Baby Step 6: Pay Off Your House Early
We purchased our second house, our hopefully "forever" house April 19, 2013. We purchased it with a 30 year mortgage so in 2043 it will be paid off. However, in that time we will end up paying for the house nearly two times thanks to interest rates! Eep! That doesn't sound very good. Our current goal is to try to pay it off in 20 years or less instead of the full 30.
At the moment, our family income is below $40,000 and that is with Mark's full-time job, overtime, and part-time job. I say this only to illustrate the fact that we are not earning $60,000+ a year or something. We are a middle-class family with one income and mediocore health insurance.
I will admit that in the first year that we have been here we have not made any extra payments on our mortgage. After paying two mortgages and two sets of utilities last spring while we were living at the old house and renovating this one, we had some work to do rebuilding our savings before we could begin paying extra on this house.
We also do not want to take money away from Annabeth's life right now. I know, I know, life is not just right now but choosing between Annabeth taking dance class or $40 extra on our mortgage we are choosing dance class. In the near future, we want to work to really begin putting extra down on our mortgage.
On thing we have discussed doing is putting an extra $112 a month on our principal each month. That would mean every six months we would really be paying seven months of mortgage payments. That translates to 14 monthly payments a year and every six years we would be making seven years worth of payments.
I think it is just like the debt snowball step, it really will be a matter of putting everything extra into our principal balance. That could include Christmas and birthday money as well as our tax return. Also, we could add money I earn from card/craft sales, consigning, and garage sales.
This step, our current step, is one that we really want to begin focusing on now that we have been in the new house one year. We look forward to the day that we own our house outright! What a day that will be!
Annabeth in front of her second house and hopefully our forever house!