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Thinking about paying the mortgage

November 6th, 2009 at 08:38 pm

I'm typically one of the regulars on the forums who advises investing first, pre-paying the mortgage second (if at all). I find that my view is slowly changing. I think it is partly due to my mortgage balance shrinking and partly due to my getting ever closer to retirement. I've still got about 17 years before my goal of retiring at 62, but that is close enough that some planning needs to be done.

Last year, I started adding $100/month to the mortgage payment for extra principal. That was done after we made the last payment for our daughter's braces. That payment was $150/month. I figured we were living fine without that money for 18 months. We could keep living fine without it, so I put most of it toward the mortgage. Our regular payment (principal and interest) is just under $700, so that means almost 2 extra payments per year. Also, a couple of times when some other extra money came in, I added more to that month's payment.

There is a medical survey program that I do. It is an ongoing study and I do data entry almost daily. Unlike the other survey programs I do, this one doesn't pay each time I do it or even monthly but just one payment per year of $1,000. I've decided that when that payment comes in (I'm not exactly sure when my year is up) I will send that $1,000 all to the mortgage. It is totally found money and isn't needed in any other area of our budget or savings plan.

I have not sat down and run numbers to see when we could be mortgage free but I see no reason why we can't knock off at least 3 years. That would have us paid off when I'm about 60, though I know that as the balance gets smaller, I'll want to just write one big check and get rid of it, so we'll probably be done before that. That would give us a solid 2-3 years (or more) to sock away cash in anticipation of retirement.

12 Responses to “Thinking about paying the mortgage”

  1. Ima saver Says:
    1257540414

    Great idea, it is so nice to be mortgage free!!

  2. creditcardfree Says:
    1257541286

    Good idea and it makes sense to me!!

  3. NJDebbie Says:
    1257541399

    Go for it!

  4. Jerry Says:
    1257545085

    The medical surveys that you do, are they mostly from insurance companies, pharmaceutical companies, or some other entity? That's great that they lead to extra income, and that you can throw it at that mortgage! $1000 is a good extra chunk of change...
    Jerry

  5. Caoineag Says:
    1257545398

    I had actually recently decided that after maxing out our retirement accounts, we will probably throw our excess towards the mortgage so you won't hear anything from me suggesting it a bad idea. There is something to be said for eliminating a large bill from the monthly expenses.

  6. disneysteve Says:
    1257549938

    Jerry, the medical surveys are all from market research companies which, I'm sure, are hired by the pharmaceutical companies. I can almost always tell what company is sponsoring the survey by the content and focus of the questions. And sometimes it is quite clearly about a particular product.

  7. disneysteve Says:
    1257550263

    I just used an online calculator to make a rough estimate of the effect of the $100 extra each month and it shows the loan being paid off about 3 years, 10 months early. I'm not at home so the figures aren't exact, but that's about what I figured. Adding anything more than the $100, like that extra $1,000 from the one survey, will advance the payoff date even more, so really I'm looking at shaving at least 4 years from the loan. That works for me.

  8. frugaltexan75 Says:
    1257557149

    That sounds very reasonable to me. And it gives you added incentive to keep up with the surveys. Big Grin

  9. monkeymama Says:
    1257563086

    I think you will probably be surprised how early you pay it off.

    Common mindshift for your age. If nothing else, you will pay it off rapidly when you no longer support your daughter. That's how our parents were. They bought in such massively expensive times, I don't get the feeling they prepaid much before their 40s though. But both paid off about age 50. My dad was in awe how little their expenses were when we were on our own, and that's when the mortgage got hit. Probably the day after our younger siblings no longer needed financial support, just about. I remember my dad telling me how awesomely low their expenses had gotten when my much younger sister got married. & we were rather financially independent children. It's the insurance and stuff that frees you up.

  10. disneysteve Says:
    1257564304

    monkeymama, I did think about that. Our daughter is 14 so we've got 9 years before she is through college. Assuming she becomes a productive and relatively independent adult at that point, it will alter our budget considerably and I'm sure we would put more toward the mortgage, shortening the repayment period even more.

  11. LuxLiving Says:
    1257702041

    Sounds like a good plan!

  12. scfr Says:
    1258423404

    Yes, that is an interesting shift.

    Do you itemize or take the standard deduction on your taxes?

    We started out slowly paying off our previous mortgage early, but we shifted to paying it off aggressively when we were no longer able to itemize.

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