Pay off the house?Well, we’re six months into the year now and I’m really starting to regret not setting some concrete financial goals for 2009.

At the onset, I really only had two goals for this year.

  1. Find a contractor to gut and remodel the entire first floor of my house. New kitchen, new bathroom, new floors, new walls, and new ceilings throughout.
    Preferably, I’d like to have the project nearing completion by May 2009.

  2. Pay for all of the work done by the end of the year. Realistically, we’re going to have to find financing for a great deal of the work and, again, I’ll probably use my credit cards for most of it.

Well, my second goal can’t happen without the first actually happening. And we’re beyond May 2009 and we’ve made zero progress on that. Hmph.

It’s not that I’m stuck in the mud or anything, I’m just not aiming towards anything either. There isn’t any excitement to be found on my spreadsheets of late… (How nerdy does that sound?)

Of late, I’ve fallen back on an old habit, debt repayment, to try and salvage the year. My only remaining debt is the mortgage so I’m attacking it like I did my old credit card debts.

See, while I’d love to have the first floor of my house remodelled, I dunno, for some reason it doesn’t excite me the way that not having a mortgage payment does — and when the time comes that I don’t have a mortgage payment, well, that’ll free up a lot of money for all of the remodelling I could possibly dream of.

That’s how I’m looking at it now anyway… (Apparently, I was thinking this way back in January too.)

So how soon can I get there?

I put together a chart this morning detailing when my mortgage will be paid off and how much of an extra monthly payment I’d need to make to get it there.

I went in increments of $250 all the way up to $2500. Yeah, $2500 per month extra. That’s crazy buy when I was at the height of my credit card repayment, I was sending VISA and MasterCard just shy of $2500 each month.

I could afford it then so there isn’t any reason I can’t afford it now — though at the time I was throwing every last penny towards it and somewhat struggling to have enough in my checking account to cover the bills as a result…

Mortgage Prepayment ScheduleLooking at the chart — if I just pay the minimum, the mortgage will be paid off in September of 2026. Seeing as I’ve never paid just the minimum on my mortgage, this isn’t a scenario I’m looking at…

I mean, in September of 2026 I’ll be turning 50. I can’t imagine still owing money on something that I bought when I was 25. I just can’t imagine that.

Really, the first few rows of the chart don’t interest me at all. I know people say that every little bit helps, I say it too, but I think that this chart proves that every “a lot” of bit really helps.

On the other side, the last few rows look a little too lofty. They also don’t seem to make enough of a difference to the end date to justify how much we’d struggle financially to make the payments in the first place.

The $1250 mark is where things start to look attractive to me with the end date of May 2014. For another $500 per month, we could fast forward things over a year.

In that scenario, my house will be paid for in less than 4 years?!

Can I delay the first floor remodel for 4 years? Probably not — I’m not really sure.

At the very least, we’d need to have “some” work done between now and then. Maybe not the remodel I picture in my head just yet but, either way, it’ll slow our progress towards this goal some.

So, for the remainder of the year, I’m going to attack the mortgage like it’s a nasty credit card balance.

I won’t throw every penny at it but I’ll be sure to fall somewhere between $1250 and $1750 each month.

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10 COMMENTS

  1. I’m so jealous! It will take us at least 18 more years to clear our mortgage. I’m hoping that we’ll be able to find more money each month to pay on it, but our new budget is already pretty tight. Ugh.

  2. Smurf, why not do this:

    Create a savings plan for the next year and wait to do the remodel until this time next year. That way you pay cash for the work and won’t have to worry about paying off credit cards.

    Also, you’ll be able to get a better quote if you tell the guy you’re going to pay cash… Nearly everyone is willing to take 10% off for cold hard cash payments.

    One other benefit is that it forces you to use the cash at hand in terms of budgeting. If you have say $10,000 in cash to work with, you tell the contractor that your budget is, say $7500. That way if he goes over for what ever reason, you’ve got some buffer built in to the project.

    -Grant

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