Home » Posts tagged 'mortgage'
Tag Archives: mortgage
Last month I was able to pay off my auto loan, about a year and a half early. In addition to the positive effect it has on my credit score, and that I don’t like my hard earned cash going to someone else if I can prevent it, I wanted to pay off my auto loan before my maternity leave started in February.
Related Post: My 3 Habits For A High Credit Score
Related Post: Pay Off Auto Loan Or Roof Repair
I was able to pay it off by following five strategies for paying off debt fast.
Setting up automatic payments means that I won’t forget to write the check and mail it. My hubby once forgot to pay a credit card that he charged a couple of Little Caesar’s Pizza to, and the $15 in pizzas blossomed to $100 once late charges and interest were added in.
Related Post: 9 Reasons Why I Pay My Credit Card Every Week
I had my auto loan set up for automatic biweekly payments, which means half the minimum payment is paid every two weeks. Besides that it lowers the interest portion of each payment than if I paid monthly, I actually make an extra payment on the loan, 13 monthly payments rather than 12 monthly payments.
Payments Larger Than Minimum Payments
While the minimum monthly payment was around $220, I actually made biweekly payments of $140, which means I paid $280 a month (plus the 13th payment of $280). Making the bare minimum payments drags out the loan, which is like pulling the band-aid off slowly.
Putting Extra Cash Towards Debt
Anytime I had extra cash, like a bonus or a tax refund, I applied a portion of it towards the auto loan. Anytime I noticed my cash balance was creeping higher, I also put a portion of that increase towards the auto loan.
Large final payment
Once I reach a point in the loan where the remaining balance can be paid off without causing a big disturbance in my cash balance, I make a large final payment. In January, I had $1800 left on my auto loan, so I bit the bullet and made an $1800 payment rather than the usual (automatic) $140 payment. And now, my car is paid off and I won’t have to make payments during my maternity leave. Yey!
These five strategies can actually be applied to any kind of debt, whether it be a credit card, auto loan, student loan, mortgage, etc. I tend to pay my credit card weekly, and I already paid off my student loan using these five strategies. I haven’t been using these strategies on my mortgage because I’m concentrating on eliminating the smaller debts first, and for some reason, the credit union won’t allow me to set up biweekly payments, or automatic payments larger than the minimum amount. I also have a personal loan for repairs on my roof, which I automatically pay biweekly an amount $50 more than the monthly minimum. I’ll start making extra payments once I return to work. That is, if daycare expenses don’t suck my cash flow dry.
Related Post: Daycare Is Expensive. And Totally Worth It.
Now let’s see how fast I can pay off my personal loan.
My maternity leave is quickly approaching now. With 3 weeks left until my scheduled C-section, I should probably figure out how much cash I’ll need to make it through a 12 week maternity leave.
Our largest cash outflow is the mortgage, which is around $820 a month. It covers the mortgage, taxes, and homeowners insurance. It is automatically deducted out of my second credit union account, so I will have to periodically transfer cash from my main credit union account to the other once my direct deposit paychecks are halted to those accounts during my maternity leave.
Related post: I Owe $116,781.21 In Debt
The next largest cash outflow is my hubby’s student loan, around $300. It is automatically deducted from my hubby’s credit union account. While we have one more forbearance available to us, we don’t plan on using it.
Related post: I Refinanced My Student Loan
Our third largest cash outflow is the loan to get the roof repaired. We just got the loan last month, and the $200 payments are automatically deducted out of my main credit union account. Since I am actually paying more than the minimum payment of $150 a month, I can actually lower my payments by $50, but I’ll only do that if there is a shortfall in cash.
Related post: Pay Off Auto Loan Or Roof Repair
The fourth largest cash outflow is the car lease for $185 a month. The payments are automatically deducted from my hubby’s account.
The second smallest cash outflow is our auto insurance. About $90 is automatically deducted out of my main credit union account. We are currently shopping around for auto and homeowners insurance to see if we can get a lower amount.
And the smallest cash outflow is the internet for $44, which is also automatically deducted out of my hubby’s credit union account. If you can’t already tell, I love automatic payments.
