First of all some props are due here:
- 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.
- 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.