Paying Off My Home Early
I have wanted to be debt free for a long time, but I’ve only been serious about it for the last year. Still, I am saddled with debt, and at 38 years old, it’s not a pretty picture for me as far as financial independence goes. I am still about $37,000 in personal debt, which will be paid off by minimum payments in six years. I plan on snowballing the debt, though, so once the first loan is paid off in 2020, I will decrease the amount of time it takes me to pay through the rest of the debt.
My debts are as follows:
Student Loan $14,397.30
Car Loan $14,905.64
Personal Loan $8,531.51
I also owe $156,000 on my home with 28 years left on the mortgage. The thing is, I don’t want to wait 28 years to pay off my house. Actually, if I had magic wishes, it would be paid off today. Since I don’t have magic wishes to pay off the home, I did a little bit of work with an amortization calculator and found that if I were to pay an additional $275 per month, I would have my home paid off in 17 years which would put me at age 55, my current goal retirement age. Doing this would save $48,000 in interest and reduce the term of my loan by 11 years.
Why I Want To Pay Off My House Early
I’ve been doing a little thinking about why I want to pay the house off early, and I am not sure that I have any good reasons to do so. I know that it is recommended to put the money into a retirement account instead of paying off the home early, but the idea of not having a mortgage payment is incredibly alluring to me. My mortgage is my biggest monthly expense, and if it were to be taken care of by the time I was 55, it would make early retirement much simpler. I think there is a security factor as well. There is something very comforting about the thought of owning a home free and clear.
Will I Actually Do It?
As of today, I don’t think I am in a position to begin paying extra on my mortgage. As much as I want to and as excited as I am at the prospect of having a paid-off house, I think that the smart thing to do is to continue to build my emergency fund and save for taxes. Once the emergency fund is built up to $5000, and I have saved enough to cover next year’s tax bill (I am expecting to owe $6000), I will begin putting extra money toward my debt every month. Once the debts are taken care of, I will begin saving for retirement, including putting extra money towards the house. As tempting as it is to put the $275 a month into the house beginning next month, I don’t think that it is the right choice. I can still pay the home off by 55 by contributing more than $275 at a later date, and when the debts are free and clear, this will be much less of a strain to do. My tax bill shouldn’t be as high as it is. I mean, I am not complaining about tax rates, though I think I pay too much, but I just shouldn’t owe as much as I do at the end of the year. I have tried to rectify this by having additional withholdings every month, but I didn’t start early enough this year to cover what I will owe. Not having to manage that money every year will also make things easier for me financially because it is tempting to spend what I am saving for taxes when an opportunity arises or when I am bedazzled by a shiny object or a burrito.