Double Your Money - Personal Update

As you may know, Let Your Mortgage Make You Rich! emerged from my own experience. After I'd succeeded in eliminating nearly $70,000 of interest in only two years, friends urged me to write out the steps. I included other mortgage savings techniques to round out the picture - especially for those unable to use equity cycling to their benefit.

My records show we refinanced in Feb, 2003 - the exact same amount of our original loan that closed in Feb., 2002. (That shows you how little principal you pay off in the first year of a loan!) The new, lower interest rate allowed us to pay $100/month extra on principal only for about the same outlay as the previous loan's required payment. This technique alone should drop our 30-year loan to about 23 years.

We've also used equity cycling as I've described in numerous posts and articles. I referred to that in the first paragraph.

Periodically, I employ other techniques that are both fun and convenient. The benefit that arrived today was so convenient, I didn't even know it occurred till I reconciled my credit card statement to make today's payment. I discovered $28.08 from Citibank rewards points had been applied to my mortgage - principal only, of course.

Looking at the mortgage statement online, I confirmed the payment. I entered the balance still owed into a mortgage payment calculator on www.bankrate.com to see how much difference in my mortgage payoff using that Citibank card for business expenses made (it isn't a business card; business cards don't offer home mortgage rewards).

The first task was to figure out how much time remains on my mortgage. I did that by entering the balance due, my interest rate, and my regular monthly payment (not counting the extra $100 we add each month). I then adjusted the years up or down with a decimal point till I determined that without extra payments or more equity cycling, we have about 18.3 years left (not bad for being five and a half years into thirty!)

Scrolling down to the bottom of the amortization table, I noted the potential to pay $101,146.72 more in interest. Then I added in the $28.08 from Citibank as a one-time payment next month (on Bankrate's calculator, you can't make an extra payment the same month the calculations begin). I discovered the value of the $28.08 is $53.82 - almost double its current cash value.

Blogging this update for you makes me curious about our years remaining. I don't know how many times we'll cycle equity - using the paid for portion of our home to pay down the unpaid for portion. But I do know we'll continue to add an extra $100/month. That alone will save us an additional $14,788.91 and cut 2 years and 4 months off the loan.

These figures are approximate, because I used the Bankrate calculator in a way it isn't intended to be used, so my regular monthly payment is off by 30 cents. In actuality, we'll do a little better than cutting a third off a 30 year mortgage.

Our equity cycling right now is paying off home improvements (required maintenance, actually). When that is complete and we return to addressing the mortgage with this huge secret weapon, we'll probably finish closer to a total of 12 years. If our incomes improve, we can make 10 (one of us took a 50% pay cut a year and a half ago).

Our situation seems similar to that of many customers of Let Your Mortgage Make You Rich! We have the dual powers of information and discipline. We also have irregular expenses, like the occasional need for a new roof or stucco, water heaters and such. While we know these are going to happen, we don't prepay them. We pay for them by reducing the amount of equity cycling for the mortgage principal and diverting those funds and that technique to those major purchases when necessary.

I hope this update has helped you. I'd like to hear your story. Also, why don't you subscribe to the blog by email? It comes to your In Box only on the days I write a new post, and is a quick scan to see whether that day's info would be helpful to you.

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