These six payments are ones that I either cannot easily change, such as the loans, lease, or auto insurance, or live without, such as the internet. These items total $1639.00 per month.
There are several additional expenses that, with some changes, I can either decrease or cut all together. The highest of these adjustable expenses is my hubby’s health insurance, a whopping $400 a month, which he picked up this year through the health care exchange. If needed, we could just cut the expense entirely.
Related post: I Was Pregnant Without Insurance
The second largest adjustable expense is our food and household items, which I estimate to be around $350 a month. It includes anything we use on a daily basis, from food and drinks to hygiene to clothes.
The third largest dispensable expense is my daughter’s before and after school care, which is $345 a month. While I could pull her out of the program while I’m on maternity leave, which would cut the expense for three months, she would be placed at the bottom of the waiting list for the program once I return to work, which poses a problem.
Related post: Daycare Is Expensive. And Totally Worth It.
The fourth largest adjustable expense is our electric and gas bill which is $165 a month. We are on budget billing, where the utility company estimates our annual cost and spreads the cost over an 11 month period. That way, 11 of the 12 bills are always the same at $165 per month, and the last bill is either higher because we underpaid or lower because we overpaid.
Gas is our next largest adjustable expense, which is usually around $80 a month. My commute to work is about 20 miles round trip, while my hubby’s commute is a nonexistent 6 miles round trip. I’m sure that the gas expense will decrease a little bit while I’m on maternity leave.
The second smallest adjustable expense is our cell phones, at $65 a month. We both have prepaid, with 250 minutes and unlimited texting each and data on my line. If need be, I could lower the expense to $50 a month and not have data on my line, but I love the convenience of having data.
The smallest adjustable expense is my daughter’s health insurance, at $60 a month. We could cut it entirely, but it has covered almost everything we’ve needed for her, so the benefits of Child Health Plus has greatly outweighed the monthly cost.
The total of these seven adjustable expenses comes to $1465.00. Adding it to the $1639.00 brings our total monthly cash outflow to $3104.00. If I take the full 12 weeks leave, the estimated cash outflow during my maternity leave is $9312.00. To balance the cash outflow, my hubby will take four weeks of the new Paid Family Leave at birth while I take eight weeks of Paid Family Leave. During the last four weeks, either my hubby will work and I will stay home unpaid, or I’ll return to work and my hubby will take his remaining four weeks of Paid Family Leave.
It’s been almost two years since I last reviewed my overall household debt, which included my mortgage, student loans for both my hubby and myself, an auto loan, and our two active credit cards.
Related Post: I Owe $148,633.01 Of Debt
The mortgage, which is our biggest single debt, decreased by about $2,500 in that time, down to $73,557.27. The payments are automatic so it’s never late.
My hubby’s student loan is our second biggest loan at $31,946.33, which is about $2,700 less than last time. His payments are also automatic so there’s a never problem with paying on time. My student loan was the next biggest loan back then, but with large monthly payments and refinancing to a lower interest rate, I was able put more than $14,000 to it and pay it off entirely by early May 2017.
It was great timing too because I got laid off on May 22. I have since found a new job, with higher pay, and I don’t have to pay any student loans. Woohoo!
Related Post: Best Things To Do When Laid Off
The auto loan for our Chevy Malibu was the next biggest loan after my student loan. My auto loan is set up for automatic payments at $60 more than the minimum monthly payment. It’s also biweekly, so I actually make 13 payments rather than 12 at $60 more than the minimum payment.
With this payment plan, I was able to pay a little under $6,000 towards the loan, lowering it to $5,700.42.
Our second to last debt is our credit cards, totaling $3,295.12. We tend to keep running balances on our credit cards to maintain activity on our credit histories, as well as collect credit card points that I use at Amazon.com. During the 6 weeks that I was laid off, I made smaller credit card payments to ease the cash flow, so my part of the credit card balance is a little higher than normal.
Lastly, we actually added a little debt to our financial situation. My hubby had the displeasure of getting a root canal earlier this year and financed it with a loan from WellsFargo, which is now at $2,282.08. We could pay it off now, but with interest free payments for 18 months, it’s better to put that cash towards his credit card and student loan for the time being.
