View Full Version : Ideas on how to pay my home mortgage off early
Hi all:
Last year I refinanced my house and consolidated my 1st and 2nd mortgage. I got a great rate and will save over 22k over the course of the new loan. But now I have a bigger goal. I want to pay my now 19 year term loan off in 10 more years (or 12 at the maximum.)
I am a public school teacher whose student loan debt will be paid off in 8.5 years. I also run my household on only my income.
I have spent the past year pinching my pennies to make a big purchase at the end of the summer. I am almost at that point but I want to start hitting and hitting hard this mortgage in a way I can maintain as soon as I'm done with this goal.
I feel like I want to put every penny I've saved per month this year toward the mortgage but I don't know if I can sustain that kind of Spartan lifestyle indefinitely. I haven't had TV for over 2 years in an attempt to save. I'm kind of thinking I'd like to get a TV now. I don't want to go hog wild spending now that I'm done my goal, but I'd like to lighten up with the no, no, no to everything a little bit.
Any suggestions from those of you currently working toward paying your mortgage off early or those who have already done so would be appreciated.
Thanks in advance for your ideas!
Gardenarian
6-19-12, 8:27pm
Quick question - is the interest on your student loan higher than your mortgage? If so, I would concentrate on paying that off first.
If you are happy with an old box-style TV (not HDTV flat panel) then you can easily pick one up for free. People are giving them away left and right. You may need a digital converter to get broadcast TV (we have not had regular TV in many years - just get DVDs from the library now and then.) A lot of people I know use their computer as their television (watching hulu, youtube - there's lots of stuff I'm not familiar with.)
I second the student loan thought - if it's higher - and for some people, even if it's not, then send all your surplus funds to it. Of course, don't neglect the mortgage, just don't prepay the principal.
One thing that worked for us was to make saving like a game. I would ask how long to fill a jar with spare change, and the winner would get to pick a cheap treat. If we could fill a mayo jar in a month - and ds was pretty good at helping that to happen - then we would save about $70 - 100 just in spare change. When paying for items, pay in full dollar increments and save the change. Also, pay for items with cash when you can. It does make one mentally question whether it's worth it.
As you touched on, don't always live in a constant state of denial. It's sure to cause a binge spending spree! Instead, have planned "off budget" events at regular intervals so that you are not feeling too deprived.
When grocery shopping, if you purchase the store specials and there is a total savings listed - put that money in the debt payoff fund.
paying off the student loan debt (regardless of interest) may be the best idea. i paid off my lower interest student loans first and having that "monthly expense" wiped clean helped me greatly to focus then on the mortgage.
regarding saying "yes" to a few splurges. do it. but do it carefully. take out a sheet of paper and write everything in your wildest dreams that you want to buy RIGHT NOW!!!!!!!!!!
just getting it out of your system and on paper can greatly reduce the pressure cooker on it.
then, priortize. of that list, pick your most favorite. put future dates on the rest of them, like in 2013 or 2015. (by then, you may not want them, but at least you can be satisfied right now that you have a set date for them).
of the ones you want this year, TV perhaps, break them up in to months or something.
i wanted to buy a whole bunch of horror movies this year, i listed all the ones i wanted, then i just picked the most favorite. and, i buy one a month.
i have to wait at least a month for the next one, so it makes it like a prize to work toward.
also, you should know, that by letting yourself say "yes" to a few things, even just this TV, it will greatly put the pressure off.
once you get the TV, you may feel just a little guilty, guilty enough to put the rest of those purchases on hold a bit, but still enjoy the TV.
congrats to you!
we are on the same path you and i.
My student loan interest rate is horrific. Luckily Congress passed and President Bush signed the Public Service Student Loan Forgiveness Law before the end of his term. It allows public servants to pay loan payments based on their income for 10 years and then have the remainder of their debts forgiven provided they are still public servants. So it wouldn't be in my interest to pay more on student loans as I am in this program.
Yeah, I can absolutely see me buying a new TV and then feeling guilty about it. I don't know what I'll do. I have been denying myself for so long saving up to make this purchase that it seems to have become part of who I am--especially in the past 6 months as I've been frequenting simple living and frugality websites.
