AM »
@Spoon,  If you can pay off the $52K now from the emergency fund, you will be more motivated and successful saving to accomplish both goals by 100% focus on one goal, then the next.   We only held off due to a timing issue < 90 days from sale of our home to avoid issues with closing, but your time horizon seems longer to complete both goals.   How quickly could you replenish $52K saving with 100% focus while not paying a mortgage every month?
The offset account is already counting against the mortgage (offsetting it) and reducing the interest as if the mortgage was reduced by the amount in that account. It's an Australian thing. I don't have one, but I can redraw from my mortgage which amounts to the same thing. Our mortgage-based emergency funds are a variant of the spongy debt method suggested by MMM.

Spoon

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Re: Mortgage Payoff Club!!
« Reply #1779 on: January 04, 2019, 03:49:04 PM »
Thanks for the replys

mrmooneymartain is right, the money is reducing the interest on my loan. So I have a loan of 181K, with 129K offset (no interest) and 52K being charged interest. Anytime my spending account has over 1K in it, I transfer the excess over to my loan to pay less interest. If I have an unexpected cost, the money can be in my spending account the next day.   


couponvan

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Re: Mortgage Payoff Club!!
« Reply #1780 on: January 04, 2019, 03:55:14 PM »
I want one of those offset things! Boo. I am planning to do a CD ladder with extra payments when we have a mortgage again.

Money Badger

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Re: Mortgage Payoff Club!!
« Reply #1781 on: January 04, 2019, 08:43:36 PM »
To both Oz posters Spoon and MrMoonyÖ  very creative concept by the bankers in Oz to lull you into perceived safety.   It seems to be a love child of the "first mortgage / second mortgage" of the US rolled into one loan "product".  Such comfort is a trap.

At the end of the day, your debt is an emergency as MMM says.   Kill it, now.   No banker "offsets".    Be on edge with a low emergency fund for a short period, stay motivated to kill it.    Perhaps a short while saving up on a side account is a reasonably safe way to build a payoff sum... But otherwise, insist that the rest of your days people pay only YOU rent/interest on your money forever afterwards whether it be in stocks, bonds, land-lording or other ventures you start with your free cashflow after eliminating debt.   Be free!   

mrmoonymartian

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Re: Mortgage Payoff Club!!
« Reply #1782 on: January 04, 2019, 11:07:20 PM »
To both Oz posters Spoon and MrMoonyÖ  very creative concept by the bankers in Oz to lull you into perceived safety.   It seems to be a love child of the "first mortgage / second mortgage" of the US rolled into one loan "product".  Such comfort is a trap.

At the end of the day, your debt is an emergency as MMM says.   Kill it, now.   No banker "offsets".    Be on edge with a low emergency fund for a short period, stay motivated to kill it.    Perhaps a short while saving up on a side account is a reasonably safe way to build a payoff sum... But otherwise, insist that the rest of your days people pay only YOU rent/interest on your money forever afterwards whether it be in stocks, bonds, land-lording or other ventures you start with your free cashflow after eliminating debt.   Be free!
I'm sure there is plenty of 'make it easier for people to consume and stay in debt for longer' sentiment from the banks. But there is a tax benefit of offset accounts if you intend to turn it into an investment property at some later point, since you can claim the mortgage interest against rental income. I have no intention to turn mine into an investment property so had no need to set up an offset account and am simply paying the mortgage down directly.

Actually MMM specifically excludes low-interest mortgages from his 'debt is an emergency' observation. That said, I'm on track to pay mine off by the end of this year because there are a lot more benefits to pay it off in Australia than in the US. With the exception of salary sacrifice into superannuation up to the concessional limit (like maxing out your employer match on 401k), I have paid it off as fast as possible... so you are preaching to the choir here. However, if I had been in a country where 3% fixed 30 year loans were a thing it might have been a different story. The fastest way to freedom is to arm yourself with knowledge and work the numbers to optimise for your own situation.

talltexan

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Re: Mortgage Payoff Club!!
« Reply #1783 on: January 10, 2019, 09:27:02 AM »
Soon those of us in the US will start calculating our final income tax returns for 2018, and we'll be able to see whether our mortgages led to tax deductions or not. That may change the incentives for some of us.

jps

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Re: Mortgage Payoff Club!!
« Reply #1784 on: January 14, 2019, 05:05:02 PM »
Hey all, I'm new here!

