Don’t Be So Quick To Dismiss Paying Your Mortgage Off Early

Gen Y Finance Guy Mortgage Snowball 20 Comments

People can tend to get dogmatic and dismissive of paying down a mortgage early. But I really think this is a function of pure ignorance. Maybe they don’t really understand how to evaluate this option against the conventional wisdom that is dished out on the daily. At first blush, it may appear that I have a bias since the GYFG household chose the path to become mortgage-free (accomplished in just under five years from when we set this goal). But wait – bias appearances can be deceiving! In theory, I actually agree with those who advocate keeping a mortgage for as long as possible and to invest what it would have taken to pay off the mortgage into the stock …

How We Plan To Destroy Our $227,000 Mortgage Balance In 14 Months

Gen Y Finance Guy Mortgage Snowball 36 Comments

Imagine life without the shackles of debt. The GYFG household developed such a vision back in 2015 when we decided to pay off our $350,000 mortgage in seven years. We had already eliminated student loans, car loans, and were in the regular habit of paying off the credit cards every month (always have, always will). We developed what we thought was an achievable plan based on a projected income that turned out to be far less than what we have actually realized. In December of 2017, I shared how well the GYFG mortgage snowball strategy was performing and that we would be mortgage-free in four more years, based on following that original plan. I have been very careful to balance our net worth …

Soon to be mortgage free

Our Mortgage Will Be Gone In Four More Years

Gen Y Finance Guy Mortgage Snowball 28 Comments

We bought our house almost four years ago and we acquired it for ~50% less than the bank said we could afford to borrow. The bank approved us for a $750,000 loan but we ultimately borrowed $355,000 on a total purchase of $376,000 (47% of what we were approved to borrow). Anyone that has read my ten guidelines to rapid wealth building knows that as a rule of thumb, I recommend buying a house for 50% (or less) of what you are approved to borrow. In doing so, you set yourself up to be mortgage-free in five to seven years if you follow my mortgage snowball strategy. The GYFG household has just completed year three of our seven-year goal to be mortgage …

Financial Engineering

Financial Engineering Your Mortgage For Better Than Market Returns

Gen Y Finance Guy Mortgage Snowball 10 Comments

A while back a fellow blogger and friend of mine, Mr. 1500 or, wrote a piece on whether you should pay your mortgage off early or not. I don’t disagree with his logic as it makes perfect sense. However, like many things in personal finance, I have a hard time with absolutes. Instead “it depends” is a much better answer. Today I am going to make the case for paying off your mortgage early, given the right circumstances are in place. Depending on your own personal goals and circumstances, this may be a viable option for you to consider. Usually the argument goes that you should keep your mortgage, especially given the historically low interest rates. The thought process, …

Like a Boss

Putting the Mortgage to Bed – Year 2 of 7 [UPDATE]

Gen Y Finance Guy Mortgage Snowball 21 Comments

It has been 13 months since devising our plan to pay our mortgage off in 7 years or less. I won’t rehash the entire post again, but let me give you a brief synopsis of how and why this goal came to be: We purchased our house for $370K in 2014 with an original loan of $355,000. As you would expect, one day I was doing some intermediate term planning, and in doing so was trying to estimate how much income we would earn over the next 5-7 years. At the time I expected our annual income for 2015 to be around $185,000 based on what I knew at the time. And I assumed that we would be able to increase …

Mortgage Like a Bond

Paid Off Mortgage is Equivalent to a…Perpetuity?…Bond?…Dividend Paying Stock?

Gen Y Finance Guy Financial Analysis, Mortgage Snowball 30 Comments

Having a fully paid mortgage sure does get a bad wrap around personal finance circles. I constantly see arguments about money being super cheap and that paying off the mortgage will lead to a loss of the interest tax deduction. I won’t argue that rates are historically cheap and that eliminating your mortgage will lead to eliminating the tax deduction. First, remember that with the tax deduction you get 30 cents on the dollar. So, although this is a step up from renting (in my opinion, and situation dependent), if you don’t have to pay interest, why do it? Why doesn’t anyone talk about a fully paid mortgage as a bond substitute? Or compare it to that of a dividend …

Paying Off Your Mortgage Early vs. Investing The Extra Payments In Stocks

Gen Y Finance Guy Mortgage Snowball 43 Comments

Over the last several months I have written about how I plan to pay off my 30 year mortgage in 7 years and also debunked the whole loss of the tax deduction. In the post about losing out on the tax deduction I presented the math that proved the interest savings over the 7 years was far greater than the loss in the tax savings as a result of lower tax deductions. The math showed that while I lost $10K due to an increased tax bill over the 7 years, the interest savings more than offset that with a total savings of $27K or a net savings of approximately $17K. In that same post, I briefly addressed why I am doing this vs. investing the extra money in …

Murder Your Mortgage in 7 Years Q&A

Gen Y Finance Guy Mortgage Snowball 30 Comments

Last month I published a post that detailed my strategy to pay down a 30 year mortgage that I only recently obtained last year. I will be the first to admit that it goes against the conventional wisdom and there have been two questions that have popped up consistently that I thought I would take some time to answer: Question 1: Why do you advocate paying down your mortgage and thus losing out on the tax savings from interest paid? This is a great question to very controversial advice depending on who you talk to. If you would have asked me a few years ago I would had said this was absolutely a mistake. But my thinking has changed over the years. There …

The Mortgage Snowball Strategy: Pay Your Mortgage Off In 5-7 Years

Gen Y Finance Guy Mortgage Snowball 82 Comments

In a previous post, I mentioned that I had recently become debt-free outside of the mortgages on my primary residence and investment condo. In that blog post, I announced an outrageous goal of paying off the mortgage on my primary residence in 7.5 years. I gave you the Cliff Notes version there of the strategy I devised to accomplish this big, hairy, and audacious goal. In this post, I want to expand upon the thinking and get more granular on the strategy. My hope is that by the end of this post you will realize that this strategy is easy and anyone can follow it…even though most won’t. Only those truly hot in pursuit of financial independence will have the discipline and …