January 2nd, 2007 - House update
Much of the work has been done on the house in the last weeks. Everything’s painted and the windows are in. They came again today (as far as I know) to being working on the front porch. The cool, original (to the porch being build–don’t know when that was) windows are being removed and they are framing in 3 widows per area. Before, it was a big window that foled in three to open. Very cool windows, although awkward. Plus, only the front two were openable. Now, we’ll have 12 windows, all of which can open top or bottom. This will save our screens from the dogs!
I have been nervous about having all our home equity back in hock. So we have committed to paying off the loan ($18000) in three years instead of 6. Aside: My credit union is awesome–they had the best rate anywhere, only 7%, and gave me my choice of terms. I chose 6 because that payment was at the high end of the range I’d been looking for. And for only 6 years instead of the 15 I found elsewhere (at higher interest rates, too). But 6 years was an awfully long time, especially since our first mortgage is an ARM, due to increase in 3.5 years. Our original plan was to use the extra money from refinancing it to an ARM to pay off the original second mortgage, then to use that money to pay down the first mortgage. That got derailed last spring with the house we didn’t buy, and then completely shot with the need for a new HEL. I would love to have the HEL paid off in time to prepare for an increase in the monthly payment on the first mortgage.
We found ways to get an average of $250 extra on the HEL, which puts us neatly at 36 months. Since we’re starting a month late, that might actually be 37 or 38. It includes some from of our Roth IRAs, which saddens me. But I hate the idea of this debt and want to pay it off as soon as we can. Hopefully, I will actually get a semi-decent raise this year and then we can push the IRAs back up. (I recently discovered that I’ve averaged about 1.5% raise per year. That’s not much. And it’d doesn’t account for the increases in health insurance, either.)
Other ways: reduce groceries, household, and personal spending money. [We’d already committed to reductions elsewhere for the original payment.] Pickle jar fund (about $1200 is all; we didn’t put in nearly as much this year). Splitting testing money (I supervise tests like the ACT about 5 times a year; the pay used to be split between us adults for spending money. Now 50% will go towards debt. We still need the spending money portion–it’s not exactly a fun job.). Money from rewards sites will towards household instead of in our pockets (not much currently, but I might do a bit more on this vein). Christmas money goes towards household (we had a giftcard to Target; it was easy to do).
January 25th, 2007 at 9:45 am EST
[…] As discussion previously, we’re trying to pay off our home equity loan early. As part of the plan, we reduced our household and grocery budgets. As these have been chronically difficult to keep within budget, I made a concurrent goal of bringing in an additional $50/month to put towards these areas. […]
February 26th, 2008 at 11:25 am EST
[…] Just 15 months ago, I told you we planned to pay off our home equity loan in just 3 years. I paid it off today! I’m not sure when we actually got it, but I think it was about November 06, which means we paid it off in 15 months. WOW. […]
June 3rd, 2008 at 10:57 am EDT
[…] And we’ve agreed that the money we used to put in the pickle jar would go towards the mortgage. When we started paying off the lead HEL, we switched the pickle jar to that. Then, when that was going well, we started splitting the larger monies like from rebates, testing, Deal Barbie, and credit card cash back in 3s–pickle jar, Eric, and me. (And the pickle jar fund morphed into funds for treating visitors. Which we ADORE doing.) Except for testing, the money will go 1/3rd to treating, and the rest towards the house. Since testing is considered work (we pay taxes on it, and we split child care the rest of the weekend), we’ll split that as before. We’re not talking large sums of money, but an extra dollar now on a 30 year mortgage saves a surprising amount of interest. (Quick estimate with 5% interest on a $100,000 loan,an extra dollar a month saves you $471 in interest on a 30 year mortgage. Or almost 1 month’s payment.) […]