Friday, May 14, 2010

AND THEN THERE WERE TWELVE!

In January of 2009 after my wife and I experienced a couple of close calls with budget cuts and staff reductions we decided to take charge of our financial future and get serious about paying off the mortgage on our home. We looked at the balance owed on our mortgage ($106,755) and the remaining term (23 years) and decided to take as much of my salary and any "extra" money we could find and throw it at the principal balance of our mortgage. Our goal was to pay it off by the end of 2013.



We wanted our goal to be significant, manageable, achievable, realistic, and time-bound.



Significant - Paying off 106k in 5 years is a significant debt reduction.

Manageable - We felt that earmarking much of my salary was manageable.

Achievable - 5 years would be a major commitment but something that was achievable.

Realistic - No matter how you look at things on paper there are going to have to be adjustments and setbacks, so we planned for the "unexpected".

Time-Bound - We set a deadline to help us remain focused on our goal.



The first three months we struggled to find an extra $700 but then things began clicking! A bonus, a tax refund and another nice check had us on our way! By the end of 2009 we were fortunate to pay an extra $36,184 toward the principal! This left us with a balance of $65,000 at the beginning of 2010.



Regarding our goals; we felt we had met each one and significantly exceeded our expectations for the principal reduction. One really exciting thing was when the amount of principal became greater than the amount of interest paid with the regular payment each month.



So here we are nearing the middle of 2010; we have revisited our goals and adjusted the date we think we can make the final payment. Our balance has been reduced to $45,194.16 and our goal is to cut it down to $25,000 by the end of the year.



We are now looking at our last mortgage payment being June 1, 2011. that's still twelve months away and will continue to require a significant sacrifice on our part. There is no guarantee that we won't have a setback that may require an adjustment but Lord willing we'll be celebrating with our June 1, 2011 payment!