Four years ago, I bought our house. I know what you’re thinking. But no, this isn’t one of the many times where I type I even though I really mean we. I purchased our house. And it seems like the strangest secret in the world to finally share and celebrate because even though the house was bought in my name, it’s always been ours. Continue reading “A Home-Buying Secret: I Bought Our House”
I am terrible at setting goals. I also don’t really share numbers here. At least not in any streamlined way. If you read my posts about unexpected expenses and the $24k in debt we killed last year, you’ll get a fairly decent picture of my income and my spending. But let’s leave a little mystery to life, shall we?
The one thing that I do consistently well, though, is to track my mortgage in an attempt to slash away at it. The goal is to have it paid off before my 40th birthday. Ten years seems reasonable. Rather than continuing to talk vaguely about it, I thought I’d share quarterly updates here.
When we bought our house, our mortgage was for $214,000. We put down just over 20%; in doing so, we dodged PMI. I’m not even sure I knew how PMI really worked back then. All I knew is that I didn’t want to give the bank any extra money on top of the gobs of money I was already going to be giving them in interest over the next thirty years. While I know some of you gasped at the thought of a 30-year loan, I made sure that we could pay it off early without any issue. See? Little Penny did have her act together a wee bit.
Earlier this year, we started to get aggressive with our mortgage paydown. In our typical budget, we plan for a double payment. Then, I toss my extra side hustle money for the previous month at the mortgage. That means that at the start of the fourth quarter of 2016, we still owe $180,815.12. Be still my heart.
As if that number isn’t panic-inducing enough, I should also point out that last year, I paid $7,076.95 in interest. Before you tell me that I can write this off on my taxes, let me remind you that I know. I did, and I’ll do it again next year. Now, let’s consider the fact that one of my friends rents a two bedroom, two bathroom apartment* with access to two pools and a pond for less than what we paid in interest. It goes both ways. You like your mortgage? Fine. Don’t let me stand in your way. But I’m getting rid of mine.
*There are also dogs. And faint odors. And neighbors very close by. Sometimes, I really do like my mortgage.
In short, the plan is to stay the course. There will be months when we pay 3.5 times our required payment. I’ll continue to celebrate obnoxiously on Twitter. There will also be months where we only pay double or slightly more than that. While I hope it never happens, there may even come a time when we only pay the regular payment. Maybe there will be some unexpected expense. Or maybe I’ll get my investing prowess so on point that I put all of my extra income there instead. I’m hoping that quarterly updates will be enough motivation to keep us pushing forward aggressively. Let’s get this done by 40, shall we?
So Tell Me…Should I share more numbers? Do you have a mortgage? What’s your debt-slashing plan?
If an extra expense cropped up, how would your budget fare? Would you cut back? Would you hustle harder? There are challenges to both. If your budget is already fairly bare bones, there may not be any remaining notches to tighten the belt. If your work week is already jam packed, carving out extra hours to hustle can be daunting, especially if you’re already side hustling. If your salary is fixed on a schedule, a raise is out of the question. So what would be your plan of attack to deal with an extra monthly expense? Continue reading “How Would You Handle an Extra Expense?”
Where are all my bi-weekly paycheck people at? If you pick up a paycheck every other week–or every week–then you know that there are months where you’ll land an “extra” paycheck. For me, one of those months happens to be September this year. While my monthly budget is structured based on two of my husband’s paychecks and two of mine, this particular month will actually net me three checks. Whenever I realize this and the initial excitement settles, the real question always becomes, What should I do with it? Continue reading “6 Ideas for that Extra Paycheck”
At the beginning of the summer, I outlined my grand plans to earn extra income this summer. And grand they were. Summer school wraps up today, and I only have two more meetings on the docket. Thanks to all of my school-related side hustling, I’ll have clocked in just shy of $3500 after taxes. That doesn’t even include the money I made tutoring or contributing to Tip Yourself. For someone who is hellbent on crushing her mortgage, you’d think I’d be pretty content. But I can’t help but wonder if I’ve been hustling too hard. Continue reading “Am I Hustling Too Hard?”
Is your budget really as smart as you think it is? One of the first things many people do when they are trying to get their financial fitness on is to create a budget. Undeniably, there is a requisite amount of trial and error involved in the first few passes. A budget should meet everyone’s needs, be grounded in reality, and align with your goals, values, and charitable priorities. Flexibility is key. For a long time, I was pretty pleased with our budget. After all, it allows us to save 42% of our after-tax income without factoring in any side hustle money. And that doesn’t even include the 10% of our pre-tax income that we each pay towards our respective pension plans every year. Clap louder. I can’t hear you this far away.
While it seems like we’re sitting pretty with our line items each month, it turns out that the true test of a budget involves the magic number twelve. That’s right. Yearly budgets lend an equally powerful perspective. Even if you already have your budget broken into percentages, the yearly totals either get a little harder to swallow when you think of what else you could be doing with some of that money, or the numbers will inspire you to take a victory lap around the kitchen table. I put our budget up to the test and multiplied every line item by 12. Below, I share just a snapshot of the good, the pricey, and the ridiculous: Continue reading “Test Your Budget with the Power of 12”
In our budget, we currently set aside between 42%-48% of our after-tax income. It is also worth pointing out that 10% of both our salaries is taken out pre-tax and put into our pension funds. So on the surface, it looks like were are living on a fairly small portion of our income. But just because we aren’t spending it, doesn’t mean we’re actually saving it. Or does it? Continue reading “Is Not Spending the Same as Saving?”