DW and I closed on our house in Sep '18 and borrowed $85K for it on a 15-year note. Our first mortgage payment was Nov '18 and in 3 months we have already shaved an entire year off of amortization and are under $80K in principal balance. Hoping to crush the rest of the principal in the next few years while we save for some massive projects and contribute to our retirement accts.

Can't really talk about this to anyone in person, but excited to share here and get the excitement off my chest!

Megs193

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Re: Mortgage Payoff Club!!
« Reply #1785 on: January 14, 2019, 05:47:59 PM »
I just paid an extra $7,000 towards the mortgage for December so our balance is just under $290,000. I have already taken some money from our savings to pay a large chunk of it off but I I considering doing it again. Our original emergency fund was based on how much we spent monthly before we discovered MMM. Now we have cut our expenses drastically and Iím tempted to take it down to a years worth of our current spending but Iím not sure I can get my DH on board.

Money Badger

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Re: Mortgage Payoff Club!!
« Reply #1786 on: January 14, 2019, 08:35:39 PM »
@Megs193 , From $497K to $290 in less than a year is crushing it!   Now time to get
tough and grind out the rest of it!   All the little decisions add up and it just gets faster as the principal ratio goes in your favor about 2/3rds through the loan amortization schedule.   A smaller six months expense emergency cash fund would add a lot more equity in your pockets every month as well FWIW.   Think if it this way... Would you both agree to borrow a bankís cash against your house and just let it sit?   You guys have got this!



Trifele

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Re: Mortgage Payoff Club!!
« Reply #1787 on: January 15, 2019, 03:13:10 AM »
Hey all, I'm new here!

DW and I closed on our house in Sep '18 and borrowed $85K for it on a 15-year note. Our first mortgage payment was Nov '18 and in 3 months we have already shaved an entire year off of amortization and are under $80K in principal balance. Hoping to crush the rest of the principal in the next few years while we save for some massive projects and contribute to our retirement accts.

Can't really talk about this to anyone in person, but excited to share here and get the excitement off my chest!

Welcome @jps  !   Great job -- sounds like you are on a mission.  Go get 'em!

AlexMar

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Re: Mortgage Payoff Club!!
« Reply #1788 on: January 15, 2019, 06:00:26 AM »
I just paid an extra $7,000 towards the mortgage for December so our balance is just under $290,000. I have already taken some money from our savings to pay a large chunk of it off but I I considering doing it again. Our original emergency fund was based on how much we spent monthly before we discovered MMM. Now we have cut our expenses drastically and Iím tempted to take it down to a years worth of our current spending but Iím not sure I can get my DH on board.

What worked for me was to invest the mortgage payoff money.  Build up a sizable amount, then whack a HUGE portion of the mortgage or the whole thing at once.  Unless you plan on paying off super quickly and don't want a down market to ruin your plans, of course.  Making a $7k payment on a $290k mortgage would be depressing for me, lol.  But when the market was up and I had some solid gains on my investments, I had a bunch of extra money to throw at the mortgage and whacked the whole thing.

Megs193

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Re: Mortgage Payoff Club!!
« Reply #1789 on: January 15, 2019, 01:23:19 PM »
I just paid an extra $7,000 towards the mortgage for December so our balance is just under $290,000. I have already taken some money from our savings to pay a large chunk of it off but I I considering doing it again. Our original emergency fund was based on how much we spent monthly before we discovered MMM. Now we have cut our expenses drastically and Iím tempted to take it down to a years worth of our current spending but Iím not sure I can get my DH on board.

What worked for me was to invest the mortgage payoff money.  Build up a sizable amount, then whack a HUGE portion of the mortgage or the whole thing at once.  Unless you plan on paying off super quickly and don't want a down market to ruin your plans, of course.  Making a $7k payment on a $290k mortgage would be depressing for me, lol.  But when the market was up and I had some solid gains on my investments, I had a bunch of extra money to throw at the mortgage and whacked the whole thing.

Our plan is to pay it off by the end of 2020 so Iím nervous about putting it in the market. I apply whatever money we didnít spend or automatically save that month so it becomes a game to see how little I can spend in a month so my payment is as high as possible.

Megs193

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Re: Mortgage Payoff Club!!
« Reply #1790 on: January 15, 2019, 01:30:16 PM »
@Megs193 , From $497K to $290 in less than a year is crushing it!   Now time to get
tough and grind out the rest of it!   All the little decisions add up and it just gets faster as the principal ratio goes in your favor about 2/3rds through the loan amortization schedule.   A smaller six months expense emergency cash fund would add a lot more equity in your pockets every month as well FWIW.   Think if it this way... Would you both agree to borrow a bankís cash against your house and just let it sit?   You guys have got this!

