Pay off 300k in 5 years?
Crazy? Yes. Ambitious? Definitely. Impossible? Not a chance.
A friend of mine told me over the weekend that her coworker is planning on paying off 300 thousand in home mortgage loans over the span of five years. Yes you read that right, 300k over 5 years. I spit out my juice and took a double-take. How is that possible? That is 60k paid off every single year. That kind of dedication at being debt-averse takes commitment, guts, and a whole lot of capital.
And this doesn’t even take into account the multitude of other expenses her friend had to make in lieu of having a vanishing mortgage loan: mortgage loan interest (although it will be dropping like a rock as the principle disappears), property insurance, property tax, maintenance & repairs, and utilities. And those are only the costs related to the house. We’re not even going into all other things like transportation, food, etc… I never asked how much her friend was making, but it must be at a minimum over 100k/year.
Thinking about the ambitious course her friend is taking, I started taking a closer look at my own situation. I should only have a 106,000 balance left at the beginning of 2010, which is well under the 300k amount her friend is trying to conquer. Under my current plan, I can pay off everything by 2017, close to eight years from now. If I possessed her friend’s aggressiveness then I would be throwing everything I had at the loan and chopping down the final payment date to the end of 2014, which is five years from now. In that scenario I would be paying off 21.2k of the loan principle every year instead of the current average 13.3k. I believe I could do this — actually I know I can — but the downside is I couldn’t save or contribute for anything else (eg. Roth IRA or save a 20% downpayment for another real estate property). The upside is both peace of mind and stable return of money (4.5% pretax).
Reviewing my options, I think I want to stick with my current plan of just paying the mortgage + another 500 prepayment. I want to keep my options open and have the ability to jump on opportunities as they rise (such as investing in more foreign currencies or buying vacant land properties). Although this will make my debt load greater, the leverage could end up magnifying my gains should real estate properties rebound back in value. And anyways, when you’re young is when you should be taking more chances and be less risk-averse.
