Quote:
Originally Posted by Sylvanfan
What kind of help? Like Go fund me?
Using the word ruined is a bit overdramatic on my behalf.
I'm not missing payments or behind on my mortgages. Still buying my own food and paying my utilities. But the $1300 a month I was able to save until this past year is now being used to pay for increases in Mortgage payments, grocery costs, property taxes, and Insuance. If those same things go up that much again on me in the next couple of years, than I'll be panic selling some so called assets.
I'm the dumb first wave of idiot who got to feel the brunt of the post Covid interest rate environment. With a family...didn't get my houses paid off by age 45 which will draw a lot of contempt from people in this forum as being terribly irresponsible. I'm stretched hard byalm these recent increases and zero personal wage growth. If a pro can help me double my wages...that would be nice...but I can't see how that happens unless I severely upgrade myself to move to a completely new field of work.
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I get it. It sucks watching your chequing/savings and investments barely move. However, you might be doing better than realized. The mortgage principal pay down is basically a forced savings. That's yours to keep to the tune of thousands/tens of thousands a year. It feels better to see your cash/investment numbers go up than a mortgage number go down when it comes to thinking about saving towards retirement though.
If you don't mind me asking, how many years left on your mortgage amortization?
I personally have around 11 and I'm trying to see if I can restructure my assets to pay it down in around 6-8 years by increasing yearly payments by around 15-25% (pure principal hit after exceeding the interest). Every year paid off early is a savings of about $5-15K in interest paid to the bank that I get to keep as net worth. That's quite a bit over 3-5 years. That's not including the principal payments portion of cashflow I unlock that stay in my bank vs go towards mortgage. Things are a little tight now and I expect them to continue to be tight for around 5-7 years, but once I no longer have $3K in payments a month, I'll have more than needed by a large margin to address the concerns I have now ($30-40K in cash flow a year).
I've done the qualitative and quantitative analysis for my own household on this. I think it's worth it to get aggressive towards a mortgage free goal. Doing so and the retirement goal stuff will be more easily and clearly met. Honestly speaking it sucks to not have cash and investments on hand for growth, fun and rainy day fund, but establishing a HELOC probably would more than suffice for any emergencies that truly need cash. The cash/investments form is just a security blanket form for my scenario. Beating a ROR by a few percentage points a year on average isn't enough of a consideration of being mortgage free earlier IMO.
Based on my recent quantitative and qualitative analysis, we couldn't help feel like we're far behind. But after analyzing my situation, being at around 20% of our household's total goal for retirement net worth assets (less debt) required at 25% of our career passed is actually on track/ahead because our average household income will be much lower in the first decade ish to the next decade. Accumulation of net worth will double and triple later career once the mortgage is gone and with the increased household income. This even with increased spending with young kids.
I also did a calculation and realized that a 25 year amortization on a mortgage means 62.5% of a 40 year career uses a heavy amount of your earnings to service that debt. That's kinda crazy. But how many people will pay the bare minimum and carry mortgages for 30+ years? Every extra 5 years (which doesn't seem long) relates to an extra 12.5% of a 40 year career duration to service debt. Something to contemplate before buying a house that's "only" an extra $100-200K or something to contemplate in a downsizing consideration. Accumulation wise, even if all thing stay the same, if you have 15 years of late career with no more debt, just the $30-40K a year in mortgage serving cash flow would mean approximately $450K-600K you could divert to the retirement basket before factoring 10-15 years of growth and any basic level of rate of return. Even at 2/3 of those totals because why not enjoy life... that's more than most people would realize they're saving if they diverted their money in that way. It's just hard to see early and mid career before you can see over the horizon towards the end stretch towards retirement.
Also, if people actually read those mortgage calendar year end summary statements and started keeping track of "interest paid during the year" and kept track of all the interest they'd ever paid the mortgage companies, I think they'd quickly start realizing the compound value they might get by paying down mortgages 5-10 years earlier. At one point, the mortgage companies was getting $34K from me in interest due to dual mortgages per year! I'm down to $21K ish now. Every $5K less per year goes a long way towards addressing inflation on groceries and incremental savings. If I eliminated that $21K entirely. That's all the money I need and a bit more for those goals that currently stress me out and that's per year. That's an extra luxury good or two or three/damn nice family vacation and more than needed to address inflation prior to saving a portion. I've had mortgages for about 15 years now with average mortgage a year probably around $400K this entire 15 year duration. With an estimated average mortgage rates of around 3% so far, That's $12K a year on average for 15 years = 180K. Double that if I have 30 years of mortgages and the average interest a year stays constant. Every 5 years of savings is around $50-60K extra for the finish line AND extra time to invest it to amplify its effect by the time I reach the finish line. That's not chump change.
Borrowing money was necessary for house, but paying the minimum and increasing the duration of interest paid for the convenience of debt is unnecessary.
Hang in there!