Why paying off our second mortgage was a good thing

I was thinking today how grateful I am that we paid off that second mortgage over 2 years ago now. I thought I'd take a look at just how much that one financial move has made a difference in our financial life.

If we would have kept our original loan of $200,000 at 5.75% we would owe $182,390 on the main mortgage today.

Our monthly payment was $1,133.

Our second loan was $25,000 at 8.65%. If we still had that mortgage our principal balance would still be $23,644.

That monthly payment was $195.

So if we had not paid down that loan, we would still owe a total of $206,034 on the house and our monthly payments between both loans would be $1,328 (not including property taxes). Now our monthly required payment is only $1,018 - a difference of $310 a month.  We currently owe $173,369 on the house. If we sold our house today, we would make an extra $32,665 on it ($206,034 that we would have owed minus $173,369 that we actually owe).

Refinancing our main loan also helped, but I'm fairly confident our mortgage company wouldn't have offered to let us refinance that loan had we not paid off the smaller loan. If we still had both loans we would have been significantly underwater on our house at the time. Ever since we refinanced, we have paid an additional $150 in principal each month, so we are sending them a total $1,168 a month. But, even with that extra contribution we are still saving $160 a month.

So we are saving an extra $310 a month for the next twenty-something years, plus we have increased our net worth by over $32,000 - which will only get better since we are already 7 months ahead of schedule on our current mortgage just by paying an extra $150 per month. We probably won't be paying that extra money towards the mortgage had we not paid off that loan since our minimum payments would have been $310 more. Not bad for paying off a $23,000 loan early!

Extra Cash Challenge - August results

Here are my results for August's extra cash challenge:

Advertising: $105.17
ING/Capital One 360: $17.51
Lending Club: $1.13
Part-time job: $83.69

Total: $207.50

Difference from last month: +$27.47

Extra cash challenge - June and July results

Another month went by too fast and I never got around to posting my June results last month, so this month I'm posting 2 months in one post. Here are the figures...

June:
Advertising: $201.05
Amazon: $20.88
ING/Capital One 360: $15.48
Lending Club: $1.10
Part-time job: $14.43

Total: $252.94

Difference from last month: -$49.43

July:
Advertising: $118.24
Amazon: $0
ING/Capital One 360: $17.39
Lending Club: $1.10 (estimated since statement is not available yet)
Part-time job: $43.30

Total: $180.03

Difference from last month: -$72.91

First a quick update on the eBay earnings from selling my aunt's stuff. I finally had my aunt come and pick up the rest of the stuff that did not sell. Based off the 20% commission I would have made $55.29 over the past few months. She decided to just give me $100 for my trouble, so that works for me!

I'm a little bummed to see my numbers drop significantly 2 months in a row. You may notice that my Amazon earnings were $0 for the month of July. Unfortunately it looks like I have permanently lost that source of extra income due to circumstances beyond my control. It is a reminder to diversify your income streams because you never know when one could stop producing income. Here is the email that was sent to me explaining why I can no longer earn commissions.

We are writing from the Amazon Associates Program to notify you that your Associates account will be closed and your Amazon Services LLC Associates Program Operating Agreement will be terminated effective June 30, 2013. This is a direct result of the unconstitutional Minnesota state tax collection legislation passed by the state legislature and signed by Governor Dayton on May 23, 2013, with an effective date of July 1, 2013. As a result, we will no longer pay any advertising fees for customers referred to an Amazon Site after June 30 nor will we accept new applications for the Associates Program from Minnesota residents. 

Please be assured that all qualifying advertising fees earned prior to July 1, 2013, will be processed and paid in full in accordance with your regular advertising fee schedule. Based on your account closure date of June 30, 2013, any final payments will be paid by August 30, 2013. 

While we oppose this unconstitutional state legislation, we strongly support the federal Marketplace Fairness Act now pending before Congress. Congressional legislation is the only way to create a simplified, constitutional framework to resolve interstate sales tax issues and it would allow us to re-open our Associates program to Minnesota residents. 

We thank you for being part of the Amazon Associates Program, and look forward to re-opening our program when Congress passes the Marketplace Fairness Act. 

Sincerely,
The Amazon Associates Team

Blah politics!  So that's a bummer because I had earned nearly $700 from Amazon since I signed up about two and a half years ago. Not life changing amount a money, but every little bit helps! Amazon has also made nearly $11,000 in revenue off of my referrals as well, so it's a lose-lose situation.