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Hi there! Here’s our May debt payoff report.
If you’re new here, welcome to Hansen Hundreds. I’m Heidi and am working with my spouse Nick to be debt free before I turn 30.
We bought a foreclosure that needed some TLC in January 2017 for $173,000.
After our down payment, we financed $130,000. Since then, we’ve been working fiercely to pay it off.
May 2018 Debt Payoff Report – $3,506
I published our first debt payoff report in April. Since working our debt payoff plan, we have paid off $51,170 of mortgage debt through lots of rice and beans, overtime, and board game nights.
We are 39% complete with our goal. If you want to read more about our story, you can check out our backgrounds.
This month, we paid off $3,506 of our mortgage balance.
Now we’re in the $70K’s, and it feels great. We’re running ahead of schedule for now.
If we keep going at this rate, our timeline for payoff is Spring 2020, a few months before I turn 29 years old.
Here’s what May looked like:
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Related: First Net Worth Report: April 2018
How did you save $3,506 this month?
A few things helped us this month:
- We make $88,000 and save over 50% of our income each month.
- I work from home for 20 hours per week as a professional writer while the rest of my time is focused on saving money and raising our daughter. Cooking meals and doing other things that save us money is time I enjoy spending.
- We live lean and in a relatively low cost of living area.
- We had a three paycheck month and received a $700 reimbursement on medical expenses we had recently.
- I’m always hungry for more financial independence life optimization content. I’ve been really into ChooseFI Radio podcast and others.
I love to learn about personal finance and managing the assets we have as best as we can.
I’m a Dave Ramsey fan and a proud member of the financial independence community.
I usually don’t subscribe 100% to most things in life-except for paying off debt. This beast has to go!
Publishing a debt payoff report each month helps me stay accountable and honest with myself.
I’m a goal oriented person. I keep track of our progress at home by highlighting lines when we pay off each $1,000.
Someone told me that paying off our mortgage is like paying a $1,000 bill 130 times. It makes it seem not so large when I think of it that way.
Plus, it’s fun to work hard so I’ll know that I did my best when we publish our debt payoff report.
How do principal only payments actually pay off the mortgage faster?
In our case with our fixed-rate conventional mortgage, the bank only charges interest on what is outstanding or left to pay.
The more we pay in principal only payments, the more we save.
Here’s our example for this month:
- Outstanding Beginning Balance: $-82,410.
- We paid as large of a principal only payment as we could: $3,300.
- Bank reduces the balance to $-79,110.
- The bank only charges interest based on the new outstanding balance of $-79,110 instead of the $-82,410.
- Then, the bank charges our minimum monthly payment of $453. Of that, $247 goes to interest and $206 goes to principal.
- Our outstanding balance is now $78,904.
By paying extra on the loan each month, we prevent the bank from charging the maximum amount of interest they could charge.
Paying extra now saves us this month and each month after in interest and time savings.
Paying off debt can compound on itself over time for the borrower’s benefit.
We’re estimating that we’ll pay only $8,000 in interest once the mortgage is paid in full.
I’m happy with this number compared to the $86,000 (and 30 years of debt) we would have sentenced ourselves to if we didn’t pay extra ever.
Are you able to have fun without a lot of extra money?
I think so. Some of the things we enjoy regularly are:
- Spending time with our almost 9 month old.
- Going to the library and checking out more books than I can carry in one trip.
- Hot, relaxing baths
- Netflix (Have you seen the Unabomber documentary? Totally gripping)
- Celebrating my friend who just graduated with her MBA
- Spending time on Mothers Day drinking coffee and reveling in my Costco almond butter gift
- Board game nights
- Dinners at home with friends
May was super busy. I already feel like the whole summer is booked up with various to-dos. Summer’s not even officially here.
We’ll be traveling to Alaska this summer to visit our ill aunt, attending 3 weddings and seeing Taylor Swift in concert.
I’m excited for it all, but also crave time by myself to write and be alone, honestly. #tiredmama
A lot of my life is wrapped up in my daughter Terin who drives me and is a reminder of what’s truly important.
The Saturday mornings I spend snuggling with Terin, drinking coffee with Nick and having time to write are precious to me.
Those quiet family mornings keep me energized for all the plans we have in the coming weeks.
What are you up to?
If you’re a blogger and ever post a debt payoff report, please share. I’d love to read more from people in the debt free community.