Wow!  I didnít realize how much we had paid off. The crazier thing is that at least $100,000 of that was from cutting our expenses. Before I discovered MMM we were wasting so much money without even realizing it!  And I never thought of it that way but we would never borrow money from the mortgage to sit in a savings account. I would have to keep it at a year because that is what my husband needs to feel comfortable due to some rough times in his childhood but now that our expenses are lower we have more than that.

Car Jack

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Re: Mortgage Payoff Club!!
« Reply #1791 on: January 15, 2019, 01:59:24 PM »
I just paid an extra $7,000 towards the mortgage for December so our balance is just under $290,000. I have already taken some money from our savings to pay a large chunk of it off but I I considering doing it again. Our original emergency fund was based on how much we spent monthly before we discovered MMM. Now we have cut our expenses drastically and Iím tempted to take it down to a years worth of our current spending but Iím not sure I can get my DH on board.

What worked for me was to invest the mortgage payoff money.  Build up a sizable amount, then whack a HUGE portion of the mortgage or the whole thing at once.  Unless you plan on paying off super quickly and don't want a down market to ruin your plans, of course.  Making a $7k payment on a $290k mortgage would be depressing for me, lol.  But when the market was up and I had some solid gains on my investments, I had a bunch of extra money to throw at the mortgage and whacked the whole thing.

It's all what you're comfortable with.  I can still remember in our first house, sending in the extra $10.23 we had to spare at the end of the month.  No, it didn't do much, but it did chip away.  I'd be depressed if I put $7k into the market in July, and today it was worth $6k.  I did do one big chunk, but it was at the end, when I got a windfall from the sale of stock options and could pay off the rest of the mortgage ($70k-ish, if I remember right).  I did it in 2 steps without calling to get a payoff number.  I paid $70k, which was almost all of it.  Then the next bill came with a balance of like $5.  I wanted to be sure, so I immediately sent them $10.  They sent me a check for the overpayment and the payoff notice.

talltexan

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Re: Mortgage Payoff Club!!
« Reply #1792 on: January 15, 2019, 02:54:59 PM »
No joke, one of the best parts of paying down debt aggressively is doing it in a down market and being smug that you threw that $$ at the debt instead of into over-priced investments :-)

TexasRunner

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Re: Mortgage Payoff Club!!
« Reply #1793 on: January 15, 2019, 03:53:11 PM »
Hey all, I'm new here!

DW and I closed on our house in Sep '18 and borrowed $85K for it on a 15-year note. Our first mortgage payment was Nov '18 and in 3 months we have already shaved an entire year off of amortization and are under $80K in principal balance. Hoping to crush the rest of the principal in the next few years while we save for some massive projects and contribute to our retirement accts.

Can't really talk about this to anyone in person, but excited to share here and get the excitement off my chest!

Welcome @jps  !   Great job -- sounds like you are on a mission.  Go get 'em!

Glad you're asking them about the basics and making sure this is a wise financial decision!  Oh... wait...

@jps What's your interest rate and are you maxing out your tax-deferred accounts?

jps

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Re: Mortgage Payoff Club!!
« Reply #1794 on: January 15, 2019, 05:21:24 PM »
Hey all, I'm new here!

DW and I closed on our house in Sep '18 and borrowed $85K for it on a 15-year note. Our first mortgage payment was Nov '18 and in 3 months we have already shaved an entire year off of amortization and are under $80K in principal balance. Hoping to crush the rest of the principal in the next few years while we save for some massive projects and contribute to our retirement accts.

Can't really talk about this to anyone in person, but excited to share here and get the excitement off my chest!


Welcome @jps  !   Great job -- sounds like you are on a mission.  Go get 'em!

Glad you're asking them about the basics and making sure this is a wise financial decision!  Oh... wait...

@jps What's your interest rate and are you maxing out your tax-deferred accounts?

@TexasRunner 4.5%, halfway to maxing out both tax-deferred accounts. Planning on a permanent ~50% cut to income in two years, and would like to have the mortgage out of the way to improve cash flow. On only one income, would be able to max out tax-deferred accounts if we didn't have a mortgage.

Obviously, I am still new to this so I welcome input, but my thinking is this if we leverage a big income right now, we'd have significantly more ability to max our tax-deferred accounts for 10+ years, rather than just for 2 years before income is cut.

