The Plan Of Attack – How I Plan To Pay Off My Mortgage Early

My wife and recently purchased our first home.  Here is my plan to pay off our 15 year mortgage in 10 years – or less!

Opening Fire – We will us online bill pay to make our regular, monthly mortgage payments.  I have already scheduled for our monthly payment to be sent from our bank to our mortgage company on the 15th of each month, the day after I receive my monthly paycheck.  The mortgage account number is listed in the memo section of each payment check.  Even is we do nothing else, we can be confident that our monthly payment will be made early, and on-time.

Steady Assault – I have scheduled an additional monthly payment, designed to reduce mortgage principal, to be sent on the 20th of each month.  I included the 5 day buffer, just to keep things nice-and-neat.  This additional payment is above-and-beyond the regular monthly mortgage payment and is a fixed monthly-amount.

Sniper Attack – I am a big fan of micro-payments – those small, irregular payments that can be made throughout the month.  Just as I did when I was reducing my consumer and credit card debt, I plan to use micro-payments, this time to reduce my mortgage principal.  Throughout the month, if I see that I am spending less in a particular budget category than I had originally planned, I will use this leftover money to make a micro-payment.  The first types of payments, the regularly scheduled monthly payment and the regularly scheduled extra payment, are hands-off.  Once they’re set, they pretty much work on their own.  These micro-payments, however, keep my head-in-the-game and really create a sense of accomplishment.


Secret Weapon - I make a little money from my blogging activities.  Over the past few years, this money has gone towards “extras” for around the house.  From now on, any money earned from blogging (or other side jobs) will go directly towards mortgage principal reduction.  The more I make from blogging – the faster we own our home!

There you have it – our plan of attack!  We are super-excited about our new house and ready to start paying it off.  With three kids and modest income, it’s not going to be easy, but we are determined and we have a plan.  Rock on!

Image by - Danny Fowler
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13 thoughts on “The Plan Of Attack – How I Plan To Pay Off My Mortgage Early
  1. Shannon

    How would you apply this principal to paying off a car loan? i have abt 12 K remaining. payments are 370/month. paid 1200 in interest last year on the loan. Interest rate at moment is 7.95%. my credit score is above 700. What do you suggest?

     
  2. jolie

    Looks like a well thought out battle plan strategy. If I close my eyes I can almost see those giant battle scene tables where attack strategies of old were plotted out.

    Will you be able to make those Sniper micro payments online towards the principal? or will you have to go to brick and mortar to do that?

    I am guessing you don’t have the kind of loan which penalizes or prohibits all the extra attacks. That’s super!

     
  3. Abigail

    Sounds great! I love it when I can find additional money to throw at our debt.

    My favorite tactic is simply to make weekly payments. That’s been possible with Tim’s unemployment. But once he gets a job, I plan to stagger my contract work payments so that they come the weeks in between Tim’s paychecks. That way, we can keep it up!

     
  4. Mike

    Sounds great on paper, but I have a feeling the blogging income will go towards house maintenace rather than principal payments! Do u have any idea how much mulch, fertilizer, and landscaping tools cost? Not to mention the random $2k renovation that seems to come up every other year. Hopefully you were responsible for all that stuff at your rented house; otherwise, you’ll be in for an unpleasant surprise =(

     
  5. NCN

    @Mike – Those types of expenses are included in our monthly budget and / or emergency fund.

    @Shannon – This technique (and those like it) will work for almost any debt, provided lender accepts multiple payments. Check and find out!

     
  6. Jeremy

    Good job! I am working towards the same goal. Last October,I refinanced my house at 4.5% (30 years). By my calculations (using the FV formula in Excel), I will have it paid in full in August of ’22 — a mere 12 years and change from now. In 10 months my interest free Best Buy loan will be paid in full, and I will add that payment to the mortgage payment. In August of ’13, I will have enough equity to eliminate the PMI payment from my mortgage, and will add that to my mortgage payment. In March of ’14 my vehicle loan (4.99%) will be paid in full, and I will apply that towards my mortgage. This results in the elimination of my mortgage by age 47!

     
  7. Luke

    Why is paying off your mortgage early such a big deal? I get that you want to save all the money you’d blow on interest payments, but with the likely rate of inflation over the next few years/decades, wouldn’t it make sense to pay off your loan when its value is significantly less and your income significantly more (assuming it keeps pace with inflation somewhat)? And use that money now for smart investments.

    That’s my plan, anyway. Of course I locked in a nice 4.875% mortgage rate when times were good :-)

     
  8. NCN

    @Luke I’ve read lots of articles – and seen opinions on both sides, of when to pay off and when not to. For me, it’s less about math and a whole lot about “I just hate debt”. :)

     
  9. Toni

    NCN- I am with you! Be debt free!! We paid off our house in 5 1/2 years. There is no feeling quite like not owing anyone (or Bank) anything! It drove me crazy having to pay interest. Our mortgage was with Chase and it was so easy to add additional payments onto the principle. Like you, I added 15-20 micro-payments a month. It was so easy. Best of luck to you!

    We took the Dave Ramsey class in Jan 2008 and paid off all consumer debt in 2008 and basically paid off the house in 2009.

     
  10. Ellen Allard

    Is there an advantage to making your monthly mortgage payment on a certain day of the month. I think ours is due on the 16th of each mth, I usually pay it by the 9th even though I have the money and could pay it on the 1st of the month. Would we pay down our mortgage that much quicker if I paid it two weeks before it was due each month?

     
  11. Bad Credit Saint

    I particularly like the micro-payments part. This is exactly what I did to pay down my car loans (I don’t own a house yet). Sometimes in the month you get payments that you don’t actually need. This is the best time to put that money to something that is useful and should be a great idea to implement for people who don’t have a regular pay check.

    Thanks for the recommendation.

     
  12. Jane

    NCN,

    One number to watch that will probably make you happy is how soon the amount of money from your regular payment going toward principal is going to be larger than what you are paying to interest. I don’t make “very large” extra payments, just round up to the nearest $100 each month but in less than a year at 4.85% on a 15-y mortgage, more of my regular monthly payment now goes to pay principal. My next “happy” moment will be when I am paying $50 more a month to principal etc.

     

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