Status Update:
Date: September 1, 2013
Pay periods to go: 20
Mortgage balance: $36234
Savings balance: $20900
Total balance left to close: $15334
Assuming I do this in 22 pay periods: 13.6% complete
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Comments:
-Thanks Enderland! It's nice to have some encouragement. I expect this thread will become a bit of a snoozer for all but me as I slowly plod onwards so I do appreciate the positive vibes.
-I have decided to plow ahead with my original goal of paying off my mortgage by the end of June 2014. Comments here raised some interesting points and gave me pause to reconsider, but I’ve decided to stick with my original goal. Does this mean I think that these alternate points of view are ‘wrong’? No. Rather, as my very first post indicated, I have taken a deliberate individual decision on this particular path, recognizing that from a strictly mathematical perspective, a good argument can be made that it’s a less efficient one: “Yes, I'm aware that there's a strong argument that I'm a dumbass for deploying capital to wipe out a debt at 3.15% when I could be earning double that in a whole of market index fund. Why then? This is my own little personal challenge and sometimes it's not just numbers, there's a psychological element to it as well [cue John Lennon's 'Imagine' in the background].”
-Looks like there was a helluva debate on this exact issue already:
https://forum.mrmoneymustache.com/throw-down-the-gauntlet/mortgage-payoff-club!!/I had some further thoughts on this debate, but I'll leave them in my backpocket for now.
-At present, I’m slowly working through the old MMM posts in two directions, from the oldest forwards and also the newest as they appear. In doing so, I’ve run across a few posts which are roughly on point on the 'payin' down the mortgage' discussion:
"And, of course, the best guaranteed no-volatility place to invest your money may be paying off existing debt. Your mortgage, your student loan, or if you still have superbad loans like car or credit card debt, you need to get on those, emergency style, before you consider saving for anything else."
http://www.mrmoneymustache.com/2011/06/07/where-should-i-invest-my-short-term-stash/ "Also, by wiping out your debt (including mortgage) early on, you are effectively investing in some guaranteed bonds: paying off a 5% mortgage guarantees you a 5% return forever*. With no mortgage or other loans, my family’s fixed costs are only a tiny fraction of what the typical indebted person needs to pull in. So there is lots of flexibility in when to sell off portions of the index fund for future living expenses. And the dividend checks keep coming every quarter, rain or shine."[/li][/list]
http://www.mrmoneymustache.com/2011/04/26/why-hardcore-saving-is-much-more-powerful-than-masterful-investing/ "So before treating yourself to a house, I’d suggest you go about it the old-fashioned way: save up a 20% down payment, then make it a priority to pay the rest of the balance off much sooner than the 30-year period implied by modern mortgages. The idea of having a house mortgage-free might shock some youngsters who have been conditioned by marketing to think that debt is normal, but seriously – give it a try. The challenge of thinking about saving larger amounts of money – a $50,000 downpayment on a house – is exactly the type of exercise you need as a new MMM reader. If I could do it as a 24-year-old bachelor fresh off the boat after arriving in America, you can too!"
http://www.mrmoneymustache.com/2011/05/11/the-elephant-in-the-room-housing/[/li][/list]
-I’m firmly in the camp that places a high importance on both the human part of the equation, as well as the numbers. This was important for me in setting this goal, and I can already see that the psychological part of this will be important if I’m to accomplish it. I made a bar graph to chart my progress, but at this early point in the journey it’s not particularly encouraging. Even over just about a year, it appears to be a long, slow battle. What does seem encouraging to me is to look at it in terms of how many ‘steps’ I’ve completed of the anticipated 22 pay-periods (or so) I may need to complete it. Looking at it this way, I’ve already completed 13.6% of the journey. This feels like progress to me. So, a post-it note of % of the journey completed will be updated on my graph at home every two weeks. I'll take stock near the end of the journey as 'I head into port' so to speak on whether or not additional time is necessary based on extra fees etc., but at that point, I don't think motivation will be an issue near the end.
-I’m feeling the pinch a bit. After all my automatic transfers and payments get made I'm not left with a whole lot, but the satisfaction of moving forward on a financial 'project' is kind of cool. Electricity and bus pass both got paid in the last few days and I also did a run out to Ikea for a few things. Things will be tight for the next two weeks. Looking forward to my new level at work taking effect and hopefully seeing that reflected in September’s first pay.
-My savings were topped up a bit more than planned by about $27 in interest and an extra addition by me of around $22 to bring my savings total to a round $20900. It was only about $50, but over the next 10 months this could have a cumulatively significant effect. I'll
try to add in a top up to the interest each month to bring it up to the next round $50 or $100 figure.
-Looking ahead, I anticipate dipping into my mortgage savings in late October to pay off business travel expenses on my credit card which I’ll later get reimbursed for. So long as I’m disciplined this shouldn't derail me though it will temporarily put my numbers off. Perhaps I’ll add on some detail to my bi-weekly stats which indicate where the numbers *should* be until they get put back in line. Based on my time for reimbursement, this could leave me derailed till the end of November. If there’s a near-term chance of me falling off the wagon, it will be here.