We bought our house in January 2012 for $489,000. It’s a renovated two story 5 bed/3 bath with a good sized pool in a nice, quiet neighborhood. We put 20% down ($97,800) and received 3% from the seller towards closing costs. We scored a good interest rate of 3.75% for a 30 year term. The home has appreciated considerably since we purchased it, with comps in the area valued ~$650,000. Our current mortgage balance is $368,895.

I feel good that we bought at a very fair price (for San Diego County) and locked in a good rate. We would have loved to have secured a 15 year loan, but the monthly payment would have been tight for us. Instead, our plan was to make extra payments to the mortgage principal as funds allow, while having the flexibility of paying the lower payment when necessary.

Over the past three years, we have failed to make progress paying extra to principal. It simply hasn’t been as much of a priority. That changed last month when we made our first extra mortgage payment of $1,100 and we paid an extra $100 this month.

Needless to say, we have some ground to make up.   One of our goals for 2015 will be to refocus on accelerating our mortgage payments. To that end, a portion of my wife’s future bonuses will be diverted to the mortgage.

As I indicated the other day, we have been considering purchasing a newer vehicle for my wife.  While she chickened out on doing the deal initially, we have decided today to pull the trigger.  We’ll be picking up a 2011 ML350 in excellent condition (55K miles) tonight.

We have already received the loan via bank wire from LightStream (a company that we used to finance our last vehicle purchase).  Here are a few of the details:

• $31,768 Vehicle cost out the door
• $26,000 loan (2.59%, 72 months)
• $5,000 trade-in (2006 Honda Accord with 120K miles)
• $768 down payment
• $390/month payment

We’ve been without a car payment for quite some time, so $390/month is going to be a bit of a shock to our systems.  That being said, my wife works incredibly hard and spends most of her day in her vehicle, so it is well deserved.

Opulence, I Has It,  Consumerism,  I Has It Too.

Both my parents and my wife’s have paid off their auto loans early to save a ton on interest. Now we get to join the club. Thanks to my wife’s $4,872 ($2,255.97 net) quarterly bonus and our accelerated payments, we just paid off the 6.5% auto loan on our 2006 car. The loan was originally scheduled to be paid off April, 2012 and at the beginning of 2009 our balance was $15,586.49. It feels great to have this paid off early. We now have $450 a month to save and/or invest.

We are on a mission to pay off our 6.5% interest auto loan ASAP. Last month, we paid an extra $6,250 to principle. This month, we’ve paid an extra $1,900 to principle on our auto loan. Most of the money for this payment came from the sale of 86 shares of our Bank of America stock. We are making good headway.

My wife is kicking butt in her job and my job is seems to be getting more secure. That being said, we’ve decided to throw caution into the wind and pull a large chuck of our money out of savings to pay down our auto loan.

We’re sick of paying 6.5% interest each month on the auto loan and only making 1% on our savings. My parents have always paid their cars off very quickly, and saved a ton of interest as a result. We paid a whopping $6,250 to our auto loan this month, cutting it in half, from $13,383.86 to $6,789.83. Our goal is to pay the balance of the loan off in the next 6 months or so. That will free up $450/month to save or invest.

We’ve finally sold my truck!

We negotiated with the buyer on a price of $12,600. Less than the $12,999 we wanted, but we were eager to quit wasting time. We’ve had four previous offers on the truck and all flaked out. It was starting to eat up more time that I had planned. In addition, the truck was smogged 2 months ago because we thought we had a guy that was serious about buying it. Since the smog certificate is only good for 3 months, we were working against the clock. Our 8 week ad on AutoTrader.com was also about to expire. It would have cost us ~$100 to get another smog certificate and place a 2nd ad on Auto Trader.

We had to pull $640 out of savings to pay off the balance we owed, but with the truck finally sold, we can begin saving an additional $293/month that was going to the truck loan.

Now, our only debt is our condo mortgages, 1 auto loan, and 1 student loan.

We have been on a good roll with our 2nd mortgage accelerated payment plan, paying down an extra $1,930.53 in principle since January 2008. The extra payments to our 2nd mortgage were great to pay down the principle, but cannot be pulled back out in case of an emergency (it’s not a HELOC). So, due to the current U.S. economic situation, we have decided to deposit future funds earmarked for our 2nd mortgage accelerated payment into our savings account.

We’re doing this to temporarily increase our emergency fund during this volatile time. That way, if the economy gets so bad that people start losing jobs, we will be a bit more prepared. Once the economy straightens out, we plan to pull the earmarked funds from savings and apply them to our 2nd mortgage.

I hope we never have to touch the money, but know we will sleep better with a bit more of a cushion right now.

We recently had a friend ask us why we are paying down our condos 2nd mortgage at an accelerated rate. I think it makes sense for a few good reasons:

1. It is our highest interest rate debt at 8.55%.
2. Once we pay it off we can:
a. Stay in our condo & have an additional $411.33/month to put towards saving for a house.
b. Buy a house and pretty much break even on renting out our condo.
c. Sell our condo, if necessary, and hopefully not be upside down.
3. We don’t have kids yet and can afford to pay extra to our mortgage.

As I posted before, we have begun our 2nd mortgage accelerated payment plan. However, we are deviating from our plan a bit this month by not paying 100% of my extra check ($1859.07) to the 2nd mortgage. Instead, it will be spent as such:

$500.00 to 2nd mortgage
$785.00 to savings account
$100.00 to my Roth IRA
$474.07 to checking

I can rationalize the deviation from our plan because I found out that I will be receiving 3 months with 3 paychecks in 2008, one more than our 2nd mortgage payment plan is based on.

The money is being put to good use. We wanted to increase our savings to ensure we had more than enough to pay for our income taxes. We also wanted to bolster our checking account balance because our February mortgage payment will be due before we receive our 1st paycheck in February. We need a large enough balance to get us by until February 8th.