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Are you ready to read April’s debt payoff report?
Last month, we paid off $2,908 of our mortgage debt. Our remaining balance is $82,410. If all goes well, we’ll be able to get into the 70s by May. I feel pretty good about reaching our goal of debt freedom before 30. That said, I want to stay the course. I don’t want to get sloppy and delay payoff at all. Can you tell I’m a “rip the bandaid” kinda gal?!
What does debt payoff look like?
Here are the steps we took:
We set a budget and stayed accountable by writing a debt payoff report.
We created a budget at the beginning of the month. Our budget reflected our April priorities which were to
- pay off as much of our mortgage as possible
- contribute 15% of gross income to retirement accounts
- pay for wisdom teeth surgery
- pay for flights to Alaska
Having that budget in place helped us tell our money where to go. In the past, I’ve spent mindlessly and then regretted not using our money toward our long-term goals. I didn’t want to do that this month. Instead, I wanted our budget to help us get closer to being 100% debt free, financially independent and extraordinarily generous.
We raised our incomes and lowered our expenses.
James worked some overtime, which is effectively his side hustle. I worked 20 hours per week, took care of our daughter and sold some small items on community selling groups. Getting paid to get rid of my clutter is a win-win. I even encouraged one woman to buy more of my books than she planned. Steal!
Decreasing expenses is a revolving goal in our home. I’ll think that we’ve finally hit “bottom” then find another way to cut expenses. I listened to Tim Ferriss’s podcast of Mr. Money Mustache today. MMM lives on $25,000-$27,000 per year for maximum happiness. I’d love to get there. We’re at around $30,000-$35,000 annually.
One habit I’ve added when I think about buy something new is to ask myself if it will make me happier in the long-term. It’s always surprising to me how many items I turn down. Life is good as is and I don’t need a gadget to complete me most of the time.
We paid for emergent issues with cash.
The first week of April, the dentist informed me that I needed my wisdom teeth removed immediately. I had an infection and risked far worse health effects than if I left them in place. This surgery cost $1,132 in dental fees. Yikes. We had the cash to pay for it since we save a high percentage. Still… it was spendy. I was relieved to not have to worry about the bill on top of everything else.
James’ aunt was recently diagnosed with cancer. We wanted to visit her while we could. We saw July as the perfect opportunity to visit since our friend is getting married then, also. We’re staying with our aunt which will save $$$$ during the height of tourist season in Alaska.
Being able to pay for emergent issues with cash gives me a huge feeling of peace. We can say yes and help even if it delays the pay off some. What’s the point of saving and investing if it’s not for those we love?
We made a large “principal only” payment before the mortgage was due.
At the beginning of the month, our outstanding balance was $85,310. To pay the least amount of interest as possible, we paid down the loan before the bank calculated interest. This is how it worked for us.
- April 1: Bank records the beginning balance. Ours was $85,310.
- April 16: We make a principal only payment of $2,713. Our new balance is $82,597.
- April 20: The minimum payment of $453 is due. The minimum payment pays the bank their interest portion. Since we paid extra, the bank can only charge interest on the $82,597 rather than the $85,310. This is a big savings for us this month (and each month after).
- We pay the minimum payment of $453. Of that payment, $195 goes to principal. We pay $258 in interest.*
*When we started the loan, over $400/mo. of our minimum payment went to interest. We’ve consistently put extra on the loan so that we now pay $258. I’m hoping to get it into the $100s soon.
Related: May 2018 Debt Payoff Report – $3,506
Do you make a debt payoff report? If you’re paying off your mortgage, what’s your strategy?