Goodbye Bank of America

Bank of America is now starting to charge fees based on the date that people pay their mortgage; no fee for the first few days, $3 for the next few and then $6 for the balance of the "grace" period. A bunch of people are up in arms about the new fees. Honestly, I never paid any attention to it because I always pay my mortgage on the due date - the 1st of the month .

I get that sometimes you might need a few days to get the payment to them but in my opinion that should be the exception rather than the rule... I guess there are "smart" money managers who know how to use every deadline to their advantage but, seriously with the paltry interest rates being paid for savings accounts you can't be talking about a lot of money. I just want to pay it and be done with it and not have it hanging over my head.

I have this suggestion for those smart money managers - quit spending so much energy trying to delay the payment and instead look at ways to find additional money to throw at the principal balance of your mortgage. My wife and I have gotten serious about paying off the mortgage company and becoming debt free. We are almost there!

I have come to understand that there is no such thing as "good debt"!

AND THEN THERE WERE TWELVE - REVISITED

In my blog post last May I wrote about our decision to accelerate the payoff of our mortgage. We had experienced a couple of financial close calls with our jobs and wanted to position ourselves in a less vulnerable place. We looked at the remaining balance of our mortgage and decided to throw everything we could scrape together at the principal balance of our mortgage. In May our goal was to pay off our mortgage by June 1, 2011.

Here is our update: We are nearing the end of 2010; we have revisited our goals and adjusted the date we think we can make the final payment. Our loan balance has been reduced to $26,250 and our revised goal is to cut it down to $20,500 by the end of the year. This will exceed our original goal by $4,500!

We are now looking at our last mortgage payment being May 1, 2011. This is a mere six months away and it 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 last payment on May 1, 2011!

Closing the Escrow Account

We continue to move closer to paying off our mortgage; see my post, "And Then There Were Twelve!," last week we contacted our mortgage company and closed our escrow account. We would have to do our own escrow after we kill the mortgage anyway and I wanted to take this step now. The advantage of this is that we can have the money in our account drawing interest instead of giving that interest away to the mortgage company. Granted the interest income is very small right now but I'd rather have it in my pocket than theirs!

I was surprised by the speed in which we received our escrow check, I expected it to take a couple of weeks but it was in our mailbox three days later! The next step is to open another sub-account with ING and have the money automatically drafted from our checking account each month. By doing this when taxes and insurance bills are due we'll have the funds to pay the bills and we'll have earned some interest on the money as well.

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!