September 2009 Mortgage Reduction Report
With the neighbours not yet giving us a bill for the fence and us not prepaying a service we use (switched to monthly) we came up with $2500 to make an additional mortgage payment. We were $2200 short this month due to a delay in my business income which should be coming in the next couple of weeks.
Business has slowed down and I am not yet expecting any business income in October. It may be tight finding the $4700 next month especially because I want to make up the $2200 missed this month. Hopefully I can generate some business income in the meantime to help out.
The mortgage balance at the end of September is a little under $263,000. Compared to our original mortgage amortization of 40 years we are now down to 23 years and have saved just under $130,000 in interest.
To wrap up, we have now paid off 17% of our original balance and are basically on track to meet our goal.
August 2009 Mortgage Reduction Report
The first ten days in August were spent on a family vacation in Kelowna which cost approximately $3000. This expense has been deferred to September thanks to Mastercard.
We were able to make our additional mortgage payment of $4700. Still on track for accomplishing our goal. The balance of our mortgage at the end of August will be around $266,000
Looking ahead to September we may come up a little short for the extra payment. The credit card used for our vacation will have to be paid off first. I was able to do some business in the first couple of weeks in August which took a couple hours away from the fun and frolick, but will likely cover our vacation expenses. Technology is wonderful!
Back to school expenses will need to be paid in September along with our cost of the fence. The neighbor will be giving us a bill for our portion of the fence and has generously contributed the labour. This is a good thing, computers and money may be my gig, swinging a hammer is definitely not my forté.
It is interesting that the extra payments on our mortgage in the last 14 months have saved us $125,000 in interest and reduced our 40 year amortization to 23.3 years. Numbers like that are motivating. If all goes well the mortgage will be paid off in less than 4 years and we will have paid less than $42,000 in interest on an orginal mortgage of $316,000.
To wrap up, we have now paid off 16% of our original balance and are on track to meet our goal.
July 2009 Mortgage Reduction Report
Although it is tight this month we have already made an additional mortgage payment of $4700. This will keep us on track for accomplishing our goal. The balance at the end of July will be around $271,000.
The number is a little high considering the balance at the beginning of the month and the payments. This is due to a payment we thought we had made last October, it was entered on our spreadsheet, but we never made the prepayment to the bank.
I am pleased with July's result especially with the credit card bills being higher due to two weekend road trips in June. We have some challenges ahead for the next couple of months in meeting the $4700 goal due to our vacation plans. We will be in the Okanogan for a week in August.
We do have two other factors working for us. My $255 RRSP loan will go down to $75 as one loan is paid off and another is beginning. Also by August we will both have maxed out our EI and CPP deductions and that will free up around $600 a month. Pretty happy about that. Business has been slowing down as of late and as of today I only have a little business income in August.
To wrap up, we have now paid off 14.2% of our original balance and are on track to meet our goal.
One Year Anniversary Mortgage Update
After one year of mortgage payments and prepayments our mortgage information is as follows:
July 2, 2008 Original Opening Balance: $316,000
July 2, 2009 Year Two Opening Balance: $274,544
Reduction in Balance: $41,455
Percentage of Reduction: 13.1%
Average Monthly Payment: $4,606
Total Payments for Year: $55,276
Interest Paid for Year: $13,821
Monthly Payments Required to Meet Goal: $6,306
I am happy with the results in the first year, but improvement needs to be made. In order to meet the goal of being mortgage and debt free by July 2013 we will have to make a monthly mortgage payment of $6,306, an increase of $1,700 per month compared to the previous 12 months. Can we achieve this?
According to the guidelines of the Canada Mortgage and Housing Corporation they will insure mortgages up to 44% of a family’s total debt service ratio. This means your housing costs including mortgage, taxes and heat along with other monthly debts cannot exceed 44% of your gross income for the year.
Using a mortgage payment of $6,306 our total debt service ratio would be 45%. Being just slightly out of line with the CHMC guideline tells me we are capable of making the payment. We are both fortunate enough to have received raises this year and the business income is ahead 40% year to date from last year.
We are going to work on making more money with the business and spending less. We didn’t budget for the last year and early in July I am going to take a look at where our money was spent in June. I am confident we can reduce our spending by a couple of hundred dollars by reducing dining out and take out meals. I am curious what percentage of our income is going towards wants rather than needs.
I will post monthly updates of mortgage payments and reasons why we exceeded or fell short of our monthly payment goal.
All of my mortgage payments are tracked by an Excel Spreadsheet designed by I suggest you check out the site for all your financial calculation needs.