Hello everyone!

This forum is so inspiring! I have spent quite a bit of time reading other people's journals and am very impressed with the progress some folks are making (particularly you, snowballer and dtr). It's amazing how big some of these numbers are and how people are just making them melt away. So I've decided to imitate their example (hey, it's the highest form of flattery, right?) and go public with my journey towards being COMPLETELY debt-free.

Even before I bought my house five years ago, I fantasized about doubling principal payments, thanks in part to books like YMOYL and The Simple Living Guide. But aside from a couple of extra principal payments here and there, I didn't get serious about pre-payment until recently. In part this was due to the initial adjustment period of homeownership (read: recuperating from shock at property tax rates), in part to the fact that until the economy plummeted my mortgage rate was lower than the rate I could earn with that extra money in a CD, in part to the hassle of having to take an extra check to the bank with a special slip whenever I wanted to make an extra payment, and in part to the feeling that, even if I did double the principal, the payoff (15 years) just seemed too far away. I couldn't really get motivated.

So, what changed? For one thing, I'm feeling more empowered after successfully saving up (in just under a year) $13,500 for a nused 2007 car, which I bought in August 2008. Every time I look at my car I feel a little burst of pride that I stuck to my fiscal goals and got exactly what I wanted without giving in to the new car urge! For another thing, even my low mortgage rate is now higher than any of the CD rates I could earn. Plus, all these stories about foreclosure and whatnot have got me thinking. (It also helps that I have recently figured out how to make the extra payments electronically. What can I say, I'm lazy!)

However, the thing that pushed me over the edge was sitting down late last year and applying "debt snowball" logic to my monthly budget. I had been reading wistfully all these pf blog stories about people finding an extra 200 or 300 or whatever dollars a month to pay down their cc or student loan or car debt more quickly. But it seemed to me that, given all the other goals I am trying to save for, an extra $150 (the current principal amount in my monthly mortgage payment) was about all I could possibly carve out of my monthly budget. Then I started thinking: one of the two biggest non-mortgage, non-utility chunks of my budget would no longer be there after August 2009. It's a $211 dollar monthly payment for the new boiler I put in almost three years ago. What if, when the boiler is paid off, I snowball that payment along with the doubled principal? And then, I thought (my excitement was growing here by leaps and bounds), what if, after Dec of 2010 when I reach my 6-month EF target, I snowball THAT $250 per month as well?

So I sat down with a pencil and notebook and calculator and came up with this rough plan (rounded numbers):

2009: Begin at $80,222; double principal plus regular payments ($3600 total) --> $76,919
2010: Begin at $76,919; double principal plus $211 per month plus regular payments ($6132 total) --> $70,787
2011: Begin at $70,787; double principal plus $211 plus $250 per month plus regular payments ($9132 total) --> $61,655
2012: Begin at $61,655: double principal plus $211 plus $250 per month plus regular payments ($9132 total) --> $52,523
2013: Begin at $52,523: double principal plus $211 plus $250 per month plus regular payments ($9132 total) --> $43,391
2014: Begin at $43,391: double principal plus $211 plus $250 per month plus regular payments ($9132 total) --> $34,259
2015: Begin at $34,259: double principal plus $211 plus $250 per month plus regular payments ($9132 total) --> $25,127
2016: Begin at $25,127: double principal plus $211 plus $250 per month plus regular payments ($9132 total) --> $15,995
2017: Begin at $15,995: double principal plus $211 plus $250 per month plus regular payments ($9132 total) --> $6,863
2018: Begin at $6,863: double principal plus $211 plus $250 per month plus regular payments ($9132 total) --> PAYOFF!

I was astounded when I had worked this out. I checked the math again and again to make sure. Nine years? You mean I could pay this mortgage off before I turn fifty, without changing my current budget, and without counting on winning the lottery or getting anything more than a COL salary increase every year????

(Irony: this is almost the same payoff date as it would have been if I'd just started doubling the principal right away, 5 years ago when I bought the house. Oh, well!)

I thought, OK, (wo)man proposes and God disposes and Murphy's law and all that, but...once that emergency fund is in place, why not try to shoot the moon?

So here I am, six months in. Thus far, although my budget feels tight as a result, I have managed to make that $75 pre-payment out of each paycheck.

