Four Year House-iversary!

Whenever we’ve talked with folks about our ambitious 5-year plan to pay off our 30-year mortgage, we always qualified it with a statement along the lines of the following: “Yeah, the mortgage payoff is going well, we’re on track/ahead of schedule. Of course, if we have a kid that would probably change things a bit.” Well, I’m happy to say that blessed little roadblock has come to pass!

Baby vs Mortgage

Since our Three Year House-iversary post this time last year, we had been making phenomenal progress on our payoff scheme and were tracking to have the house paid off before the end of 2014! Once we found out we were expecting – after a few hours of high fives and Snoopy-dancing around the house – we decided we would take our foot off the gas a bit on the house, save a little “baby fund” for anything unexpected, and take care of a few house projects that made sense to get done before our little bundle o’ joy arrived (like fully scraping and painting the exterior of the house).

So we’ve slowed things down, but what does that really mean? As always, let’s go to the numbers!

The Year in Dollars: Since last July, we’ve paid $38,334 on the principle of our mortgage alone (i.e. not counting interest, taxes, and insurance); by far our biggest year ever!

The Payments: Not surprisingly, that means some massive payments. Prior to the baby news, we had made our biggest payment to date in February 2014 (8 times principle & interest)…until the next month in March when we did it again, paying NINE times principle & interest! Since then, we also made our smallest ever, a measly $200 extra. But without fail, we’re putting something above our mortgage each month. It just wouldn’t be us not to!

The Running Total: As of July 2014, the end of our fourth year of homeownership, we’ve paid just over 26 years off our mortgage.

So what’s next? The biggest shift comes to our income. We always planned, when a baby came into the picture, for Courtney to stop working (a stay-at-home parent is something we both believe in, and I like working more than Courtney, bada boom). Part of that plan included running our household on a small budget, leaving us lots of financial ‘oomph’ left over: first to let us save and make big honking mortgage payments, and now to make it easy for Courtney to gracefully shift to part-time business owner and full-time mom.

Mortgage Payoff 2.0! With our fabulous MVP Health Care insurance and a fully-funded HSA, we’re good to go on our medical costs for everything baby – phew! Ratcheting down the mortgage payments lets us meet all our bills on just my income, with enough left over for a baby-sized boost to our cash savings; funds for our last few house projects; and our new, slightly adjusted mortgage goal: to pay off our house by our SIX Year House-iversary, July 2016. It’s not quite as crazy as five, but it sure beats the pants off 30!

A few of our friends and relations have (lovingly) accused us of being a little too focused on money these last four years. But actually, it’s quite the opposite. Having the freedom for one of us stay home with our children – and for the other to work without bringing home the stress of debt and a tight budget – is worth just about any short term sacrifice to us. But the crazy thing is; the cost hasn’t been that steep! We don’t take expensive vacations, but we take long weekends to Boston or New England each year and our low-cost honeymoon was affordable AND unforgettable. We don’t drive fancy cars (quite the opposite) but we get around safely and reliably. And while we have plenty of fun “stuff”, as you saw in Courtney’s last post anything we don’t get full value from we sell to someone who wants it more (though some sales were tougher than others) and put the money toward our dream of family peace and financial freedom. And after years of dreaming together, we’re very much looking forward to including one more little dreamer into the mix!

by Andrew

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Ringing in the New Year (with an extra $1,593.60)

by Courtney

n 2013 we continued purging unnecessary “stuff” taking up space and collecting dust.  After having a joint garage sale with my sister and her husband over the summer, we really kicked it into high gear and decided that enough IS enough.  And as I’ve been reading several books on my Kindle (FREE books of course) about a minimalist way of life, I’m really on a roll with selling the “stuff” that has no purpose in our lives.  Here are the many ways we’ve earned some extra cash in 2013.

GARAGE SALE – $150  After making a few bucks at our joint garage sale, we really dreaded packing all of the extra loot into our cars to bring to The Salvation Army.  So instead, we brought the more valuable things into the house that we knew we could get some money for and placed the rest at the bottom of our driveway.  By the next morning, everything but the wicker flower pot and retro suitcase were gone…phew!  And I kept the suitcase.  Score!

