Mortgage Pre-Payment Plan Update – December 2014

2 Dec

Our mortgage pre-payment effort has had a few setbacks this year, mostly due to the purchase of our 3rd duplex in May. This created the double-whammy of (1) tapping our reserves to pay for down payment/closing costs and (2) raising our rental emergency fund minimum (we aim for $5,000/duplex).

Curvy Roads

(edited photo by allison.hare)

As such, we’ve been replenishing our savings ever since, which hasn’t left much in the way of discretionary rental income for mortgage pre-payments:

  • Nov 2013 – $94
  • Dec 2013 – $1,146
  • Jan 2014 – $800
  • Feb 2014 – $881
  • Mar 2014 – $863
  • April 2014 – $0
  • May 2014 – $0
  • Jun 2014 – $0
  • July 2014 – $0
  • Aug 2014 – $121
  • Sept 2014 – $0
  • Oct 2014 – $0
  • Nov 2014 – $0

Wanting to see faster progress, I decided to track and periodically apply small “windfalls” to duplex #2’s mortgage. Particularly things I could easily justify not doing in the first place – like clipping a coupon, waiting to order something until a discounted gift card arrives, or completing an incentivized survey.

Below is my log of about 2 1/2 months of “found” money:

  • $118 – Discounted gift cards
  • $1 – Amazon ‘No Rush Shipping‘ book credit
  • $3 – Remnant rewards from a closed credit card
  • $10 – Social media promotion by my apartment complex
  • $150 – Health screening from my health insurance
  • $424 – Leftover auto insurance premium savings
  • $22 – Returning to DSW to apply a forgotten coupon
  • $129 – Blog revenue

That $857 applied to the mortgage saves an additional $1,724 in interest!

Counting this latest payment, we’ve paid a total of $4,762 in extra principle which translates to ~$10,666 in unpaid interest over the life of the loan. That’s already almost half of the interest savings projected from my conservative pre-payment calculations of ~$94/month.

Mortgage PrePayment Update Dec 2014

Mathematically, we’d probably be better off applying cash flow towards another property, so it’s fair to question whether we should be paying extra at all. We’re both happier with the idea of (eventually) having paid off properties, so I expect we’ll do a little of both. We’re almost done building that larger emergency fund, so progress should accelerate in early 2015.

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2 Responses to “Mortgage Pre-Payment Plan Update – December 2014”

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  1. 2015 Real Estate Resolutions | Rental Realities - December 31, 2014

    […] to Mortgage #2 – we anticipate a good bit of discretionary cash flow that can be applied to our pre-payment efforts. Averaged across the year, that $833/mo. will save an additional $16,668 in interest and shave just […]

  2. 2014 Goal Results & Highlights | Rental Realities - January 2, 2015

    […] Pay Down Mortgage Debt – $3,522 applied to mortgage #2 ✔  Expand Property Management – done! ✔  Mean Tenants – replaced with pleasant […]

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