Thanks for the great ideas.
chickpea30
6-20-12, 9:28am
I just wanted to add that we paid off our mortgage early. I thought that after we paid it off that I would be able to relax and not worry about money. I am proud of myself for paying it off, but it did not alleviate my concerns about money. It is something I still work on every day; realizing that money is just a means of exchange and that I always had enough and will have enough. I think that we need to be kind to ourselves and not feel guilty with any choices that we make.
fidgiegirl
6-20-12, 6:31pm
bunnys, I did not know about the forgiveness program. Interesting.
http://www.finaid.org/loans/publicservice.phtml
How about a used TV? You could still have TV, but not have to shell out for a new one. I bet you could even get a larger tube TV for free, leaving you just to purchase the converter box/antenna for over-the-air signal if needed or hook up your cable or whatever you are going to do.
Yes Fidgie. I know you said you're a teacher. If you work for the public schools and still have student debt you should look into it.
I think I will look around for a free/cheap TV in the fall but I will not get cable again.
I just pulled out all my receipts for the entire year thus far. Figured what I've been spending on my groceries only and was very pleased that I'm only spending about 63 bucks per week. I just commented about grocery spending on another thread bc I thought I was spending A LOT MORE myself.
I've been trying to think of ways I can shave that down by 5 or 10 more dollars per week but given my weird diet and the fact that many of the things I eat never go on sale, I'm kind of limited.
When my big purchase is made at the end of the summer I'm going to start pounding on the mortgage. Just trying to figure out how much I can put to it every month and be consistent. I don't know how much leeway I should allow myself for emergencies/luxuries/living beyond just paying the bills every month. I'm going to have to work on this for 10 years and I don't want to commit to something I can't sustain...
fidgiegirl
6-20-12, 9:23pm
Another thing to keep in mind is that you wouldn't have to go for the 10 years straight. When I was paying off my consumer/student debt, I would hit it really hard for a while, and then stuff would come up. For example, my sister decided to get married in Hawaii. I wasn't willing to say no to that trip, but it cost a lot of money. So I took a break in the debt repayment and focused on saving up for Hawaii. One thing I am proud to say is that once I committed to getting out of debt, I did not go further in. It was very hard at times not to do so, but I think taking this tempered approach made it happen. I had to be ok with not making as MUCH forward progress at times, but I was still moving forward.
I was re-reading your original post, and forgive me if you've said in other threads, but do you have kids living with you? I would think that will make an impact on your progress. But even if not, anything can happen.
I just wanted to add that we paid off our mortgage early. I thought that after we paid it off that I would be able to relax and not worry about money. I am proud of myself for paying it off, but it did not alleviate my concerns about money. It is something I still work on every day; realizing that money is just a means of exchange and that I always had enough and will have enough. I think that we need to be kind to ourselves and not feel guilty with any choices that we make.
THIS IS VERY INSIGHTFUL! I suspected as much!
I am very focused on my mortgage and I keep asking myself, "will anything actually change once you have it paid off?"
Thing is, debt can be a huge weight to bare BUT not having debt doesn't mean there is no more weight to bare at all.
I know Suze Ormann once said that you cannot view money as a means of security. Because, it isn't security.
I like how you say to be kind to yourself. That is really really really good advice.
A paid off mortgage doesn't mean anything in many ways. It is a great thing to have but it isn't your life worth. It won't in and of itself make problems go away or make you happy.
Wow oh wow.
I like you.
chickpea30
6-21-12, 9:27am
I like you too!
iris lily
6-21-12, 10:44am
I just wanted to add that we paid off our mortgage early. I thought that after we paid it off that I would be able to relax and not worry about money. I am proud of myself for paying it off, but it did not alleviate my concerns about money. It is something I still work on every day; realizing that money is just a means of exchange and that I always had enough and will have enough. I think that we need to be kind to ourselves and not feel guilty with any choices that we make.
I think that people who are focused enough on mortgage elimination are pretty focused on money, period, so their concern about money will never go away.