SECONDSPIN.COM - $44.03  Secondspin is a great online source to get rid of your unwanted DVDs, CDs and video games that you pay no attention to.  After entering the UPC code of your items into their system, you can choose to add the item to your selling cart which keeps a running total of how much you will make.  Note: Your items have to be in near perfect condition; no scratches, damage to inserts, etc.  If you ship your items by Media Mail, Secondspin will reimburse you for shipping.  A nice and easy way to clear some clutter!

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You don’t need to hold onto this one, people.

AMAZON MARKETPLACE - $168.20  Selling on Amazon is so easy.  Unlike ebay, you don’t have to take pictures of your items, but only leave an item description.  We’ve sold many books, DVDs, CDs, and video games through Amazon.  They will periodically deposit your earnings into your linked bank account of your choice.  They take a portion of each sale, but give you shipping costs.  Not a bad deal!

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Andrew got this game in an XBOX 360 bundle on Black Friday. Along with another game, we made money off of games that were essentially FREE!

Craigslist - $215  This is great for high value items or huge, bulky items that you wouldn’t sell on ebay.  It’s very easy to take pictures and upload them to a post with details about your item, AND it’s anonymous.  If a buyer wants to bite, they contact you through an anonymous e-mail that Craigslist generates, but it arrives in your chosen inbox.  We’ve sold things like golf clubs, exercise equipment, electronics and even Andrew’s car & motorcycle.  (BONUS: Andrew’s motorcycle earned us an extra $2,900 in 2013.  It sold within a week of our post…Yay Craigslist!).  For the most part, I did most of the anonymous communicating with buyers, while Andrew met them in the Shop Rite parking lot IN BROAD DAYLIGHT to finalize the sales.  People scare me.  You never know!

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Farewell to a fun ride.

EBAY - $1,016.37  Although ebay takes time to use, it’s worth it.  Yes, I have to take pictures of my item, describe its condition and do a little research to find out what it might be worth to then decide what I’m going to sell it for, but it made us an extra $1,000+!  On ebay, you can either sell your item at auction style and come up with a starting bid OR you can sell it at a fixed price and hope someone buys it for exactly what you want for it.  The nice thing about ebay is that you can sell ANYTHING.  This year, we sold many vintage and retro toys, video games and paraphernalia that were taking up real estate.  You’re welcome, mom!

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Goodbye, Rainbow Brite

2014 is a new year with a fresh start.  Sell your things!  What are they doing for you, anyway?

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Special thanks to all you nerds out there who are buying all of Andrew’s retro PC games and manuals.

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That “Slap in the Face” Moment

by Andrew

In old movies, you’ll often see a character raving or crying hysterically in some stressful situation, at which point another character calmly draws back and slaps the first person across the face. The hysterical character immediately calms, and is then able to see their situation clearly and begin to take rational action. This happens in real life as well, though usually the “slaps” are less literal.

slap

They can take the form of unexpected revelations from family or friends; a rejection from a job or college (or dating prospect) you thought you had locked; a powerful book, poem, or article; a bank statement or collection notice; a report card or job review; or something as simple as a long-overdue look in the mirror. Whatever the form, a “slap in the face” moment can alter the landscape of your thinking in profound ways. It might even change your life.

I’ve been promising for a while to tell the story of my own financial recovery (this is just my story, Courtney had no debt and good savings when we met). It starts with a slap in the face moment shortly after I turned 30. I’d been living with one of my oldest friends at the time; we’ll call him “Jack”. To give you the full scope of the situation, this time was the absolute lowest point of my life financially. Deep breath, here goes…

  • I was broke with around $50 in the bank, no savings, and no retirement.
  • I had a combined total of $55,000 in debt from credit cards (most of which were maxed out), a brand new car note, student loans, and some personal loans and credit card cash advances.
  • I was making about $12/hour.