Jan 2009: $80,222
Feb 2009: $79,924
Mar 2009: $79,624
Apr 2009: $79,324
May 2009: $79,022
Jun 2009: $78,720
Jul 2009: $78,491 (the second $75 payment gets made next week!)

So far I'm on track to hit my goal of $76,919 by the end of the year. We'll see whether I can stick to it!

The tricky bit will be figuring out whether I've left myself enough elbow room in my budget, particularly in those chilly Northeast winter months, when the heat bill goes way up! And then there's the eternal potential increase in property taxes...

Stay tuned.

congrats! and good for you for sitting down and mapping out a successful plan that will get you to your goal

Wow, that looks like a great plan - a mortgage is such a huge debt but when you lay it out like you have it makes it look really achievable. I haven't started to pay off my mortgage yet (I settle in September) but I'm hoping to pay mine off earlier too. I hope your thread will be an inspiration to me!

Thanks for the encouraging words! Edi, congrats on your purchase, and just build that doubled principal into your budget from the very beginning, if you can. That way you never miss the money....

On the off chance it's interesting to anyone, here's my monthly budget. Wish I could just have posted it as a jpg -- does anyone know how to do that?


1616.36 Paycheck 1
892.98 mortgage
35 dog food
60 gas
100 grocery
100 entertainment

428.38 LEFT AFTER EXPENSES

20 vet acct
75 hobby
50 xmas
75 mort prepay

208.38 LEFT AFTER SAVINGS


1616.36 Paycheck 2
162.09 utilities
211.9 boiler next month
49.95 internet
25.35 phone
94 car insurance
50 gas
120 grocery
100 entertainment

803.07 LEFT AFTER EXPENSES

20 vet acct
85 car
50 xmas
350 efund
75 mort prepay

223.07 LEFT AFTER SAVINGS

The mortgage payment includes PITI. The Boiler payment is actually due on the first of every month, but I can't pay that from the first paycheck along with the mortgage, so I save it ahead of time out of the second paycheck. Entertainment is usually dining out, movies, or "flex money" in case I want some gourmet ingredient at the store, or use an extra tank of gas to go visit a friend. I decided to to save $350 for the e-fund in non-winter months; in winter months the utility bill can be as high as $430 (ouch!), so the efund contribution goes down. I try to average $250 a month to the efund over the whole year.

The money left over after savings usually goes to things like garden or small house purchases, the occasional clothing splurge, birthday presents for family and friends, etc. If there's any extra left, I usually sweep it into an online savings account at the end of the month. I've tried to save more than this, but I find I start to feel deprived and then "binge shop," so I've learned to leave myself some elbow room. Sometimes I feel guilty about letting the post savings money just slip away, but after 9 years of managing a real salary I am discovering and accepting my limits...

OK, my second $75 prepayment this month went through without a hitch while I was away on vacation last week. Here's a semi-monthly progress update:

Original mortgage amount: $87,900 (Nov 2004)
Balance at start of prepay plan: $80,222 (Jan 2009)
Dec 2009 goal: $76,900
Current balance: $78,416

Percent of this year's goal: 54%
Percent of total mortgage paid: 10.6%

It's really tempting to snowball that extra $17 from my checking account right this minute to push the current balance below $78,400. But my carefully calculated transfer from the hobby ING account to my checking account to cover vacation expenses did NOT go through as promised, and so I have to wait a few more days to recalculate and see how much money is left over for this month. This is the second time I have somehow clicked the wrong button, or something, and not had the transfer go through. Has anyone else had this happen with ING?

A lot of times, the roller ball on my mouse gets moved, and the account changes and I almost cause errors.
Also, make sure you hit the accept button at the end of the transaction to ensure that everything is set up the way you want it. Sometimes I get sidetracked and forget to hit accept.
Lastly, ING will send a transfer confirmation to your primary email notifying you when the transaction takes place. Make sure you keep an eye out for those three things.
Hope that helps.

Thanks! The funny thing is, both times I was sure I saw a confirmation email from ING, but couldn't find it when I went back to check. Perhaps I'm only making the transfers in my dreams...

I'm really excited for you and the dream of paying off the mortgage early. We are paying our mortgage off this December and I wanted to tell you that the extra payments now DO make a big difference down the road. Progress is motivating. We keep an amortization chart on the side of the fridge from bankrate.com and I swapped it out a lot as we got sidetracked or were able to pay in differing amounts. keep up the good work.