I thought I had goals. But it turns out, I have mostly hopes and dreams when it comes to personal finance. Paying off our mortgage in the next 10 years isn’t a good goal. Staying out of debt isn’t a good goal. Increasing my net worth isn’t a good goal. They’re undoubtedly important aspirations, but they’re not measurable. They’re also quite vague.
For someone as fond of spreadsheets as I am–I love them, I do, I do, I do–you’d think that I’d be all about SMART goals. The more specific the goals, the more observable the metrics. Hello, spreadsheets. For too long, I’ve let fears prevent me from setting specific goals. Fear of failing and fear of investing have kept me locked in a holding pattern of saving but not really allowing our money to work for us. So here’s to shaking off the fear and setting some real goals for once and for all. Continue reading “Goals are Good: I Should Set Some”
At the start of the year, I wrote two different posts about debt repayment. First, I talked about how we paid $18,000 towards our mortgage. Then, I copped to the fact that we actually paid $24k towards debt, because Mr. P still had a car loan until one final click paid it off in full.
In both posts, the tone is not entirely celebratory. Part of me is proud that we were able to put some extra money towards our mortgage and towards paying off his car ahead of time. But most of me thought it wasn’t really worth celebrating because so many people put so much extra money towards their debts. That fact, coupled with my feelings that a mortgage isn’t actually good debt at all, kind of soured my celebration. Continue reading “Nothing But Net: Putting One-Third of Our Net Income Towards Debt”
I hate our mortgage. And I probably always will. The fact that we own so little of our home yet foot all the repair bills was maddeningly frustrating last week when our furnace started acting up to the tune of $600. But after clicking through Tim Urban’s “The Tail End”, I realize that maybe I’ve been viewing my mortgage–and homeownership to a degree–all wrong.
Our Mortgage Takes Our Money
Every month, I am greeted with an email ping reminding me that we owe the bank something to tune of $900*. Since we are determined to pursue some form of financial independence and now Mr. P’s car loan is no more, we are trying to double those payments. Because we made a 30-year commitment to our bank, we are trying to be more aggressive with paying it off by adding my side hustle money to the debt-payoff pot as well.
It isn’t always possible to be so aggressive with our payments, but we are going to keep trying. There’s no denying the crushing feeling that comes with six figures worth of debt. As for those who classify a mortgage as good debt, I say no debt is good debt. I won’t be sorry to see it go.
Our Mortgage Buys Us Time
As much as I dislike our debt, it affords us the luxury of time. My commute lasts between 15-20 minutes and Mr. P’s is about five minutes longer. I can make it to and from work in the span of a single podcast. That’s pretty hard to beat. Sure, having no commute would be even nicer, but I’m not about to make that weird childhood misconception that teachers actually live in their classrooms a real thing. These short commutes allow us to maximize our time at home and our time with each other.
More than that, though, our mortgage buys us time with our families. My family is ten minutes away and Mr. P’s is just a stone’s throw farther. Tim Urban’s analysis of his time left with his parents was crippling to me. He writes, “When you look at that reality, you realize that despite not being at the end of your life, you may very well be nearing the end of your time with some of the most important people in your life.” His reality affords him about ten days per year with his parents. Tears rolled down my face when I looked at his chart that was almost completely filled with red Xs.
Once I pushed past that momentary existential crisis, I realized my chart would look dramatically different. Yes, my parents are in their 60s as well. No, I’m not kidding myself into thinking that they’re going to be the first couple to live to 120 together. Unlike Urban’s setup, however, our mortgage allows me to spend at least one or two days each week with my parents. Whether it’s me stopping over for tea and to go through the hoards of things they are still so generously storing in their basement or it’s us meeting up for dinner and running errands together, I can see my parents whenever I want. The same holds true for Mr. P and his family.
As easy as it is to get caught up in numbers, spreadsheets, payments, and account balances, I have to remember that life is so much more than a mortgage. In the moments that matter most, I’ve not given our mortgage a single thought. Money is not the most precious thing in the world. If leveraged correctly, money is nothing more than a tool that allows us access to the truly precious things in life: the people we love.
The next time my in-laws are over for a barbecue or my parents are crowded around the kitchen table, I like to think I’ll hate our mortgage a little less. In reality, I know that, as we pass plates, clink glasses, and laugh loudly, our mortgage won’t even cross my mind.
*It’s worth mentioning that apartments and rentals in our area are commensurate in cost, if not more expensive, than our mortgage. Just the other day, I learned of one friend who is paying $1700 for a two-bedroom apartment. I about peed myself.
So Tell Me…How are you leveraging your money to do the things you love or to spend time with the people who matter most?