With those numbers, it’s no surprise I was frequently late or short with my share of the rent or other bills.

One day the dam broke and we got into a loud argument about my habitual delinquency. Things got heated as I made excuses and rationalized, until finally Jack spoke me some hard truth, the kind only good friends can give. He said; “This is why you’re 30 years old and don’t have a pot to piss in!”

Just like a character in one of those old movies, I was stunned. The fight stopped abruptly and we stared at each other. I felt as though he’d thrown a cold glass of water in my face, and that chill slowly dripped down my spine.

All the excuses, self-negotiating, and rationalizations I’d indulged in for years to avoid responsibility as my life slowly crumbled fell away in an instant. In that moment I saw that I was 100 percent responsible for the choices that had led me to my present circumstances: broke and utterly desperate. I felt tremendous regret over my past decisions, was terrified of my present circumstances, and in despair about what I saw as a hopeless future.

I couldn’t speak. I just gaped at my friend for a long moment, then turned and walked away, and out of our apartment. Days later, Jack apologized for being so harsh but I just thanked him for his honesty.

I didn’t know a thing about personal finance, but I knew I was in a horrible mess. It was tempting to just throw up my hands and say it was too big a problem to do anything – heck, I’d been doing it for years. But when I considered all I might have ahead of me, how could I not fight for a better future? The rest of my life was at stake! I knew I would gain nothing by doing nothing, but I could change my life if I was willing to learn and make better choices.

It all ties in to a powerful quote (I’ve mostly seen it attributed to Thomas Jefferson) I heard around that time: “If you want something you’ve never had, you must be willing to do something you’ve never done.”

And that’s how I woke up. I’ll continue the story in my next post; what I started doing and how I put a plan together. But that figurative slap in my face was what re-introduced me to hope. It was so unfamiliar I almost didn’t recognize that warm, uplifted feeling in my gut for what it was!

Have you had a slap in the face moment in your own life? What people or things have had that effect on you, and what changes have you been inspired to make?

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Three Year House-iversary!

Well, we’ve officially been homeowners for three years now, and I’m proud to say that our house payoff plan is still going strong (see our 1-Year and 2-year “House-iversary” posts for some background). In three years, we’ve paid just over 20 years off our mortgage! It’s surreal to be in the single-digits, but at the same time it feels like we still have a long, long way to go. So how does one keep the financial furnace stoked when your goal is so long-term? Through the wonder of fiscal nerdery!

Toward the end of 2012 I found myself scrutinizing our budget spreadsheet and mortgage graphs (yes I have multiple graphs, remember the nerdery?). With those numbers, I concocted three “levels” of mortgage payment; the three basic ways homes get paid off.  For fun, I applied those levels to our own situation to come up with some hypothetical scenarios of what might have been. We’ll start with a graph to give you the total picture. Read on for the details. Perhaps you’ll think of a ‘might have’ you might like to try.

3Y House-iversary chart

Scenario 1: The Normal (aka “status quo”)

Our mortgage payment is $1,200 per month; $757 for principle and interest (P&I), the rest for insurance and taxes. Over three years, if we had followed the strict terms of our 30-year mortgage thus far…

  • Total Paid: We would have paid a total of $43,200 in mortgage payments.
  • Amount on Principle: Approximately $6,600 of that total would have applied to the principle of our mortgage. That’s just 15% of what we’d have paid out. Ouch.
  • Bottom Line: Mortgage debt reduced by a paltry 5% of the total loan.

Scenario 2: The Bi-Weekly

The first level to accelerate mortgage payoff is both easy and effective, and the one most folks are familiar with. In a nutshell you set up bi-weekly half-payments instead of monthly whole ones. Those 26 half-payments add up to 13 whole payments, or one extra monthly payment per year. It’s as painless as it gets, but still packs a punch. Make it automatic through your bank (it should be free to enroll) and you’ll likely barely notice the difference but you’ll pay off a 30 year mortgage in 22 to 25 years, and save $10,000 to $40,000 in interest (or more) depending on your loan balance. If we had followed this plan…

  • Total Paid: We would have paid an extra 3 full payments so far, for an additional $3,600 dollars tacked onto the ‘normal’ figures above. A total of $46,800 in payments.
  • Amount on Principle: Approximately $10,200 of that total would have applied to the principle of our mortgage, a more reasonable 22% of what we’d have paid out.
  • Bottom Line: Mortgage debt reduced by 7% of the total loan, a decent improvement over the ‘normal’ track.

