Hey hey hey! It’s time for my quarterly update on how fast we’re paying off our mortgage despite making fun of the guy who paid off his loan in a similar amount of time.
The difference between the two scenarios is simple. I could liquidate investments and have enough to pay off my mortgage by the end of the week. This would probably make my debt-adverse wife very happy. But I don’t do so because I’m convinced those investments will grow faster than the interest rate of the loan.
In other words, if I can grow my investments by 10% a year (which is my stated goal), it would be silly for me to take that money and put it towards a mortgage that costs me 2.7% annually. Besides, we’re making plenty good progress without doing so, as you’ll see.
As a reminder, we’ve set a goal to be mortgage free by January 1st, 2019, roughly 30 months after purchasing our house. We paid $195,000 for the place (whoo! small town real estate prices) and originally financed $190,000 of the loan from a very generous
sugar mama family member who was looking for a GIC alternative.
Here’s what we’ve accomplished so far:
- September 15th — Owed $151,324.51, meaning we paid back $40,000
- December 15th — Owed $129,457.09, meaning we paid back an additional $22,000
I promised this quarter could be even better because I expected a tax refund, and I felt good about my prospects in the new year. Can I deliver, or did I set myself up for failure?
The current balance
Can I get a drumroll please?
Aww, come on Italics Man. It’ll be fun.
You can’t hear them.
I know. But I want them to be excited. It’s all about marketing.
You are such a buzz kill.
Okay, that’s enough time killing for one blog. Today’s balance is…
$107,233.71, for a total payoff of $23,000 in the quarter.
BOOM KIDS THAT’S HOW YOU DO IT.
It was a pretty mundane quarter, all things considered. I did plan to put a little extra tax refund cash on the loan, but I haven’t actually filed said taxes. The rest came from existing cash flow, either from both of our jobs or from the people who owe me money.
Let’s throw up some graphs because at least one of you likes pictures:
The blue lines are the pace we’d have to maintain to pay the loan off in the original 30 month timeline. As you can see we are well ahead of our goal. I only have to pay off $7,000 in the next quarter to keep the pace going, and I intend to do better than that.
The next quarter should be pretty similar to this quarter. The only significant money I’m expecting is a tax refund, but regular cash flow should be enough to continue making a significant dent in the debt.
We’ve paid off 43.5% of our mortgage in just eight months, which is a pretty significant accomplishment. I will take it. It also puts us easily on pace to get this bad boy paid off by the end of 2018.
Simple math says we’ll need to chuck $5,100 per month at the loan to get it paid off in time for New Year’s, 2019. At this point, it’s looking good to happen, but that’s a lot of money.
People ask me all the time how I’m managing to pay off the loan so quickly. While we do live a relatively frugal lifestyle, success is all about the top line. We have a healthy household income that goes a long way because of where we live. I’m also heavily invested in things that spin off all sorts of cash flow, money I’m directing back to my mortgage.
There’s also the possibility of one (or more) of my private mortgage customers repaying me early. I’d likely throw that cash right down on the ol’ mortgage.
And that’s about it. Questions? Comments? Terrible jokes? The comment section is all yours, chumps and/or chumpettes.