Tuesday, January 25, 2011

Taking a break from paying down the mortgage

My husband and I are going on a vacation this spring.  I had already set aside the money to do so, but I found out today it's going to cost us more than we thought.  So unfortunately, I'm going to have to stop paying down the mortgage and just pay the minimums until I have saved enough for the vacation.  There is a part of me that wants to be "nerdy" like Dave Ramsey would probably advise, and not go on the trip and then put all that money towards the mortgage.  But, on the other hand, it's a pretty big vacation and we've been looking forward to it for months.  So despite it coming in way over budget, we're still excited to go.

Wednesday, January 19, 2011

Is it important to pay off your mortgage early?

At this point, I plan on just paying off that second mortgage and then start saving more in both retirement and short term savings, and just pay the minimum on the main mortgage. But this video below gives me something to think about. This is an interview clip with Suze Orman where she discusses why it is so important to pay off your mortgage early.

Youtube video courtesy of anagramfinancial

Monday, January 17, 2011

How I'm saving $7.21 on my next mortgage payment

I noticed something an extra bonus of paying the extra $1,000 to the second mortgage last week. The principal we would be paying on the next payment was $36.56 (the regular payment total is $194.89).  But now that I put the extra $1,000 towards the mortgage, the principal amount that comes out of regular payment will be $43.77 - a difference of $7.21. I was originally going to wait until next month when the bill is due and pay $2,000, but I'm happy I was impatient and paid $1,000 of that early!  It motivated me enough that I just sent them another $200.  I think for now on, I'm not going to wait until the bill is due to pay the extra principal, I'm going to pay it whenever I have the extra money.  Every day that mortgage balance is being charged interest, so if I can reduce the balance - even just by a little bit, I'll save on paying interest.

Thursday, January 13, 2011

Pulling money out of the emergency fund

I had a CD that was coming due for renewal, and at .75% interest I decided my money was better invested in paying down the mortgage.  The CD was $1,000 so I made an extra payment on the 2nd mortgage.  So I have a mid-month mortgage update!  Here is the balance as of today:

1st Mortgage: $185,225.05
2nd Mortgage:  $20,964.56
Total Owed: $206,189.61

It's so nice to see some progress.  And assuming I'll be able to pay $1,000 at the beginning of next month, that first digit on the 2nd mortgage will be a ONE!  We're down to a little over $6,000 to the "break even" mark. 

It was a little painful to take money out of savings, but Dave Ramsey says have a small emergency fund ($1,000) and then pay down the debt.  We still have more than $1,000 in emergency funds, but they're in CDs and I don't want to cash them before they mature, so for now they'll stay where they are.

Tuesday, January 11, 2011

Personal Training - Worth the expense?

My husband decided he wants to start using a personal trainer, which will cost about $25/week.  That's another $100 per month.  I have to admit, my husband could use a little motivation to lose some weight, so maybe this is what he needs, but I'm not happy he wants to spend $100 a month to do so.  I told him if he does start working out with a trainer that he needs to cut back on going out to eat for lunch and spending $1.50 on a vending machine soda every day.  Not only for the money, but what's the use of him going to a trainer if he just eats stuff like that anyway?  So hopefully we will break even if he stops his expensive restaurant lunch habit, but starts with the trainer.  Best case scenario is our doctor bills will go down as well.

Wednesday, January 5, 2011

January update on the mortgage principal balance

I will probably be posting these every month because it's encouraging to see the progress made. Our mortgage balance is almost $1,600 less than it was this time last month partially due to the rebate and how much I paid this month.

Here are the current numbers:
1st Mortgage: 185,225.05
2nd Mortgage: 21,964.56
Total owed: 207,189.61

Saturday, January 1, 2011

New Year's Resolutions

I thought I'd share this article I found on MSN about financial New Year's resolutions:

5 financial New Year's resolutions

If you've made plans to eat right and exercise, be sure to add a couple of to-do's that will be sure to improve the health of your finances.

Lay a balanced investment groundwork
Made any New Year's resolutions yet? Focusing on the state of your financial health can pay big dividends down the road.

Resolve this year to lay the groundwork for a balanced investment portfolio. Ask yourself: Does my current asset allocation still match my risk tolerance and time horizon? Are changes in order?

The reason to undertake this exercise is simple: The stock market's gyrations over the past few years may have shifted the value of your stock holdings above or below their projected levels. If your portfolio has changed significantly, consider a rebalancing -- either by selling some of your stock or bond investments or by purchasing more stock, bond or cash investments.

Create a nest for the future
Rather than just hoping you'll have enough for a comfortable retirement, resolve to take time to calculate how much you'll need -- and how much you'll need to save.

Think through the "must-have" expenses, such as housing, and the "nice-to-have" expenses, like annual vacations to the tropics or a ski resort. Once you've figured out what your future liabilities could be, you can establish a realistic accumulation goal and ensure that you're on course to reach it.

If you don't know how much you are going to need to retire comfortably, how will you know how much to save?

Check your family's financial security system
Unforeseen calamity can rob you of your savings and investments if you don't have the right financial security system in place. Many Americans are underinsured, which is a shame because insurance can help protect you and your loved ones from the costs of accidents, illness, disability and death. It is an important part of any sound financial plan.

Your individual need for coverage will depend on your age, family and financial situation. Whatever your situation, resolve this year to make a checklist of the insurance you have -- and equally important, what you lack -- to determine how best to safeguard your family's financial future.

Preserve the assets you've accumulated
You may not enjoy thinking about what will happen after you're gone, but failing to plan could cost your family and loved ones. A sound estate plan can help preserve your assets and keep them from being unnecessarily reduced by taxes.

Studies show that more than half of Americans die without a will. If you don't have one, resolve this year to put together an estate plan that includes an up-to-date will, a power of attorney and a living will, and is capable of utilizing estate-planning tools regarding charitable giving and joint ownership of property.

Protect your financial foundation from the ravages of debt
While you're putting the rest of your financial plan in order, don't neglect credit-card balances or other outstanding debt. Consider ways to either reduce your debt or manage it better. For example, you might be able to save on interest charges by consolidating and transferring your credit-card balance or by refinancing your mortgage.

Your financial house is a complex structure that needs regular upkeep. By keeping it in order throughout the year, you'll be well on your way to reaching your goals.

As with any New Year's resolution, it's all about the follow-through. How many times have you had a great idea and a moment later you couldn't remember it? Try using some of the financial aggregation tools available for free at websites such as Bundle.com or Mint.com.

I don't know how much I'll use the things in this article. However, here are a few of my goals for 2011:

Pay down at least $10,000 on the 2nd mortgage
Fully fund my IRA ($5,000)
Start saving for a new-to-us car. It will probably be a few years before I get one, but it doesn't hurt to start saving now.