For one brief period in my life, five years, I had a mortgage. I remember the horrifying moment when, signing up for that mortgage, the disclosure documentation showed how much I would pay in interest over the life of the mortgage. I thought to myself: never again will I sign one of these mortgages. And I was lucky after that to find a way into having a paid-for house but it was more than luck (of course, it always is.) I always tell people that you, too, can have a paid for house if you are willing to live the way that we did for 20 years--living in a shell with electricity only in some of the house, one room plumbed, no kitchen cabinets, no floor, wall finishes, etc. And, drive old cars and thrift shop and the like to support getting the house to "done."
bunnys, have you used one of the online calculators to figure out how much extra you'd have to pay every month in order to pay off your mortgage in 10 years? We're going through a similar exercise and they were very helpful for us. At least that tells you exactly how much extra you have to pay per month to reach your goal, no gray area.
I don't happen to agree that money isn't a source of security. When you are 80 and possibly facing going into assisted living, or affording healthcare, there's a vast gulf between having $10,000 in the bank to pay for it, and $100,000. That's money, pure and simple, and if one redirects every dollar they're currently paying a mortgage bank into safe savings, it makes the difference between the cockroach-infested public facility or the one where you might actually have quality of life.
It's not the only source of security (I also count survival skills, a brain, a strong community, self-reliance, personal economy, and many other things) but it matters, especially if one doesn't have children. Getting rid of a large monthly payment and directing that money into savings instead - a good goal imho.
Re: the TV thing - hubby and I got rid of TV a long time ago. We fell out of love with the same-old same-old sitcoms and such a while back. But we do have a widescreen set, because we rent DVDs and I enjoy playing video games on a big screen.
So we don't have a cable bill (Comcast is really baffled by the fact that we don't buy cable, they seem to think it's a necessity like food or water), but we did splurge on the widescreen. It was a one-time cost though, and the cost-per-use goes down daily. For us it was worth it - plus we're more likely to stay in, instead of spending a ton of money on movies or other kinds of entertainment after work.
If the TV will keep you entertained at home and less likely to go out, I'd say it's worth it!
fidgiegirl
6-23-12, 12:21am
Guys, on this topic, my sister made an interesting comment to me tonight and I wanted to get your take.
She thinks that rather than sending the money to the mortgage, one should save the money they WOULD send to the mortgage and when they have enough to pay it off, to do so.
I think I disagree, but am not sure. Though I think it could be done over a short period. Say, save the extra for six months and then send it in, rather than bothering with dribs and drabs.
First, the interest on savings isn't going to be anywhere near the interest on the mortgage, so it'd be like a bike trying to keep up with a car. The car is going to win.
Secondly, we, and most people I know, would spend that money, not save up to $200,000 or whatever it takes. If people were easily able to do that, they would just do that before buying a house.
That said, I can see her point. Actually, about a year and a half ago, we made the conscious decision NOT to pay extra on the mortgage. The value of the property was dropping and we felt it would be akin to bailing water out of a sinking ship. We thought we were interested in selling so didn't want to basically throw our money away by paying extra and not recovering the equity at the time of sale. Now that it's a rental, though, it feels different. It feels like "pay off the loan and then all the rent will be profit we can use toward paying off this house."
Our new house would appraise for much more than we paid, partly because we lucked into a steal, partly because we busted our humps making awesome improvements, like a redone bathroom. So that value-of-the-property doesn't really hold here, either. And sold signs are going up a lot faster now. I think it's heating up around here.
Now in my sister's town, the values are still depressed. Well, they still are here, too. But it's looking up in our neighborhood. Not so sure about hers.
What do you think?
fidgiegirl
6-23-12, 12:35am
pug you gave me the idea to go start hunting down calculators :)
This is a good page: http://www.mtgprofessor.com/CalculatorArticles/Mortgage%20Payoff%20Calculators.html
More sensitive to circumstances than the one everyone seems to use. Plus that one was so far off on what our monthly payments are . . . I dunno, I suppose cuz we have escrow is why but I just didn't trust it.
fidgiegirl
6-23-12, 12:51am
Hmmm think I made a mistake in comparing the mortgage to a bank account. That much money would go into some kind of stock account most likely, which would perform better.
try2bfrugal
6-23-12, 1:11am
Just a thought, but have you considered getting a more affordable home you could pay off easier? I have been intrigued with the tiny house videos on faircompanies.com. We are not getting a tiny house but we do plan to downsize. Besides the price of the house we will save quite a bit over the rest of our lives on expenses like repairs, water, insurance and heating.
