Tuesday, 19 February 2013

Kill the Mortgage ‘till it’s Dead

So as we saw yesterday I’m a bit short on my plan to have my mortgage gone in 5 years.  In fact I’m short to the tune of about $38,946.90. How to deal with this short fall?  There are a number of different options let take a look. 

A) Revise my goals and continue to pay $1,545.62 a month towards my mortgage.  That will have me paid off in roughly two more years (depending on what my new interest rate is.)  

B) Use a portion of my retirement savings to pay off the balance when it comes to renew my mortgage.  This is a real option, especially if interest rates are high.  I would consider this an interest free loan from myself and pay it back to my retirement savings as quickly as possible. 

C) Start looking for ways to make up the difference.  All of my numbers yesterday assumed that I won’t see a pay-raise in the next 5 years; I am kind of hoping that that is not the case.  If I see a 4% increase each year (for cost of living) I’ll see $140 a month more from Nov 2013 – Nov 2014, then $150, then $155, then $160.  If half of my pay-raises goes towards housing that would be an extra $3,630 over a four year period. 

Add to that I haven’t accounted for the Found Money that I hope to put against my mortgage.  From Nov to Jan this year I saw over $500 in found money, if I put $150 of found money a month against mortgage that is $8,550 by Nov 8th 2017. 

That brings us down to a deficit of $26,766.90 (a bit less actually because I will be paying less interest and more of my payments will go towards principal, but those calculations get absurdly complicated.)  One way to bring this down would be to fund my masters with scholarship money, thus freeing up to $20,000 of the money that I have earmarked for my continued education.  Otherwise I will need to look for a way to bring in an additional $560 a month over four years.  There are a lot of ways this could happen and I have started to explore avenues (I swear my book is the next Harry Potter, now I just need a publisher to realize that.)  

All said paying off my mortgage in 5 years is not going to be easy.  I was never under the impression that it would be.  I'm still planning on making it a priority (most people who know me will vouch for my stubbornness, I have on occasion decided to will things into happening.)  Fully paying off my mortgage will give me an incredible amount of freedom to pursue other goals and dreams while not having to worry about keeping a roof over my head.  

I hope you follow along for the next 5 years!  

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