Last April I wrote a blog post about why I’m trying to pay off my home early. The interest rate on my mortgage is relatively low at 4%, so I could get a higher return by investing my money in the stock market instead. But my fiancé and I have decided paying off our home early will give us more peace of mind and financial flexibility than making extra retirement contributions.
I don’t like the feeling of owing the bank money. If disaster struck and we couldn’t make our mortgage payments, we could lose our home, which is a pretty scary thought. Although we have a year of living expenses set aside for emergencies, you never know what could happen.
Extended income loss or illness could clean out our emergency savings. I’ll feel much more financially secure once our home is paid off. It will be a big comfort to know we’ll always have a roof over our heads no matter what.
So, how is our early mortgage payoff going nearly a year later? I thought I’d give you an update on the progress we’ve made below.
Early Mortgage Payoff Progress
Since I wrote the last blog post, we’ve knocked about $16,000 off our mortgage balance. If we keep up this pace, we could pay off our home in as little as seven years. This is better than my projections when I wrote the first post. I estimated that we’d have our home paid off in about a decade, and so far we’ve been beating that estimate.
We were able to increase our mortgage overpayments by being frugal and living on just one income. My fiancé has a good job in sales that allows us to cover all of our baseline expenses as long as we watch our pennies, including our retirement contributions. Because we’ve avoided lifestyle creep, we’ve been able to live off of my fiance’s salary and put all of my income toward savings, investments, and extra principal payments on our mortgage.
Because I’m a freelance writer, my income varies from month to month, which affects how much we can save. For that reason, we didn’t set any firm targets or goals for our extra principal payments. We usually sit down once a month to decide how to divide my income between savings, investments, and mortgage overpayments.
If we know we have a big expense coming up like a home repair, we usually direct more of my income toward our savings account than our mortgage. Some months we may not be able to make any overpayments, but it all balances out. Even though we had to take a break from making principal payments for a month to replace our gutters, hot water heater, and car tires, we were still able to knock $16,000 off our mortgage balance in total. That’s some pretty good progress.
Future Goals
Going forward, we hope to be even more aggressive with our mortgage overpayments. My fiancé has been getting good bonuses and may be up for a promotion in 2022. I’m always looking for ways to increase my income as well, such as starting a crafting side business. So we’re hoping to make at least $2,000 per month in principal payments this year. I’ll probably write another update post at the end of the year to let you know how things are going.
What are your thoughts on paying off your home early? Do you think it’s better to make extra principal payments or invest that money in the stock market to get higher returns? Let me know in the comments below!
Read More
How I Saved Money With Ethical Spending
Why I’m Not Spending Any Extra Money In February
Did I Save or Lose Money Decluttering in 2021
Come back to what you love! Dollardig.com is the most reliable cash-back site on the web. Just sign up, click, shop, and get full cashback!
Vicky Monroe is a freelance personal finance and lifestyle writer. When she’s not busy writing about her favorite money saving hacks or tinkering with her budget spreadsheets, she likes to travel, garden, and cook healthy vegetarian meals.
Comments