TexasRunner

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Re: Mortgage Payoff Club!!
« Reply #1795 on: January 16, 2019, 08:14:51 AM »
Hey all, I'm new here!

DW and I closed on our house in Sep '18 and borrowed $85K for it on a 15-year note. Our first mortgage payment was Nov '18 and in 3 months we have already shaved an entire year off of amortization and are under $80K in principal balance. Hoping to crush the rest of the principal in the next few years while we save for some massive projects and contribute to our retirement accts.

Can't really talk about this to anyone in person, but excited to share here and get the excitement off my chest!


Welcome @jps  !   Great job -- sounds like you are on a mission.  Go get 'em!

Glad you're asking them about the basics and making sure this is a wise financial decision!  Oh... wait...

@jps What's your interest rate and are you maxing out your tax-deferred accounts?

@TexasRunner 4.5%, halfway to maxing out both tax-deferred accounts. Planning on a permanent ~50% cut to income in two years, and would like to have the mortgage out of the way to improve cash flow. On only one income, would be able to max out tax-deferred accounts if we didn't have a mortgage.

Obviously, I am still new to this so I welcome input, but my thinking is this if we leverage a big income right now, we'd have significantly more ability to max our tax-deferred accounts for 10+ years, rather than just for 2 years before income is cut.

In your case this makes sense (mostly) as you have a known reduction in income coming up.  In that case its similar to someone about to FIRE, and you want to reduce sequence of return risk, or in this case maximize savings at a future point to continue to fill tax buckets.

The math says that if you are filling 50% of your tax buckets now (1/2 of $50,000 in 2 401ks and 2 IRAs), and are essentially forgoing 25k in tax savings now and next year, you have to max out the tax accounts for at least 3 years before you break even BUT that is only if you could not deposit anything towards your 401k while still paying the mortgage.  What is the maximum you could pay to your 401k in two years if you still had the mortgage, and how quickly to you both plan to FIRE after that?

By skipping out on 25k each year this year and next, you are losing out on $97,000 of tax free deposits and growth by the end of 10 years- and that's without even calculating the tax savings.  It is very likely that 97k is more that the entire interest on your loan.

Boofinator

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Re: Mortgage Payoff Club!!
« Reply #1796 on: January 16, 2019, 08:35:06 AM »
Hey all, I'm new here!

DW and I closed on our house in Sep '18 and borrowed $85K for it on a 15-year note. Our first mortgage payment was Nov '18 and in 3 months we have already shaved an entire year off of amortization and are under $80K in principal balance. Hoping to crush the rest of the principal in the next few years while we save for some massive projects and contribute to our retirement accts.

Can't really talk about this to anyone in person, but excited to share here and get the excitement off my chest!


Welcome @jps  !   Great job -- sounds like you are on a mission.  Go get 'em!

Glad you're asking them about the basics and making sure this is a wise financial decision!  Oh... wait...

@jps What's your interest rate and are you maxing out your tax-deferred accounts?

@TexasRunner 4.5%, halfway to maxing out both tax-deferred accounts. Planning on a permanent ~50% cut to income in two years, and would like to have the mortgage out of the way to improve cash flow. On only one income, would be able to max out tax-deferred accounts if we didn't have a mortgage.

Obviously, I am still new to this so I welcome input, but my thinking is this if we leverage a big income right now, we'd have significantly more ability to max our tax-deferred accounts for 10+ years, rather than just for 2 years before income is cut.

In your case this makes sense (mostly) as you have a known reduction in income coming up.  In that case its similar to someone about to FIRE, and you want to reduce sequence of return risk, or in this case maximize savings at a future point to continue to fill tax buckets.

The math says that if you are filling 50% of your tax buckets now (1/2 of $50,000 in 2 401ks and 2 IRAs), and are essentially forgoing 25k in tax savings now and next year, you have to max out the tax accounts for at least 3 years before you break even BUT that is only if you could not deposit anything towards your 401k while still paying the mortgage.  What is the maximum you could pay to your 401k in two years if you still had the mortgage, and how quickly to you both plan to FIRE after that?

By skipping out on 25k each year this year and next, you are losing out on $97,000 of tax free deposits and growth by the end of 10 years- and that's without even calculating the tax savings.  It is very likely that 97k is more that the entire interest on your loan.