Below is the amortization schedule that I am sticking to [variables used: 4.5% rate, 15 year fixed, 500 prepay/mo, 113,666 starting loan]:
|
Month / Year |
Payment |
Principal |
Interest |
Total |
Balance |
|
May 2009 |
$1,369.54 |
$943.29 |
$426.25 |
$426.25 |
$112,722.71 |
|
June 2009 |
$1,369.54 |
$946.83 |
$422.71 |
$848.96 |
$111,775.88 |
|
July 2009 |
$1,369.54 |
$950.38 |
$419.16 |
$1,268.12 |
$110,825.51 |
|
Aug. 2009 |
$1,369.54 |
$953.94 |
$415.60 |
$1,683.71 |
$109,871.56 |
|
Sept. 2009 |
$1,369.54 |
$957.52 |
$412.02 |
$2,095.73 |
$108,914.04 |
|
Oct. 2009 |
$1,369.54 |
$961.11 |
$408.43 |
$2,504.16 |
$107,952.94 |
|
Nov. 2009 |
$1,369.54 |
$964.71 |
$404.82 |
$2,908.98 |
$106,988.22 |
|
Dec. 2009 |
$1,369.54 |
$968.33 |
$401.21 |
$3,310.19 |
$106,019.89 |
|
Jan. 2010 |
$1,369.54 |
$971.96 |
$397.57 |
$3,707.76 |
$105,047.93 |
|
Feb. 2010 |
$1,369.54 |
$975.61 |
$393.93 |
$4,101.69 |
$104,072.32 |
|
Mar. 2010 |
$1,369.54 |
$979.27 |
$390.27 |
$4,491.96 |
$103,093.05 |
|
April 2010 |
$1,369.54 |
$982.94 |
$386.60 |
$4,878.56 |
$102,110.12 |
|
May 2010 |
$1,369.54 |
$986.62 |
$382.91 |
$5,261.48 |
$101,123.49 |
|
June 2010 |
$1,369.54 |
$990.32 |
$379.21 |
$5,640.69 |
$100,133.17 |
|
July 2010 |
$1,369.54 |
$994.04 |
$375.50 |
$6,016.19 |
$99,139.13 |
|
Aug. 2010 |
$1,369.54 |
$997.77 |
$371.77 |
$6,387.96 |
$98,141.36 |
|
Sept. 2010 |
$1,369.54 |
$1,001.51 |
$368.03 |
$6,755.99 |
$97,139.86 |
|
Oct. 2010 |
$1,369.54 |
$1,005.26 |
$364.27 |
$7,120.26 |
$96,134.59 |
|
Nov. 2010 |
$1,369.54 |
$1,009.03 |
$360.50 |
$7,480.77 |
$95,125.56 |
|
Dec. 2010 |
$1,369.54 |
$1,012.82 |
$356.72 |
$7,837.49 |
$94,112.74 |
|
Jan. 2011 |
$1,369.54 |
$1,016.61 |
$352.92 |
$8,190.41 |
$93,096.13 |
|
Feb. 2011 |
$1,369.54 |
$1,020.43 |
$349.11 |
$8,539.52 |
$92,075.70 |
|
Mar. 2011 |
$1,369.54 |
$1,024.25 |
$345.28 |
$8,884.81 |
$91,051.45 |
|
April 2011 |
$1,369.54 |
$1,028.09 |
$341.44 |
$9,226.25 |
$90,023.36 |
|
May 2011 |
$1,369.54 |
$1,031.95 |
$337.59 |
$9,563.84 |
$88,991.41 |
|
June 2011 |
$1,369.54 |
$1,035.82 |
$333.72 |
$9,897.56 |
$87,955.59 |
|
July 2011 |
$1,369.54 |
$1,039.70 |
$329.83 |
$10,227.39 |
$86,915.88 |
|
Aug. 2011 |
$1,369.54 |
$1,043.60 |
$325.93 |
$10,553.32 |
$85,872.28 |
|
Sept. 2011 |
$1,369.54 |
$1,047.52 |
$322.02 |
$10,875.34 |
$84,824.76 |
|
Oct. 2011 |
$1,369.54 |
$1,051.44 |
$318.09 |
$11,193.44 |
$83,773.32 |
|
Nov. 2011 |
$1,369.54 |
$1,055.39 |
$314.15 |
$11,507.59 |
$82,717.93 |
|
Dec. 2011 |
$1,369.54 |
$1,059.35 |
$310.19 |
$11,817.78 |
$81,658.59 |
|
Jan. 2012 |
$1,369.54 |
$1,063.32 |
