The house in question
I have a new financial goal that I wanted to share with you — I will be mortgage free five years from today. On the morning of March 30th, 2016 I will wake up and check my mortgage loan balance to see this sweet looking figure looking back at me:
$0
Today I’m putting a stake in the ground. It’s going to be a huge challenge and I don’t have all the details figured out on how I’m going to achieve it, but I know that it’s possible. And it wouldn’t be fun if it didn’t seem damn near impossible.
The facts
As of March 1st, my mortgage balance was $214,569. It’s currently a 3.25% ARM and the margin is 2.25% over the 1 year LIBOR. Essentially to get the rate you take the LIBOR (London Interbank Offered Rate) and add 2.25% and then round it up to the nearest 1/8th of a point. The first five years were interest only and I barely made a dent in the balance, ie I didn’t pay any extra interest. My original mortgage balance was $216,000.
Why am I doing this?
After my experience with extreme frugal living in February, I’ve realized that these kind of challenges are motivating and inspiring. I’m far more likely to do this if I declare it online. I want to be totally debt free and this is the last piece of debt that I have.
Why this is stupid
If interest rates stay as low as they are right now (which I doubt) then my money would be put to far better use by investing it. Also, mortgage interest is tax deductible, so my effective rate is lower than 3%.
Why it just might be smart
I’m likely to save more than I would if I weren’t doing this. The goal will force me to look at my spending and identify other income sources to accelerate the payoff. The money that is likely to fund this challenge would otherwise be sitting in accounts earning between 0-1.29%.
Current balance
I drew down $13,000 of my emergency fund this month to pay it down. I currently have an ample emergency fund ($31k or so) that I will slowly reduce to contribute towards this challenge, which will give me a nice head start. The current balance as of March 30th is $201,569 and prepaid through April.
What do you think? Have any of you paid off your mortgage already? How did it feel?
{ 6 comments… read them below or add one }
Are you back in Nashville or did you seriously just make a blog post while on vacation in Mexico? Reaching that travel-blogger lifestyle a little faster than anticipated are we?
I seriously made a blog post while on vacation. To me it’s not work…. I feel bad if I haven’t posted in a week. I’m well on my way to be a traveler/blogger.
I’m very impressed by the scope of your challenges – thoughtful, helpful and inspiring. Thanks Dealerity!
Thanks Phil for such a genuine and positive comment!
Pay off as much as you can each month!
Glad I stumbled on this page because we have the same goal. I started about a month ago, hoping to pay off my mortgage by March 2015, my 30th birthday. I agree with your points. Sure, it MIGHT make more sense to invest, but with the goal of paying off your mortgage, you are going to put more money toward it. Saving money is like an addiction– just a positive one. I know that if I didn’t set this goal, I would find other uses for my money, and it wouldn’t just be ‘investing in the stock market.’ Good luck.
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