My Mortgage Payoff Plan

First of all some props are due here:

  1. To Dave Ramsey and his book, The Total Money Makeover, for opening up my eyes towards debt and planting the seed inside of me to want to payoff my mortgage extremely early.
  2. To JMoney of BudgetsAre$exy.com for inspiring to create this blog to document my journey and even giving me inspiration for the title of the blog.

We bought our absolutely wonderful house in August of 2009 and landed ourselves with a 30-year mortgage of $295,000 at 5.25% and a monthly payment of $1,629.

Since then we followed the steps in Dave Ramsey’s book, The Total Money MakeoverThe Total Money Makeover, and are now completely debt free except for the house. [insert primal scream of joy here]

In June of 2012 we refinanced through Quicken Loans (highly recommend them BTW) and ended up with a 30-year mortgage of $288,225 at 3.99% and a monthly payment of $1,374.37 which is a nice savings of $254.63 per month.

I know. I know. Some of you people reading who are familiar with Dave Ramsey are shaking their heads about me getting a 30 year loan again. I know Dave only “allows” a 15 year. I know.

I almost did do a 15 year – but I chickened out. The monthly payment seemed too high at $2,130.52. Being a freelancer with unsteady income, it was a little hard to pull the trigger on that. I wanted the flexibility of a lower mortgage payment if we needed to.

BUT – I promised myself that once all the other of Dave’s Baby Steps were completed we would start putting the extra $750/month into the loan to make it into a 15 year or less loan.

In fact – that’s what we started doing in November 2012, where I made my first extra payment of $750.

In December 2012 we made an extra payment of $975.41

January 2013 we made an extra payment of $800.

February 2013 an extra payment of $800.

March 2013 an extra payment of $0. Wait ZERO? Yes.

Maybe Dave has a point. We’re saving to buy a new car – we need a minivan as we’re having our third – so I decided to send all of the extra cash towards that as we want to pay CASH for a nice pre-owned van. But they keyword is CASH – remember I drank the Ramsey Kool Aid.

Dave’s point is that people always mean to pay off a 30 year loan like it’s a 15 – but something always comes up…. like needing to save for this car.

Which is why I decided to start this blog to track my plan to pay off the mortgage and see how it’s going. Maybe by broadcasting everything out there in public with BIG RED NUMBERS will help me in my cause. I hope so. In fact writing this diatribe has made me want to scrounge up the extra $750 and make that extra mortgage payment for March. We’ll see.

But that’s not all of the plan. I want to put way more than $750 towards paying it down. 15 year? Shucks, I want to pay it off in 10 year? 7 years? Dare to dream?

Once we buy the minivan (in CASH – no more DEBT) my plan is to now put $750 at least plus anything else I can scrounge up to pay off this debt as quickly as possible. I want it gone in my forties and I’m 36 now.

So according to this mortgage calculator if our current mortgage balance is $281,077.42 and I want it paid off in:

15 years = $730.26 extra principle payment. Totally doable. We’ve been doing it (mostly).

10 years = $1,516.82 extra. Not too impossible.

7 years = $2,551.93 extra. Okay that’s a little painful.

5 years = $3,962.21 extra. Holy smokes. We can dream right?

To further complicate matters we’re going to have our third child in August and we plan to have my wife stay home with the baby this time so we’re losing her salary and health care which will take a big chunk out of our ability to save.

BUT – I need to always no matter what make the extra $750 a month. I expect this blog to hold me to it. I’m also going to throw everything else I can at it too. Maybe work an extra gig here and there.

I want to get rid of this mortgage. The grass will feel different, Dave says. I want to see if it’s true.

-cdub

 

 

{ 12 comments… add one }

  • Ann March 21, 2013, 7:17 pm

    Hey there!! I’m also a DR follower and I’m on BS6. I actually went under $100k this month and I’m super excited. My goal is to have mine paid off by Oct 2015 so we will see. If u can’t scrounge up the $750 to throw at it this month maybe you have something to sell or change to count,. I love finding extra snowflakes to throw!!