Scenario 3: The Berzerker (aka “Go Big and Own Home”)

Past bi-weekly, all further levels are really just one big level, there aren’t any tricks from here out: Pay whatever you can above your regular monthly or bi-weekly payment, period. Every dollar beyond that minimum goes right to principle (make sure you designate it as such on your payment voucher, or online portal, whichever you use).

We’ve chosen to try to pay off our 30-year mortgage in just five years. Admittedly, we’re an extreme case for a couple with under a six-figure combined income. We routinely make triple or quadruple payments, our largest being eight times our monthly P&I amount. It makes for a very tight budget, but by living simply and getting rid of all other debt first, it’s very doable and the results are pretty incredible.

  • Total Paid: In 3 years, we’ve paid a total of $117,000 in mortgage payments.
  • Amount on Principle: Approximately $74,000 of that total was applied to the principle of our mortgage, a whopping 63% of what we paid out.
  • Bottom Line: Our mortgage debt has been reduced by 51% of the total loan. That’s sizeable, but thanks to the magic of amortization, we’ve cut an unbelievable 67% (just over 20 years) off the term of our 30 year mortgage. Truly, time is more than money!

The truth is, this is nothing but a simple, yet profound, savings and security plan. As we own more of our house (and especially once it’s paid off) we are far less at risk from changes in the housing market, our investments or our income. Fewer bills equals less to worry about should bad times come. On the savings side, the money we pay extra on our home is invested in our largest asset. Even considering the housing crisis of 2008, houses generally trend upward in value. More importantly, we’re building massive ‘saving muscles’; once our house is paid off, we could apply the monthly payment we used to send out to the bank to our own savings. Or we could go the other way; reduce our working hours and do whatever we want – more time for hobbies and travel, more time with family and friends, or the chance to start our own ventures. There’s a whole lot of freedom in these kind of margins!

NOTE: It should be understood that it is not a good idea to pay extra on a mortgage until/unless you have gotten rid of all other consumer debt (including student loans and cars), have a comfy cash emergency fund, and regularly contribute to retirement.

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Easy-Come-Easy-Go Rider

Earlier this month, I sold my motorcycle. That’s a big deal for a guy who grew up, almost literally, on the back of his dad’s 1973 BMW R90S. It was a sweet-bitter moment (since it was more sweet than bitter) handing over those keys, but it felt really great to do something that­ had such a profound effect on my finances, goals and life in one fell swoop.

Financial: The first layer is easy. Since I owned it outright, selling the bike put a few grand into the budget for house projects and our mortgage-payoff scheme (more on that in the 3-Year House-iversary article next month!).

Goals: Selling the bike was just another part of our ever-churning simplification process. It’s one less machine to maintain and feed; one less registration and insurance policy to pay for; and one less vehicle to keep clean, store, and worry about. All of which ticks up our overall Peace rating.

Life: Finally, and most importantly, it was the right time to let it go. Things are shifting, priorities changing, and a motorcycle represented too much risk for what is – at the end of the day – a toy (a very cool and kickass toy, but a toy nonetheless). And I surprised myself with how at peace I was with it. But maybe it’s not so surprising; my motorcycle served its purpose. I got in some great rides and memories, especially with my dad, which was a huge part of buying it when I did. He’s been riding for 40 years, and it was always a dream to have my own bike and go on long, sweeping rides together through the northeast, and it’s been incredible. A surprise benefit was when my friend Tim got interested, learned to ride and got a bike, and joined us. Even my initially recalcitrant wife, Courtney learned to love riding (tho she’ll admit, the new wardrobe was a big draw for her). Bottom line, I’m content with my time having the motorcycle.

