We’re back and finally ready to share our mortgage payoff plan, year 2 goals. But first, a little recap on where we ended 2019 in regards to our mortgage payoff.
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2019 Mortgage Payoff Recap
Last year we smashed our goal of paying off $23K on the mortgage. We actually ended up paying off $35,732.72. With our 70/30 plan and deciding to throw all of the RSU money at the mortgage, it didn’t feel like we were sacrificing much at all.
On the contrary, 2019 felt like the year we spent the most money on consumer services and products including this cool TV that I (Omar) really wanted. It’s actually our first time buying a new TV since 2008 when I moved into my first apartment. Lol. Anyhow, this was the goal we had in mind when we spent hours discussing this 70/30 plan. We wanted to make sure we were having fun while hitting the goal and avoid burning out. It’s funny how much of this financial journey is psychological as opposed to mathematical.
Our Mortgage Payoff Plan: Year 2 Goals
With that being said we are definitely raising the stakes for 2020. Our mortgage balance is currently $99,507.37. The mortgage payoff goal for this year is $37k. If we’re able to hit this goal, our mortgage balance will be $62.5k at the end of the year.
We hit $35k with such ease that at a minimum we think we can do it again. Our reasoning is twofold:
- The portion of our mortgage that goes to principal increased from just shy of $800 to just shy of $900. Obviously this makes the journey easier.
- Secondly, and more importantly, last year we received 4 RSU payments. This year we’ll receive 8 RSU payments.
If you’ve been reading these mortgage pay off posts then you know that these RSUs have been the x-factor in paying our house off. The number of payments is doubling, not the amount, unfortunately… Lol. And of course, the amount we get from them depends on the stock value at the time it vests.
For us to come up with this goal, we had to take a look at the numbers. We’re estimating another $18k from the RSUs. Hopefully, they’ll be more, but if not, hopefully, they won’t be any less! We’re estimating our regular principal payments at $900 per month. So that’s roughly $11k for the year from the regular principal. We’ll have 2 two-check months, which should add another $2k on the low end. Originally, Omar wanted to include our tax refund, but since we’ve owed the last several years with the exception of last year, I (Kim) would rather not count on money that isn’t guaranteed. So that leaves us to come up with $6k from our budget, which will be $500 per month. This will give us our $37k for the year, or so we hope!
Estimated Mortgage Payoff Date
When we started our mortgage free journey this time last year, our original goal was to pay off the house in 6 years. That would’ve put us at the end of December 2024. Six years was the max amount of time that we both agreed upon in it making sense to start paying off the house early. Anything over that just seemed too long to be throwing the majority of our extra money towards, honestly.
Now that we’ve seen what we were able to accomplish last year, our estimated mortgage payoff date is May 2022 at the latest. That calculation was based on paying $38.5K, on average, per year until it’s paid off.
Wishful Thinking: Our Stretch Goal
If we’re able to reach our goal of $37k early on, we have a stretch goal that’s two parts:
First, we hope to reach $40k. We think that we can, but when we look at the math, those numbers just don’t equal $40k. Lol. Hence our goal of $37k for the year.
Secondly, what we’re really hoping to hit this year is $45k.
If we’re able to hit $45k, then that makes us wonder if we can pay this thing off by the end of December 2021. That would be in 2 more years (and 2 years, 11 months from the time we initially started paying extra on the mortgage if you’re counting). That’d be one hell of a Christmas gift! If we’re actually able to pay $45k towards the mortgage this year instead of the $37k, that would leave us with $54.5k to pay off. And if we can find an additional $8k this year, best believe we would try to find an additional $9k next year to be completely done!
Being on this journey has been an amazing one. When we paid for our wedding debt free, we were amazed. When we spent even more money to pay off my student loans, we were really amazed. And when we started cash-flowing updates to our home as well as purchasing a new (used) SUV… Yep. We were amazed then too. But this right here… having a paid-off house right before either of us turns 37 at the latest or several months before we turn 37 if we reach our stretch goal… This is AH-MAZ-ING to us. We’re definitely excited, to say the least! Lol.
We’ll continue to post quarterly updates with our progress just as we did last year. And in the meantime, you can find us sharing all kinds of number breakdowns about it on our IG page.
As usual, thanks for your support with the blog and with this journey. Let us know if you have any questions (or any comments/thoughts) in regards to our #mortgagefreejourney.