Another option would be to get a room mate to pay rent.
fidgiegirl,
i get so much satisfaction throwing 100 bucks at my mortgage and seeing it rip away like 3 months of time. it is soooo coool.
and i think little drops is good. i got 20 bucks once and i threw it at the mortgage. it was cool.
20 bucks in to savings would not be as cool.
every little CENT makes your mortgage go down.
chanterelle
6-23-12, 9:54am
this is a good thread..so many perspectives!
I paid my house off 12 years ago, with extra payments every month...it was the major reaon that I could leave paid work 3 years later.
However, I feel a great deal has changed in the economy, and my situation might not apply well to people now.
I had no student loans, my house was worth much more than I paid for it [and still is, even with the huge 30%/40% RE losses in my area] my job was always shifting but paid well and I could always pick up several well paying gigs if I wanted/needed. Much of this is not the case now.
My house has a rental unit attached , which is a good part of my income, and I have had very good tenants..The kind who come up with water and heat saving suggestions and help compost kitchen scraps!
If, down the road, you come to dislike being a landlord[ it takes a particular personality!] and that property now has marginal market value, I would hesitate to pay that perticular mortgage off early. I most likely would keep a separate account and possibly pay it later when things settle down or the situation is more clear.
You can always pay it down later or use those funds towards your own place, or put them toward student loans if you have them as SL's will follow you into old age.
As employment is now iffy in alot of professions that were once stable and valued, given a job loss, or health emergency, special plans for those in the service sector may never be realized. If you cannot pay those plans off early now on a montly basis it will be good to have the ability to do so with a special savings account set up now for that purpose..
If your house is marginal and you job is iffy, putting money into a separate mortgage savings account and paying it in a lump now and again may be the way to go if you lose you job and need to relocate else where especially if you have SL's hanging around your neck as well.
If your job is stable, you have no SL's and an excellent emergency fund and you plan to remain in this house for a good while I can see the value of monthly extra payments monthly, as Dude points out it rocks to see the balance drop each month.
Never underestimate the value of a giant E fund and the potential disaster of unpaid SL's...one needs to allocate funds carefully according to YOUR particular situation,
fidgiegirl
6-23-12, 10:38am
I did some calculators last night and am a little discouraged at how long it's gonna take. But you know what? Anything we do extra is gonna be faster than 30. I just have to remember that we have to enjoy life in the meanwhile. Neither of us will want to completely forgo travel for the next 10 years, for example. That's important to us. But the groceries, the cars, the yard - that can all be done inexpensively, and we are always learning more frugal and self-reliant skills to help keep costs down.
bunnys? What do you think? Is this helping re: your OP?
My wife and I got married in 1996. We had about $5000 in credit card debt and $27,000 in student loans.
At the time, my wife worked at a library, and I was working on my graduate degree, (in eastern classics -- not a very employable MA).
I started teaching high school a year after we married, and we used my income to pay off the debts. We had decided, when we were dating, that I would be the at-home-parent. That was more important to us than money.
In 1998, we bought our house for $127,000. At the time, my wife's father loaned us $40,000 for the down payment, (which my mother-in-law gifted us at his death).
In 1999, I stopped teaching to take care of our new baby, so, at that point, we had $86,000 in mortgage debt and a $42,000 a year income.
We budgeted, were frugal, joined this discussion board, and always tried to pay more on the mortgage than we had to.
Then we had to borrow $15,000 for a new roof putting our debt at close to $100,000. And then, my wife decided to go to massage school, so that was another $7000 in student loans, and we would sometimes build a little credit card debt, but paying off the credit card each month was the number one priority.
Still, the debt seemed insurmountable, and just the financial software telling me that paying an extra fifty dollars that month knocked another month off the life of the mortgage kept me hopeful. This past winter, we finally HAD to replace our old furnace and hot water heater, and we also put a little home repair on the loan, (we've had vigas rotting into the front porch for the entire time we've had the house).
