How to pay off $92,000…fast – part 1

    Fast can mean so many things. I should probably clarify a little. Some people may say fast is a speed, as in “I hit 52 mph on my road bike coming down the backside of that mountain” (yes this was me and yes I thought I might freeze to death). Others link fast to a length of time, such as running a really fast marathon (can one really use the words fast and marathon together?). I however, in the realm of mortgages anyways, consider fast to be two years.
    Wait what? Your telling me you paid off your mortgage in two years?
    No. We did however pay off the final $92,000 of our mortgage in exactly two years. Our initial mortgage was $154,000 with a payment of $1,200 a month.  For six years, from 2008 – 2014, we refinanced twice, and with extra payments* had paid off $62,000 of the original principal. Then in 2014 things changed. 
    As with all of life’s great discussions mine started with a campfire and a whiskey. My wife, Melissa, was also present (I only occasionally talk to myself out-loud). I started this particular conversation with “so I was thinking…” For her this is always an “uh-oh” moment. I never follow this phrase with something like “let’s go grab a bite to eat.” Anyways, my concern was what would happen if one of us lost our job? The answer was that even though our only debt was our mortgage, things would still be fairly tight. (My dad had just recently been downsized at the age of 54 thus my pondering) With that I ran through the numbers detailing how I wanted to pay off the house in 30 months.
    My lovely wife, in all her subtlety, wanted to know if this was even possible. Which was really her way of saying “Where, exactly, is that much money going to come from?” Below, is my answer outlined in rough terms (I wasn’t recording my campfire conversation).
  • Mortgage payment – $1,400 a month (we already paid extra)
    • + $200 diverted from Roth IRA investments**
    • + $300 diverted from vacation account
    • + $100 going to have to squeeze the budget a bit
  • New mortgage payment – $2,000 a month
    Unfortunately, these quick fireside calculations still left us short of reaching $92,000 in 30 months. Next week I will finish the story – so stay tuned.
Enjoy the ride,
*If you pay extra every month on the principal of your loan the effects can be amazing in terms of loan duration. Even $100 a month extra can lower your loan term by years.
**Financial planners usually advise against paying off a low interest mortgage aggressively like this. They say you would be ahead if you instead invested that money. Mathematically I can’t argue with them (in most scenarios), but in the end debt free feels better to me personally than big debt and big investment accounts (plus financial planners make money when you invest with them). 
Not great riding weather…but the kids loved it