$306.22 |
$12,124.00 |
$80,595.27 |
|
Feb. 2012 |
$1,369.54 |
$1,067.31 |
$302.23 |
$12,426.23 |
$79,527.96 |
|
Mar. 2012 |
$1,369.54 |
$1,071.31 |
$298.23 |
$12,724.46 |
$78,456.66 |
|
April 2012 |
$1,369.54 |
$1,075.32 |
$294.21 |
$13,018.67 |
$77,381.33 |
|
May 2012 |
$1,369.54 |
$1,079.36 |
$290.18 |
$13,308.85 |
$76,301.97 |
|
June 2012 |
$1,369.54 |
$1,083.40 |
$286.13 |
$13,594.99 |
$75,218.57 |
|
July 2012 |
$1,369.54 |
$1,087.47 |
$282.07 |
$13,877.06 |
$74,131.10 |
|
Aug. 2012 |
$1,369.54 |
$1,091.55 |
$277.99 |
$14,155.05 |
$73,039.56 |
|
Sept. 2012 |
$1,369.54 |
$1,095.64 |
$273.90 |
$14,428.95 |
$71,943.92 |
|
Oct. 2012 |
$1,369.54 |
$1,099.75 |
$269.79 |
$14,698.74 |
$70,844.17 |
|
Nov. 2012 |
$1,369.54 |
$1,103.87 |
$265.67 |
$14,964.40 |
$69,740.30 |
|
Dec. 2012 |
$1,369.54 |
$1,108.01 |
$261.53 |
$15,225.93 |
$68,632.29 |
|
Jan. 2013 |
$1,369.54 |
$1,112.17 |
$257.37 |
$15,483.30 |
$67,520.12 |
|
Feb. 2013 |
$1,369.54 |
$1,116.34 |
$253.20 |
$15,736.50 |
$66,403.78 |
|
Mar. 2013 |
$1,369.54 |
$1,120.52 |
$249.01 |
$15,985.51 |
$65,283.26 |
|
April 2013 |
$1,369.54 |
$1,124.73 |
$244.81 |
$16,230.33 |
$64,158.54 |
|
May 2013 |
$1,369.54 |
$1,128.94 |
$240.59 |
$16,470.92 |
$63,029.59 |
|
June 2013 |
$1,369.54 |
$1,133.18 |
$236.36 |
$16,707.28 |
$61,896.42 |
|
July 2013 |
$1,369.54 |
$1,137.43 |
$232.11 |
$16,939.39 |
$60,758.99 |
|
Aug. 2013 |
$1,369.54 |
$1,141.69 |
$227.85 |
$17,167.24 |
$59,617.30 |
|
Sept. 2013 |
$1,369.54 |
$1,145.97 |
$223.56 |
$17,390.80 |
$58,471.33 |
|
Oct. 2013 |
$1,369.54 |
$1,150.27 |
$219.27 |
$17,610.07 |
$57,321.06 |
|
Nov. 2013 |
$1,369.54 |
$1,154.58 |
$214.95 |
$17,825.02 |
$56,166.47 |
|
Dec. 2013 |
$1,369.54 |
$1,158.91 |
$210.62 |
$18,035.65 |
$55,007.56 |
|
Jan. 2014 |
$1,369.54 |
$1,163.26 |
$206.28 |
$18,241.93 |
$53,844.30 |
|
Feb. 2014 |
$1,369.54 |
$1,167.62 |
$201.92 |
$18,443.84 |
$52,676.68 |
|
Mar. 2014 |
$1,369.54 |
$1,172.00 |
$197.54 |
$18,641.38 |
$51,504.68 |
|
April 2014 |
$1,369.54 |
$1,176.39 |
$193.14 |
$18,834.52 |
$50,328.29 |
|
May 2014 |
$1,369.54 |
$1,180.81 |
$188.73 |
$19,023.25 |
$49,147.48 |
|
June 2014 |
$1,369.54 |
$1,185.23 |
$184.30 |
$19,207.56 |
$47,962.25 |
|
July 2014 |
$1,369.54 |
$1,189.68 |
$179.86 |
$19,387.42 |
$46,772.57 |
|
Aug. 2014 |
$1,369.54 |
$1,194.14 |
$175.40 |
$19,562.81 |
$45,578.43 |
|
Sept. 2014 |
$1,369.54 |
$1,198.62 |
$170.92 |
$19,733.73 |
$44,379.81 |
|
Oct. 2014 |
$1,369.54 |
$1,203.11 |
$166.42 |
$19,900.16 |
$43,176.70 |
|
Nov. 2014 |
$1,369.54 |