Wow, how cool is that -- somebody who's actually about to pay it all off. T hanks so much for the encouragement. How did you do it? How long did it take you? Is your story on another forum thread, or will you share it with me/us here?

Well, it looks like I'm going to make it through the end of this month in the black after all. All the bills have cleared, and there's money to cover the (second-to-last!) boiler payment on Aug 1. I've got $26 left over in my checking account and about $15 in my wallet, just enough leftovers and groceries in the fridge, and payday is Friday. Things wouldn't be quite so tight if I hadn't decided to put the hotel room deposit for my August hobby weekend on my debit (checking) card instead of my credit card, but it means I'll be able to cover the rest of the hotel with the money set aside in the hobby account (which got a lot lower thanks to this month's hobby outing). To me, that's worth four days of quiet, at-home entertainment and leftovers, because it means my credit card balance has stayed at zero.

I'm sure my friends would be surprised to hear how close to the line I live, but hey, it works for me. The fiscal lessons of graduate school die hard!

If I've got $17 left still on Friday morning, I'll put it towards the principal pre-pay, as I've been hoping to do...

I've learned that I budget best by listening to the squeaking sound in my checking account, which means I'll get as low as $5. I have a slush fund that all my paychecks go into, and I dole it out to checking or savings as needed. I spend last month's pay while this month's income piles up in the account, so I'm never actually at risk of being short, but it helps me keep spending under control. (If I were risking fees by doing this, I probably wouldn't, but I have enough in the extra account that I am not.)

I am handling utility bills by doing averaged billing.

As long as you have a good emergency fund, it should be fine!

Well, this might be a silly thing to post about, but it feels like a milestone to me. I just got my next paycheck direct deposited, and I still had that $26 surplus in my checking account at midnight last night, so...drumroll please...

I just made my first mortgage snowflake payment of $17! I tacked it on to the $75 prepayment that I would be making anyway today, and so my balance now stands at:

$78,324.72

Let it snow, let it snow, let it snow....

One of the fun things about making online prepayments out of each paycheck in addition to the usual payment is that my mortgage balance goes down three times a month instead of just once. I find this very encouraging. Last week my balance was $78,416.72, and now it's $78,169.70. And I get to watch it go down again after the 15th of the month. Whee!

I also faced the lion today: remember how I said in a previous post that I was worried about whether I'd left enough room in the budget for the high heating bills of winter? Well, in part I was worried because in April (after winter was largely over), I switched my retirement contribution from pre-tax to Roth, which meant the Feds and the state are now taking a bigger chunk out of each paycheck. Plus I had them take out a little bit extra just to be sure I don't owe any taxes next April 15. (If it turns out I overestimated, I'll put the refund in my efund -- hey, that rhymes! -- and dial the withholding back next year.) All of this means that since April I've been living on about $200 dollars less per month than before, which in winter I thought could be a bit tight. On the plus side, this is the last month I will have to save for the boiler payment: the final payment will be on Sept 1.

So I sat down this afternoon and played with the numbers, and it looks like I will be OK. (Unless natural gas prices suddenly skyrocket, I suppose.) The second paycheck covers the utility bill; this is what the budget for the second half of the month would look like with the highest utility bill I have ever received:

1640 paycheck (including anticipated COL raise beginning sept 1)
440 utilities
44.95 internet
25.35 phone
94 car insurance
50 gas
120 grocery
100 entertainment

765.7 left after bills

20 vet fund
85 car fund
50 xmas fund
250 efund

75 mort prepay

285.7 left after savings

Whew. Barring major catastrophes, I won't have to scale back the efund savings (or burn the furniture to keep it going). That's a relief.

That's great Cecily.
I would never think to put $17 towards my mortgage, but that's why yours will be paid off while mine is still hanging around. Keep up the good work.

I like the way you broke down your paycheck and have everything accounted for. The utility bill is high, but I know you based that off of your highest bill, so hopefully you will pay less than that every month, and can snowball the rest towards your mortgage.

Thanks, Peachy, for the encouragment. Until I get my efund up to a full six months ($13,500, currently at about half that), any extra money from having a not-so-outrageous utility bill will go towards the efund. Then, look out mortgage, here comes the avalanche!!