Money Reasons

Smart Reasons to Save, Use and Invest Money

Posts Tagged ‘debt free’

Being Debt Free is like the Driving Part of Being on Vacation

March 8th, 2010

As a kid, do you remember that rush of excitement you would get, when you knew you were crossing into another state? You’d see that big billboard sign welcoming you to a supposedly wonderfully great state. Of course, your family was just passing thru and had no intention of checking out any touristy stuff they might happen to have in the their otherwise “Great” state…

Do you remember the feeling about 15 seconds later after you asked how much further before the next new state, and learn that this new state had an even long drive time to get through than the last state?

Well, that’s how if feels for me right now, since I’m now in the asset building phase. And I have to juggle 2 kids and their various activities and needs on top of that. Though I have to admit, I’d rather deal with the upcoming kid issues now than in the past.

But, the feeling I’m having now is wrong (at least if I do it right)!

Over the next 2 months, I’ll have (for me) three decent sized infusions of cash (taxes, saved money from no house payment, and the bonus from work), that I’ll be able to invest in a low risk dividend stock. This will kick off the creation of my life long dream of the start of a Dividend Portfolio to cover my expenses. If you’ve been following my site, for the past 6 months or so, I’ve been doing a lunch experiment where I eat cheap at lunch and save the money to invest in stocks that yield dividends. The idea was to invest enough to have the Lunch dividend fund eventually pay for some or all of my weekly lunches. That would free up that money for other purposes (like investingJ). Through sacrificing (it wasn’t that bad really) by packing lunch (oh, the agony), I would save $40 a month week to invest in stocks. Of course, I didn’t invest it every month week because the transaction fees would have eaten me alive (I waited until I got a big lump sum, then purchased stocks)… I’m up to 1 fully funded lunch a week already!!!

Hopefully, the next time I write about this, I’ll have some snapshots of where I’m going with these funds and some conservative projections!

MR…

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Posted in Inspirational

Tags: debt free

I Am Debt Free, My Mortgage Countdown #1 – Equilibrium

February 22nd, 2010

At Equilibrium

We’re Debt Free! We don’t have credit card, car, mortgage or any other type of debt!

Two weeks ago, on the Wells Fargo Website, we chose the send “Payoff form” option for our last mortgage payment.

My wife filled it out, and we sat on it, waiting for Wells Fargo to pay our real estate taxes from our escrow. Now that they did that, we still have to pay our house insurance at the beginning of March, but… We sent in our last official mortgage payment!

Actually the check is sitting on our kitchen counter downstairs, waiting for me to put it in the mailbox! Tomorrow, I will drop it off at the post office, and then we are finished with it!!! (Booyah)

We ended up paying off our house in a little over 10 years.

So how did we do it?

Well, first we created an excellent excel spreadsheet (later converted to open office) to do some analysis on our amortization schedule.

Primarily, we used primarily 2 sheets in our House Payments spreadsheet:

The actual payment that was recorded sheet. This sheet was the real deal! As soon as I made a payment on the house, it was recorded in this sheet. Not much to this one, pretty cut and dry. At the top, I calculated the reduction in interest paid by pre-paying, the shorting of the life of the years of the mortgage by prepaying, and the total cost of the initial mortgage plus the interest.
The “What If” analysis sheet, was the same as the first sheet, but I copied the formula that referenced the payment amount all the way to point the mortgage would be paid off. This was my play sheet! I used this sheet soooo many times to calculation my payment schedule! It was truly great.

Next for the first year of the mortgage, we made double payments on the mortgage amount, with the excess going toward paying down the principal. Then later after our son was born (and my wife quit working), we lessened the payment amount to only 1.5 times the original payment amount.

I’m still in disbelief! I’m at a point of balance and having an “equilibrium moment”, so to speak!

As of this point forward, we will be solidly marching on a wealth building path (or at least I hope, life sometimes throws some wild pitches at you…).

As the last phase of this final numbness wears off, I’ll tell you what it feels like being debt-free in a future post!

-MR

Update: An equilibrium moment is when something is in perfect balance! I don’t owe any debt anymore and nothing is owed to me either! With the “debt phase“, I’m in perfect equilibrium. This phase is over! I don’t plan on ever going into debt that I can’t pay in a month’s time again!

Here are some links to former post in the Countdown series

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Posted in Mortgages

Tags: debt free early payments on house financial freedom mortgage free payoff house totally debt free

Mortgage Milestones, My Mortgage Countdown #4

November 5th, 2009

This month I’ve finally broke thru the $5,000 dollar mortgage barrier!

I still have about $4,989 left to go. That’s almost the cost of our upcoming Disney vacation (ouch.. thinking about it still hurts a bit)!

With my mortgage, I created “Mortgage Milestones“, each time I cleared one, we would go out to a nice restaurant to celebrate. You can see from the list below, I increased the number of milestones as I get closer to $0 owed. This added a bit of incentive to stick to the schedule, and reward the family for their patience and sacrifices.

$75,000
$50,000
$25,000
$10,000
$5,000
$0

Once we get to $0, We’re going to go to the nicest place I can think of in my area. I’m expecting the freedom from a mortgage payment to be a huge change in my life. Already, I’ve been trying to figure out what to do with the money saved from the mortgage.

If you plan on making extra payments on your mortgage like I did, I’d definitely recommend making “Mortgage Milestones” like I did. If I had to do it all over again, I think I’d make the earlier milestones $10,000 increments instead of $25,000. Keeping the $5,000 decrement amounts once you hit $10,000 in the end just to spice it up a bit. This also keep the your whole family focused on the goal of paying off your house early.

So a better revised “Mortgage Milestone” configuration would be: