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Browsing posts in: Student Loans
Nov 27, 2023    |       12 comments

Soliciting Advice: Setting Financial Goals

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As of last month, my only remaining debts are for my student loans and my mortgage. I’ve written before about how I’ve decided to put the student loans on the backburner – paying only the minimum payment each month. They’re set to be forgiven through PSLF in approximately 2 more years. That brings us to the mortgage…

Current Mortgage Status

When my husband and I bought our home together in 2020, one of our goals was to have it paid off by the time my husband retires. He’s set to retire in under 9 years. We have a current loan balance in the mid-$200s. Since we bought it, we’ve made a double payment twice each year, and every month we round up our payment, so an extra $105 goes to the principal each month (on top of the portion allocated toward the principal from the mortgage payment, itself). We locked in an unbelievable interest rate – a fixed 2.625%, and our payment is reasonable for our budget, $1695/month.

At our current rate of payment, we will not have the home paid off by the time my husband retires, but our plan was to ramp up payments as incomes increase (with raises) and debts decrease (paying off my car and when my student loans are forgiven). I know it will take some making up on the back end, but the goal has remained constant:  to have the house paid in full by retirement time.

As an aside just for context – my husband will retire in 9 years from his current position, but he will only be 50 years old at that time. He fully intends to find another job and continue working, but my hope is it could be a more flexible, maybe part-time or remote position. His income will definitely decrease in retirement, but it won’t be zero. He has a pension and healthy retirement account, plus plans for continued work on some level.

Mortgage Repayment Options 

Recently, a neighbor who works in real estate was chatting with my husband and I about his plans for investing and building long-term income. He mentioned how one of his big financial mistakes with his wife was sinking all their money into their first home together. They’d put 35% down to get a low mortgage payment, but then the 2012 recession hit. Although their family was fine, he regretted putting all his money into his home. He wished he’d had liquid assets available to purchase a second property that could be used to generate rental revenue. The best time to buy, of course, is when prices bottom out!

The conversation got me thinking – is it really wise to put all this money into our home? What if, instead, we put those extra payments into savings with the goal to use it to buy a second property at some point that could be used to generate rental income? I think we all feel like the housing market is extra inflated right now. Although I hope the U.S. finances strengthen (I’d never hope for a recession!), another housing market bubble pop feels inevitable at some point.

Return on Investment

Paying off our house early would be great since it would be lovely to have no mortgage payments! But with our super low-interest rate, it doesn’t save us as much money as we could potentially stand to earn by putting that same money into another investment vehicle (property or stock market, etc.). All that said, my husband and I are both pretty financially conservative. And the thought of having a paid-off home just feels nice. Having a second property certainly comes with some risk – having two mortgages to cover, requisite repairs to be done, etc., etc. But property also tends to be a great investment. Please chime in if you’re an expert in this area, but I believe that over my lifetime the ROI for property has been higher than what the stock market has produced. At least in my areas.

I’m soliciting advice! What are your thoughts or opinions on paying off one’s home versus putting that money elsewhere? Would you suggest investing in real estate versus investing in the stock market (or something else entirely)? What would you do if you were in my position?

Nov 23, 2023    |       3 comments

Increasing Our Liquidity and Settling Into Our Home

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Increasing our liquidity

First off, I want to wish everyone a Happy Thanksgiving! Today my partner and I kept it really low-key. I decided to opt out of Thanksgiving this year to avoid all the hassle and expense of cooking a big feast. We didn’t make a special grocery trip for the holiday so we didn’t have to fight the crowds. We were still able to make stuffing and potatoes au gratin with ingredients we already had on hand, so we felt like we got a taste of Thanksgiving. I’d love to hear what you did today down in the comments. 

I also wanted to thank everyone for the feedback on my last post! It was encouraging to hear that I’m going down the right path. It certainly feels like I’ve made progress, but it’s nice to have that feeling validated by others. I wasn’t able to provide all the updates I wanted to in the last post, so I thought I’d share a few more now. 

Feeling Settled in Our Home

A few months ago I was contemplating the idea of moving to a less rural area. Since I was feeling unsettled in my career, I thought moving to a more populated place would provide more job options. 

However, my spouse and I are happy with our home, the cost of living, and the unparalleled access to nature we have here. There would have to be a concrete reason to move, and there definitely isn’t. The vague notion that I might be able to get a “better” job is not a good reason to pack up our entire life, sell our house, and incur all the expenses of moving. 

Again, I think the whole idea of moving was anxiety and ADHD talking, but I just could not see that at the time. Anxiety makes it hard to think in a clearheaded way, so I couldn’t tell that moving was a half-baked idea. We’d have to make a lot more money to make up for the difference in cost of living if we moved to a populated area, and I had no real plan for how we were going to do that. 

Following Through on Liquid Savings

Another thing I’ve been able to follow through on since getting treatment is increasing our liquid savings. We’ve been reducing our mortgage overpayments and stashing more cash in our high-yield savings account instead. Between decreasing our mortgage overpayments and saving my spouse’s bonuses, so far we’ve increased our savings by around $5,000.

This has definitely made me feel more comfortable and secure. I’m not worried at all about replacing our car when the time comes. We still want to pay off our mortgage and are working toward that, but recognize that liquidity is important too. I feel like we’re striking the right balance now. 

Easier to Exercise Willpower

Before I got on medication, I felt like I needed the forced savings aspect of sending more money to our mortgage. I was always worried that keeping too much cash on hand would make me feel “flush” and able to afford impulse buys. But now I feel confident that I won’t be tempted to spend any of the money in our savings account, so we can pad it more. 

I wasn’t ever spending recklessly or making tons of purchases. However, I spent a lot of time and energy trying to fight temptations. Exercising willpower feels much easier now. Today a Black Friday deal caught my eye, and I was easily able to put it out of my head because I don’t need it. Before I might’ve spent hours thinking about it and agonizing over whether or not I wanted it obsessively. It definitely felt like a win to be able to move on so quickly. 

Overall, I’m feeling less restless and anxious and more settled and content. I’m hoping that these changes in my mental health will allow me to keep making financial decisions that will set us up well for the future.

Read More 

Selling the House?

The Unexpected Costs of Moving

Oh Dear, We Hit a Deer

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