Our total debt sums up to $116,781.21, which is $22,318.31 less than my last analysis almost two years ago.
My name is Emilie Chang, and I am the wife of Aaron Jackson. We have been married for over 5 years, and I still have not changed my name. When I do change my name, I will become Emilie Chang-Jackson.
While I love the idea of being called Mrs. Chang-Jackson, I do not look forward to the monumental effort it will take to update all of my loans and records. As the financial person of the household, I am a little concerned about the possibility of fixing any errors that might result from changing my name. Plus, I don’t feel like waiting in line at my local Social Security office for an ungodly amount of time. And as much as I’d like to pretend that I’m preserving my self-identity as a Korean American woman, I’m really just procrastinating. I also don’t want to deal with the possibility that the IRS doesn’t handle my name change smoothly. I don’t want to be the accountant that gets audited by the IRS on her own personal taxes.
When it comes to our financial accounts, my hubby and I have kept everything separate, including our checking accounts. Both of our names are on the mortgage and the house, but everything else is kept separate. Both he and I each have a couple of credit cards, savings and checking accounts, a student loan, a car loan, an IRA, and a 401(K) plan. Besides the fact that I don’t want to keep track of another bank account, we felt like it wouldn’t serve us an additional benefit from the bank accounts we already have. The biggest joint cash outflow is our mortgage, and we have automatic monthly transfers set up that transfers money from my husband’s bank account to my bank account every month, and then the entire monthly mortgage amount from my bank account to the mortgage, so that we each pay a portion.
We’ve also kept our finances separate to keep the grubby hands of debt collectors out of them. We both have student loans, his much higher than mine. Separate accounts helps prevent debt collectors from claiming a stake in the other’s money if something were to happen to us and we could no longer pay the debt. A joint account with both our names could entice a debt collector to collect as much as they can out of both of us, even if only one our names was on the debt. In addition, it gives each of us the right to do whatever we want with our money. In exchange for that, we each allow the other to read each other’s financial information to keep us financially healthy, and to keep communication open. Finances is one of the more common reasons marriages end in divorce.
Paying off your debt does not have to be hard. In fact, you can make it so easy, it becomes automatic, literally. All it takes are two easy steps:
1) Open and read all your statements thoroughly. You need to know how deep in the hole you are to know how to dig yourself out. When I first talked about paying off my debt back in January, I did not bother checking how much we owed on my hubby’s student loan, and just assumed it was around $30,500. Nine months later, while I was reading all our statements to do an update on our debt status, I finally opened one of his statements to discover that not only was my estimate off by approximately $4,000 and we owed $34,657, but that we were also on the worst payment plan ever. We have paid $1,459.41 on the loan since May, with only $169.55 going to the principal, and the remainder towards interest.
I was furious at myself for the rest of that night. That’s what happens when you don’t look past the current due section of a loan statement. Make sure to regularly read ALL your statements THOROUGHLY. If you don’t understand something, call customer service.
2) Set up automatic payments. You don’t have to worry about making a payment on-time, or getting to a computer to make the payment. If you set up automatic payments for more than the minimum payment, not only will your payments be on-time, but you’ll actually pay it off faster. You can even take it a step further and set up automatic biweekly payments, so that you’ll pay half the amount twice a month. Biweekly payments help you save on interest and pays off the debt a little faster than monthly payments. For example, I have my weekly paycheck direct deposited into two separate bank accounts. In the first bank account, I deposit just enough cash to cover my mortgage and student loan, plus a little extra as a buffer. I also have my monthly mortgage and student loan payments automatically deducted from this bank account (I would do biweekly payments, but the loan holders’ won’t allow it). This bank account is used only for these two loans, so that I never have to worry about having enough cash.
Then I have the remainder of my paycheck deposited into a second account, which I use for my variable expenses, like my credit card payments, electricity, etc. This way, the only time I think about my loans are once a month, when I read the statements to make sure everything is as expected.
The only other times I think about my debt is when I’m checking out interest rates to compare them with mine, or when I’m making an extra payment in addition to my regularly scheduled debt, because the only way to eliminate your debt is to make extra payments.