    Good luck and I look forward to following your progress. Are u on the TMMO board by chance?

    Reply
    • cdub March 21, 2013, 7:44 pm

      $100k! Wow – I’d love to get there. Awesome. I was super stoked when I paid off our car and student loans. I think we paid off like $40k in the past year or so. Now it’s just the mortgage.

      I’m kind of new to this – ok extremely new to this – so you’re going to have to help me with the abbreviations here… BS6? TMMO? Is that Total Money Makeover?

      No I’m not on TMMO. But I’m on YNAB’s forum – the best budgeting software on the planet – I’ll have to do a post on that one day too.

      Reply
      • Ann March 21, 2013, 8:35 pm

        Yes TMMO is total money makeover and BS6 stands for baby step #6 because DR walks u thru 7 steps. I also use YNAB but I’m not on the forum. Do u celebrate milestones or have a visual to keep u motivated? They both help me :)

        Reply
        • cdub March 22, 2013, 6:20 am

          Ahh… Baby Step 6. Yes. I definitely celebrated paying off all of our debt. I think the last one was my car – but definitely the one that made the happiest was my wife’s student loan.

          YNAB has been vital in allowing me to do all of that – not to mention it’s extremely helpful in dealing with my irregular income.

          I’m hoping to be able to use this blog as a visual motivator for BS6. :) Mortgage Free here I come!

          Reply
        • cdub March 28, 2013, 7:54 am

          Just posted another blog post on how I got to baby step 6:

          http://mortgage-payoff-club.com/2013/03/28/following-dave-ramseys-seven-baby-steps/

          Reply
  • Stephen August 20, 2013, 4:36 pm

    Six years ago I read Dave Ramseys book and it opened my eyes. We were $210,000 in debt.

    $127K House
    $30K Cars
    The rest was student loans and credit cards.

    We were 26 when we started the plan making a combined $77K. When we finished paying off all the debt we just turned 31 and our income during that time raised to $125K. It feels great to not have the weight of debt and it’s even better watching the bank accounts swell each month. Good luck with the journey!

    Reply
    • cdub August 20, 2013, 9:21 pm

      That’s awesome! I have a long way to go – and it’ll be a little longer as it’ll be just my income for a while – but it’s possible. Thank god our only debt is the house.

      Reply
  • J. Money February 4, 2014, 4:31 am

    Hey! Just now seeing this for some reason? Great idea for a blog – keep hustlin!

    Reply
    • cdub February 4, 2014, 12:52 pm

      Hey there! You know it was your blog that inspired this one! So thank you for that. I can’t wait to kick this mortgage to the curb.

      Reply
  • Sharon April 23, 2014, 8:09 pm

    Hey there, We also follow Dave Ramseys steps, we are on Step 6. We literally jumped from Step 2 to Step 6 in a matter of months. I had been on stuck but working on Step 2 for years by myself as a single mom with a limited income, paid off the school loan a few years back. Got married and hubby took a job out of state, we moved, sold our old home, kids were out of the house, so once the house was sold we got rid of all the other debt. We just have our new mortgage. Hubbys gma passed and left him $$ which went into our Retirement and investment account, and my Dad passed and left us a pretty new vehicle. Now its time to focus on getting the mortgage paid off. Hubbys job situation has been a little odd, lay offs but rehires, contract jobs, severence packages, paid months off, rehire, temp, but somehow we have managed to make it just fine but we also have our savings in case something happens. It seems so daunting to pay off a $212,000 mortgage, but I know we can do it. Just time to focus!

    Reply
  • Ginger July 20, 2014, 10:10 am

    Do you set aside money for anything else, like repairs for the house, the next car etc?

    Reply
    • cdub July 22, 2014, 11:32 am

      Yes! with I create budget categories for those things. I have a home repair category that I throw $50-75 a month at. I’m not planning on buying a car any time soon but we did have a category for that before we bought our most recent one. YNAB is an awesome tool and has allowed me to achieve so many of my financial goals. Quicken and Mint just tell you what you did with your money. YNAB tells your money what to do! :)

      Reply

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