I agree with TexasRunner: Do not pay off that mortgage, but rather invest in the 401k. As TexasRunner elegantly pointed out, the tax savings alone more than cover your interest (not even getting into return on investment). After you max tax-deferred accounts, you may want to consider paying off the mortgage, but even then you might want to consider investing in taxable (or Roth IRA) if you are a long way from full retirement.

FIreDrill

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Re: Mortgage Payoff Club!!
« Reply #1797 on: January 19, 2019, 10:43:31 PM »


No joke, one of the best parts of paying down debt aggressively is doing it in a down market and being smug that you threw that $$ at the debt instead of into over-priced investments :-)

Investing through a bear/down market is the exact time you should be thrilled about throwing extra money into stocks. Purchasing stocks while they are on "sale" will just increase your holdings quicker and prep your portfolio for a massive rise come the next bull run.

Sent from my moto g(6) using Tapatalk


Trifele

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Re: Mortgage Payoff Club!!
« Reply #1798 on: January 20, 2019, 03:55:12 AM »
Hey all, I'm new here!

DW and I closed on our house in Sep '18 and borrowed $85K for it on a 15-year note. Our first mortgage payment was Nov '18 and in 3 months we have already shaved an entire year off of amortization and are under $80K in principal balance. Hoping to crush the rest of the principal in the next few years while we save for some massive projects and contribute to our retirement accts.

Can't really talk about this to anyone in person, but excited to share here and get the excitement off my chest!


Welcome @jps  !   Great job -- sounds like you are on a mission.  Go get 'em!

Glad you're asking them about the basics and making sure this is a wise financial decision!  Oh... wait...

@jps What's your interest rate and are you maxing out your tax-deferred accounts?

@TexasRunner 4.5%, halfway to maxing out both tax-deferred accounts. Planning on a permanent ~50% cut to income in two years, and would like to have the mortgage out of the way to improve cash flow. On only one income, would be able to max out tax-deferred accounts if we didn't have a mortgage.

Obviously, I am still new to this so I welcome input, but my thinking is this if we leverage a big income right now, we'd have significantly more ability to max our tax-deferred accounts for 10+ years, rather than just for 2 years before income is cut.

In your case this makes sense (mostly) as you have a known reduction in income coming up.  In that case its similar to someone about to FIRE, and you want to reduce sequence of return risk, or in this case maximize savings at a future point to continue to fill tax buckets.

The math says that if you are filling 50% of your tax buckets now (1/2 of $50,000 in 2 401ks and 2 IRAs), and are essentially forgoing 25k in tax savings now and next year, you have to max out the tax accounts for at least 3 years before you break even BUT that is only if you could not deposit anything towards your 401k while still paying the mortgage.  What is the maximum you could pay to your 401k in two years if you still had the mortgage, and how quickly to you both plan to FIRE after that?

By skipping out on 25k each year this year and next, you are losing out on $97,000 of tax free deposits and growth by the end of 10 years- and that's without even calculating the tax savings.  It is very likely that 97k is more that the entire interest on your loan.

I agree with TexasRunner: Do not pay off that mortgage, but rather invest in the 401k. As TexasRunner elegantly pointed out, the tax savings alone more than cover your interest (not even getting into return on investment). After you max tax-deferred accounts, you may want to consider paying off the mortgage, but even then you might want to consider investing in taxable (or Roth IRA) if you are a long way from full retirement.

Careful folks . . . This is a celebration and support thread, not a thread where we try to persuade people to not pay off their mortgage.  (Those threads are elsewhere on the forum -- we can direct people to them).  Definitely appreciate the intent of the last couple comments and applaud your desire to educate, but the mods have stepped in on this thread several times in the past to draw that line.   

Money Badger

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Re: Mortgage Payoff Club!!
« Reply #1799 on: January 20, 2019, 08:15:45 PM »
And right on cue, here's one to celebrate...   After ~4 years on this thread, as of last week, it's DONE!   ;-)

The mortgage is paid in full, we unlocked a nice bit of equity already put it to work in our stash and our "right size" move to our smaller digs is done.  This accelerates free cash flow for us every month by reduced expenses every month to focus on FIRE.   The incidental savings of downsizing (reduced property taxes, no HOA dues, less utilities, etc.) were greater than our previous mortgage payment in our case for example.

And for even better timing, just received an "Important Notice" from our former lender that the variable rate on our previous ARM was going to reset soon to just over double the initial term's interest rate.   HA!   So sweet to tear that letter up and just laugh out loud about it.    For folks who may be worried or distracted, focus on freedom from debt and you'll get there!