$1,207.62 |
$161.91 |
$20,062.07 |
$41,969.07 |
|
Dec. 2014 |
$1,369.54 |
$1,212.15 |
$157.38 |
$20,219.45 |
$40,756.92 |
|
Jan. 2015 |
$1,369.54 |
$1,216.70 |
$152.84 |
$20,372.29 |
$39,540.22 |
|
Feb. 2015 |
$1,369.54 |
$1,221.26 |
$148.28 |
$20,520.57 |
$38,318.96 |
|
Mar. 2015 |
$1,369.54 |
$1,225.84 |
$143.70 |
$20,664.26 |
$37,093.12 |
|
April 2015 |
$1,369.54 |
$1,230.44 |
$139.10 |
$20,803.36 |
$35,862.68 |
|
May 2015 |
$1,369.54 |
$1,235.05 |
$134.49 |
$20,937.85 |
$34,627.63 |
|
June 2015 |
$1,369.54 |
$1,239.68 |
$129.85 |
$21,067.70 |
$33,387.94 |
|
July 2015 |
$1,369.54 |
$1,244.33 |
$125.20 |
$21,192.91 |
$32,143.61 |
|
Aug. 2015 |
$1,369.54 |
$1,249.00 |
$120.54 |
$21,313.45 |
$30,894.61 |
|
Sept. 2015 |
$1,369.54 |
$1,253.68 |
$115.85 |
$21,429.30 |
$29,640.93 |
|
Oct. 2015 |
$1,369.54 |
$1,258.38 |
$111.15 |
$21,540.45 |
$28,382.55 |
|
Nov. 2015 |
$1,369.54 |
$1,263.10 |
$106.43 |
$21,646.89 |
$27,119.44 |
|
Dec. 2015 |
$1,369.54 |
$1,267.84 |
$101.70 |
$21,748.59 |
$25,851.60 |
|
Jan. 2016 |
$1,369.54 |
$1,272.59 |
$96.94 |
$21,845.53 |
$24,579.01 |
|
Feb. 2016 |
$1,369.54 |
$1,277.37 |
$92.17 |
$21,937.70 |
$23,301.64 |
|
Mar. 2016 |
$1,369.54 |
$1,282.16 |
$87.38 |
$22,025.08 |
$22,019.49 |
|
April 2016 |
$1,369.54 |
$1,286.96 |
$82.57 |
$22,107.65 |
$20,732.52 |
|
May 2016 |
$1,369.54 |
$1,291.79 |
$77.75 |
$22,185.40 |
$19,440.73 |
|
June 2016 |
$1,369.54 |
$1,296.63 |
$72.90 |
$22,258.30 |
$18,144.10 |
|
July 2016 |
$1,369.54 |
$1,301.50 |
$68.04 |
$22,326.34 |
$16,842.60 |
|
Aug. 2016 |
$1,369.54 |
$1,306.38 |
$63.16 |
$22,389.50 |
$15,536.22 |
|
Sept. 2016 |
$1,369.54 |
$1,311.28 |
$58.26 |
$22,447.77 |
$14,224.95 |
|
Oct. 2016 |
$1,369.54 |
$1,316.19 |
$53.34 |
$22,501.11 |
$12,908.75 |
|
Nov. 2016 |
$1,369.54 |
$1,321.13 |
$48.41 |
$22,549.52 |
$11,587.63 |
|
Dec. 2016 |
$1,369.54 |
$1,326.08 |
$43.45 |
$22,592.97 |
$10,261.54 |
|
Jan. 2017 |
$1,369.54 |
$1,331.06 |
$38.48 |
$22,631.45 |
$8,930.48 |
|
Feb. 2017 |
$1,369.54 |
$1,336.05 |
$33.49 |
$22,664.94 |
$7,594.44 |
|
Mar. 2017 |
$1,369.54 |
$1,341.06 |
$28.48 |
$22,693.42 |
$6,253.38 |
|
April 2017 |
$1,369.54 |
$1,346.09 |
$23.45 |
$22,716.87 |
$4,907.29 |
|
May 2017 |
$1,369.54 |
$1,351.13 |
$18.40 |
$22,735.27 |
$3,556.16 |
|
June 2017 |
$1,369.54 |
$1,356.20 |
$13.34 |
$22,748.61 |
$2,199.96 |
|
July 2017 |
$1,369.54 |
$1,361.29 |
$8.25 |
$22,756.86 |
$838.67 |
|
Aug. 2017 |
$841.81 |
$838.67 |
$3.15 |
$22,760.00 |
$0.00 |
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