Contentment is a big part of enjoying your life and the people and experiences that make it truly rich. It’s been said that, once above the subsistence level, the only difference between poverty and abundance is one’s level of gratitude. Enjoy the NOW, my friends; it’s all a beautiful ride!

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My Frugal Valentine (Birthday)

My birthday falls upon Valentine’s Day every year, and this year was my 30th to boot!  I could’ve demanded a fancy over-the-top day of being showered with gifts, chocolates, flowers, and more, but you know me…I chose another route.  Andrew had already given me tickets to see Passion Pit Monday night (amazing!) and another major gift, so I made it my mission to find fun and frugal things to do yesterday.

We began our day (at 7am) with a mouth watering breakfast at Perreca’s in Little Italy of Schenectady.  I had french toast with their homemade italian bread and a side of home fries.  No, this was not too many carbs.  BIRTHDAY FREEBIE #1: FREE breakfast with my license as proof of my b.day!

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Thank you for my incredible FREE breakfast, Perreca’s!

After moving into our house almost 3 YEARS AGO, we received a coupon in the mail for a FREE bouquet of 1 dozen roses from Felthousen’s Florist.  Andrew got this gorgeous bouquet for FREE people!  BIRTHDAY FREEBIE #2: 1 dozen roses!

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A FREE flower is somehow more fragrant =)

After lunch at our favorite pizza place, Home Style Pizza, we booked it to the Regal theater to see “Warm Bodies”, the perfect V-Day movie for us.  A love story combined with zombies…who wouldn’t find this romantic?  BIRTHDAY FREEBIE #3: Got my movie ticket fo-FREE with a special Birthday Free Admission Regal Cinema pass from our Entertainment Book.  Hollah!

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Thanks for my FREE movie, Regal Cinema!

Not only was my movie ticket FREE, but by using my Regal Crown Club card, we also got a FREE small soda: BIRTHDAY FREEBIE #4, plus a $2 OFF Popcorn coupon from the Entertainment Book.  We shared a small soda and small popcorn (plenty for the two of us) for only $4!

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Hollah 4 dollah!

I don’t enjoy going out to dinner on my birthday because there’s always a huge Valentine dinner crowd out.  I don’t like crowds.  So, to do something nice for Andrew (because it’s not just my birthday), I attempted to make homemade heart shaped ravioli.  They came out pretty well, but next time I’d fill them with more cheese.  I was hesitant, as this was my first time making my own pasta (aside from gnocchi), and I didn’t want them to explode.  But…success!

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Before sauce

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After sauce

After a delicious homemade dinner (if I do say so myself), we hung out for a bit.  We met up with my parents after dinner so I could pick out a Fossil watch for my birthday.  It was at the mall that I got to partake in my final freebie of the day.

BIRTHDAY FREEBIE #5: FREE drink from Starbucks.  When the girl at the counter asked me what I wanted (because apparently you can have ANY free drink you want on your b.day…remember this), I said a mint green tea.  She looked at me land said, “You want a tea…for free…on your birthday?”  When she asked me what size, I started to say medium, and she interrupted me to tell me I wanted a large.  I’ll definitely get a fancier drink next year.

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My free tea was awesome. I regret nothing.

There were many other things I could’ve had for FREE on my Valentine Birthday, but you have to sign up for them ahead of time.  I will remember this for next year.  We really got a kick out of seeing how much I could get.  It was an awesome day.  And it pleases me, and besides, Dave Ramsey would be proud.  ~ Courtney

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Homemade goods made from Upcycled materials

Check out my GOOT. shop where I sell a variety of affordable things made from upcycled and repurposed materials.  Help me celebrate my 30th Valentine Birthday and enjoy 30% OFF anything in my shop until Feb. 14th!  Use coupon code GOOTIS30 at checkout.  Buy REpurposed…It’s a GOOT thing.  ~ Courtney

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“No Credit, No Problem!” Upcycled guitar picks

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