Finances, FIRE, Goals, Home Ownership, Money, Mortgage Payoff

Mortgage Payoff Update: Two Years In

We moved into our current home on November 27, 2020 after a whirlwind several months of house hunting during a hot housing market. We were very fortunate to find the house we did at the price we did, which was largely thanks to us stumbling across a For Sale By Owner listing that happened to be in our price range, in our desired area, and that had everything we really needed.

My husband and I always planned on paying down our mortgage early, but that goal became even more solidified when we decided last year that we wanted to try and shoot for an early retirement date of 2036, when we’d both turn 50. Now, for clarity, when we say “retirement,” we don’t really mean retirement — what we mean more specifically is that we’d like to be financially independent by 50, or in other words, we’d like to be able to have the option of working part-time (or perhaps full-time still) on the things that really excite us. I’m already basically doing this with the flower farming business we started last year, but we’d like for Matt to be able to have the same option.

Now that we have the background out of the way, you may or may not have noticed that for the past several months, I’ve been very quiet when it comes to posting about financial goals and money, which are topics I usually blog about regularly. The truth is, when I set this year’s financial goals back in January, I was still riding the high of 2021 and all of its windfalls, which included an unexpected part-time job for me, the child tax credit money coming in regularly, and the stimulus check early in the year.

I had no idea how different this year would be.

On top of inflation rising more drastically than most of us have seen in our lifetimes, my position at the local paper was also cut, which meant that that side income was also gone. My husband usually gets some kind of yearly raise at work, but that didn’t come through this year like we had expected. While our flower farm business did, in fact, grow considerably, we basically just broke even this year since we had some huge infrastructure costs we put in this year, including a high tunnel and 7 new raised beds. We also decided (perhaps unwisely?) to replace two-thirds of the windows on our main floor this year to try and help with some of the heating issues we’ve had in this house, which we’re still paying off.

All that’s to say that we find ourselves in a very different financial situation now than we had perhaps anticipated.

I debated whether or not it was worth even sharing this update since so very little extra progress has been made towards the mortgage payoff this year. However, I also know how much accountability helps me (especially when times get tough), and I also wanted to paint a realistic portrait of what many people go through when they’re going for a huge financial goal — some years, you make a ton of progress and knock your expectations out of the park. Other years, you barely float by on making the minimum payment.

Here’s where things currently stand:

Our original loan amount was for $280,500.

Last year, after one year of living in our house and making payments on it (including several extra payments), we had whittled that down to $270,438.

This year, after two years of payments, we are now down to $263,565.

If we had absolutely only made the bare minimum payment, we would have paid down to $264,165. That means we did at least make an extra $600 in payments this last year of living in the house. Half of that was from an extra payment we made last December, when we were still getting all the extra income streams mentioned above. The other half came because we’ve been rounding up our mortgage payments each month so that we pay around $25 extra per billing cycle.

That means that in the last year, we saved approximately $715 in interest and knocked one extra month off of our mortgage timeline. All in all, we have paid off 33 months’ worth of payments in 24 months and have already saved $5,934 in interest.

In reality, I’m happy that we made even this much progress this year. Going forward, I obviously hope we’ll be able to start putting large chunks of money towards the mortgage again, but even if we can’t swing that for awhile, there is another important milestone we reached this year — getting to cancel our mortgage insurance. Even though that was just $35 extra per month, we plan to continue paying the same payment as before, which effectively means that even if nothing else changes, we still should be putting an extra $60 towards the mortgage a month in 2023.

It’s definitely not the extra $700 per month we were originally hoping for (or extra $8,400 a year) to get it paid off in 15 years, but any progress is still progress.

How has your 2022 looked financially? Anyone else noticed a definite squeeze?