I have to say that seemingly always being $100,000 in debt is discouraging, but all I could do is keep chipping away at the length of the loans. That kept me motivated. And, I have to admit that it would be very easy to push me over into simply charging everything I want. I never want much, but I think it's funny, and telling, that if you put a dollar amount to the things I want but feel I just can't afford right now, the amount would always be the same, no matter how many things on my list I eventually save for and buy. Shouldn't you be able to reach a point where you feel, "that's it, I'm done. All I have to do is mend my clothes for the next fifty years).
When my mother passed away this February, rather than buying the things I wanted on my list, I dumped most of the money into the principal of the mortgage, paid off the furnace loan, paid off my wife's student loan, and funded a decent emergency fund. (And we also bought a used car and a scooter, ending our eight year streak of not owning a car).
We now owe about $45,000 on the mortgage alone, and we can can put all the money we were paying on the other stuff into the mortgage. During all that time of struggling, we developed the skills that will allow us to knock out the $45,000 in three years on my part time and my wife's full time income.
For me, the financial software kept me motivated, because, while it seemed I was just dumping money into a void, (money that I could have used to do something fun and distract myself from all the debt!), I could see the lengths of the loans getting shorter.
And it hasn't been a perfect process, (not to mention we're not done). My wife doesn't really want to hear about the finances. She's happy I work so hard at it, but she doesn't want to hear about it. I would prefer she get excited about Your Money or Your Life and pepper me with ideas to save money. I do well when I'm encouraged. Instead, I'm always encouraged in the other direction. When our grocery budget is used up for the month, she doesn't go into the kitchen with me to see what we can make with the old split peas and that three-year-old box of cous cous, she sends me out to the store for sushi, beer and ice cream. I've learned you just have to accept those small things and work around them. It's easy, when you're putting so much energy into trying to pay off debt, (god forbid you're even trying to become financially independent), to fly off the handle at your spouse. "You spent three dollars on gum! We don't have a category for gum!"
Let it go. Take it easy. Keep the big picture in mind and watch your own habits. It's the journey, not the destination, and so on.
(Edited to add: Right now it looks like our mortgage will be paid in 2015, rather than 2028, which would be the end of the original 30 year term.)
awakenedsoul
6-23-12, 2:19pm
Small changes can help you get out of debt faster. My tiny house is paid off, and so is my car. I use my bicycle or the bus for most of my errands. That has saved me a ton of money. I grow as much of my own food as I can, and I read, do yoga, and check out DVD's from the library instead of watching t.v. I buy almost everything at thrift stores and I mend and do my own repairs as much as possible. Since making these changes, I received a windfall, and was able to pay off my cc debt and business loan in 2 years instead of 10. Closing the business saved me more money. I was able to retire early. So, even though it sometimes looks like a long road, your positive actions may speed things up for you. Because my living expenses are so low now, I have a nice fat emergency fund. I feel much more secure now than when I was dog paddling in debt! I need and use much less. I stay as cash heavy as possible. My neighborhood is a little iffy, but it's very inexpensive to live here. (I got the house for $89,500.) I've planted a gorgeous potager garden and make it look as beautiful and artistic as possible. I also adopted a German shepherd and she's a great watchdog/protector.
DH and I pay on almost nothing besides mortgage. We're used to doing without things like TV. My goal is if one of us dies first, then the other can still pay the mortgage and not lose the house. With refinancing this month, if indeed it all goes through as predicted, and then continuing to wildly pay down our 2nd mortgage, we'll have $600 less monthly mortgage payment, ie down to $900 or a little less. That's for life. I'm 70, he's 68. One way I stay on track is to remind myself that however much we need even necessities now, we'll need them more more the older we get.
So we don't have a cable bill (Comcast is really baffled by the fact that we don't buy cable, they seem to think it's a necessity like food or water),
This reminds me of a conversation I had with Comcast many years ago. I'd lived years without any tv, then bought a small one and started using the free broadcast channels that were coming over the cable wire in my apartment. I don't know if Comcast somehow knew that I was now using the signals or what, but I got a sales call from them:
A minute of back and forth where he tried to use his pitch on me, followed by:
Me: No thanks. I don't need to buy cable. I barely watch the free broadcast channels I currently get.
Salesperson: How do you LIVE without TV???
Me: Actually I'm doing just fine. Thanks for calling. [click]
Guys, on this topic, my sister made an interesting comment to me tonight and I wanted to get your take.
She thinks that rather than sending the money to the mortgage, one should save the money they WOULD send to the mortgage and when they have enough to pay it off, to do so.
I think I disagree, but am not sure. Though I think it could be done over a short period. Say, save the extra for six months and then send it in, rather than bothering with dribs and drabs.
First, the interest on savings isn't going to be anywhere near the interest on the mortgage, so it'd be like a bike trying to keep up with a car. The car is going to win.
Secondly, we, and most people I know, would spend that money, not save up to $200,000 or whatever it takes. If people were easily able to do that, they would just do that before buying a house.
That said, I can see her point. Actually, about a year and a half ago, we made the conscious decision NOT to pay extra on the mortgage. The value of the property was dropping and we felt it would be akin to bailing water out of a sinking ship. We thought we were interested in selling so didn't want to basically throw our money away by paying extra and not recovering the equity at the time of sale. Now that it's a rental, though, it feels different. It feels like "pay off the loan and then all the rent will be profit we can use toward paying off this house."
Our new house would appraise for much more than we paid, partly because we lucked into a steal, partly because we busted our humps making awesome improvements, like a redone bathroom. So that value-of-the-property doesn't really hold here, either. And sold signs are going up a lot faster now. I think it's heating up around here.
Now in my sister's town, the values are still depressed. Well, they still are here, too. But it's looking up in our neighborhood. Not so sure about hers.
What do you think?
Your sister's plan only makes sense if you can invest that money in something that earns more return then your mortgage charges. The beauty of paying off the principal of the mortgage early is that it reduces the amount of interest that accrues each month. If you can offset that by getting better returns elsewhere then yes, do so instead of paying the mortgage down. Not only are you coming out ahead from a strictly dollar viewpoint, but you're also diversifying your investments away from having all your savings tied up in house equity. Otherwise pay the loan down as quickly as possible.
Fidgie:
To be honest, I have looked really hard at this. I am a teacher in a state where the salaries are completely flat. Difference btwn bachelor's and master's is 1k. We haven't gotten a step increase (usually $100-300 per year) in 4 years, not that that really matters. The salaries are dead end here. And took a pay cut of 2% 2 years ago that will finally be reinstated this year.
So, I can't sit here and fantasize about my salary suddenly taking off to get this mortgage paid off. I want to retire in 10 years. I currently have 19 left on my mortgage but no other debt. For me to pay this mortgage off in 10 years I am going to have to allocate virtually all of my salary after basic needs food/shelter/utilities are paid each month. It leaves virtually nothing for clothing and nothing for vacations or entertainment and nothing for luxuries (books, music, evenings out, gym memberships, et. al.)
Do I think I can do this? Yes because I am really, really used to not spending money on anything. In 8.5 years my student loan will be paid off and I plan on funneling all the money that's going into that toward getting rid of the mortgage that last 1.5 years. I also plan on allocating anything extra (tax returns, bonuses for organizing student trips to Europe, etc.) right into the mortgage as well.
I don't think I can afford to retire and not be at full retirement or collecting SS with a mortgage over my head. My goal is 10 years but if I have to go to 11 or 12, I will. I just don't want to.
I don't think I can stand to teach much more than another decade and still be a good teacher. I've been doing it awhile and while I love it and I really like the kids (because I like people in general) and I feel like I'm doing a vital service, once I hit 60 or so, I know I'm going to have get out or I'm gonna be some kind of mean. I want to be a good teacher, not an angry one and the nature of teaching is that (while it can be fulfilling,) it sucks the life out of you. I don't want to be still in there when I'm a blue-haired 67-year-old.
So, I'm going to work really, really hard to get this mortgage paid off in 10. If I find an additional source of income, it should be easy....
fidgiegirl
6-27-12, 9:39am
bunnys, I admire your confidence. I believe in people who believe in themselves!!
I hear you about not being able to do it forever. It's so intense.
I hope you will keep reporting back to the boards about your progress.
I love these stories everyone! Pcooley that is some story. Awakenedsoul, I too want to put more effort and yes allocate some modest funding to making my home prettier and cosier--especially putting money into the yard. I have lost like 9 oaks since I bought this house (so depressing) and I'm going to replace some of those trees this year with silver maples and tulip poplars. I so love the shade and it helps with the cooling as well bc I just don't like to do AC. I love the story about the cable salesman! You gotta laugh.
Fidgie, I know what you mean as far as being overwhelmed trying to make the payments every single month and how little impact one payment extra makes. But it think the important thing is keeping in mind the collective impact of many extra little payments will have over the course of this project. Honestly, I think it's just making this process part of what you do, like flossing your teeth every day and getting out of bed and going to work. You just do it. Sometimes I feel like a little automaton.
And Fidgie, I can't imagine that your sister's plan would work at all. That just doesn't make sense, economically. Also, thanks for the affirmation!
broadcast bunny ear tv is not what it used to be. it is far more than the big 3 plus public tv.
i am on broadcast and in addition to getting full HDTV FREE through the airwaves, I get 15 channels that I watch! Beyond that, there are about 10 more channels that I do not watch (so about 25 channels total). Isn't that about what a basic cable package gives you? 25 channels or so and most of them the ones I already get?
I could buy complete full season box sets of shows I am missing on cable complete with behind the scenes footage and extras AND STILL BE SAVING MONEY!
see what I posted in a similiar thread on the "success" board. I basicly lived bare bones, got roommates and a second job and paid off the house (and ex-dh) with in about 4 years after buying it.
Spartana, good to see you back.
fidgie,
we're taking the approach your sister suggests in relation to our mortgage for a few different reasons:
1) The rules on mortgages in China are different in the US, so we can't do small pre-payments. We can only make extra payments after we've had the mortgage for three years (which has now happened) and then can only make large lump sum payments. i think the minimum is 10% of the balance, which in our case is around $25k.
2) DH's job situation is a little unstable, so while we could put some of our liquid reserve toward the mortgage that would leave us without sufficient cushion (in my mind at least) should he lose his job. Once we have enough in cash reserve to fund 1-2 years of living expenses, I might feel more comfortable paying off the mortgage.
3) Our current interest rate is not bad -- 4.25% (compared to the 3.75% it was when we started).
4) US$ depreciation is working in our favor in relation to the mortgage, as it is in US$ -- the comparative cost of the mortgage goes down as the US$ depreciates against the RMB, while the US$ equivalent value of the apartment goes up. Yes, it makes me a bit nervous to be hedging currency rates in this way, but I think the general consensus is that the US$ has nowhere to go but down in relation to the RMB, so I'll ride that wave while we can.
5) The remainder on our mortgage balance is a small fraction of our apartment's current value, and we would make a large profit if we were to sell at current market rates. It would take an enormous drop in property values for us to lose money, and even if the value of the apartment dropped to $0 we could pay off the mortgage with our current reserves plus a small withdrawal from long-term investments if we needed to. Knowing we could manage that makes it easier to have the mortgage still hanging there.
6) I'm not totally sure how our housing situation is going to play into financial aid issues when the time comes for the kids to go to college, but my perception is that having a mortgage works in your favor in most cases. Need to do more research on that issue, especially as it applies to our wierd expat status (which means that there is no way for kids to get instate tuition at any state school, unless we move back before they go to college).
Admittedly our situation is extremely atypical, but it does point out that there are some situations where paying down the mortgage in small increments might not be the best/preferable approach.
lhamo
Spartana, good to see you back.
Thanks - still meandering. Just spent the last month touring around Calif - Oregon and Washington next - but checking in when I'm back home.
Another thing I did when I was trying to pay off my house was to put extra money towards the principal for things I almost bought but didn't. Say i was going to buy some clothes, or have dinner, drinks, movie, etc.. out, go on a trip, whatever.. but stopped my self from spending that money on those unneeded (and often impulse) buys. I would then take the money I would have spent and put that right towrds the mortgage. I figured if I was willing to part with that money for something I really didn't need or even want like new clothes or an expensive meal out, I must have enough to pay extra towards the mortgage to get out of debt sooner. I even tracked that as a spending catagory for a couple of years. I think I titled it "crap i didn't need but was gonna buy anyways so might as well pay off the house instead" catagory. It was surprising just how much extra money I put towards paying of the house with just that money.
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