Making Me a Millionaire

Down to 1 Car

Sorry everyone I know I haven’t been blogging with as much frequency as usual but we’ve been very busy over here with all the changes.  Thanks for giving me suggestions on where to move to.  We’re still trying to figure that out and we’re in the process of trying to sell one of our cars.  With my husband traveling all the time, we won’t need 2 cars so we’re going to sell one of them and save some money from that!  He’s also starting work next week so we need to get most of this stuff done soon.  Then on top of that, we’re leaving for New Orleans today for a trip that was planned a while ago and we’re trying to book our tickets back to NY for the holidays.

I’m pretty excited about selling our car.  We’re hopping to get around $23,000 – $24,000 for it and with that money plus some money we have in savings, I’d like to pay off the additional home loan we have.  By doing that, we’ll save over $7,000 in interest on that loan, reduce our insurance payments, eliminate maintenance costs and gas!  We’ll be left with one car which we’re currently leasing (i know big mistake) and once our 3 years are up, hopefully we will have saved enough to just plop down money for a good practical family car.

OK I’m off to New Orleans.  Hopefully I’ll have some nice photos for you all!

Why You Should Increase Your Loan Payments

When we bought our house back in 2004, we got a 5 year adjustable rate mortgage with an interest rate of 5.25%.  A great rate for those days.  In addition, we also borrowed about $50,000 from my inlaws with an interest rate of 5.25%.  Now, why would we do that?  Well, simply because we would rather pay interest to family members than a bank.  The only downside to doing this is the interest we pay on that loan is not tax deductible.

So now that our 5 years are up on the ARM, our new rate is at 3.25%!  Who would have thought they would go down!  In addition, our monthly mortgage payments have been reduced to $1245 from $1499.  That’s more discretionary money for us!

I decided, with the extra bit of cash I have on hand I would try to pay off that loan from the inlaws a little faster since it’s our highest interest loan AND it’s not deductible.

Here’s what the original loan amortization schedule looked like:

I will pay off this loan by February 1, 2020.  By then, I will have paid $21,865.37 in interest on a $50,000 loan.  GEESH!!

Since I was saving a little over $200 each month on the mortgage payments, I decided I would add $200 each month to the payments for this loan.  I was at the time paying a total of $400 a month.  Now I will be upping that to $600 a month.  Here’s what the new loan amortization schedule looks like.

With the extra payments each month, I will be able to pay off this loan a little over 4 years earlier than if I were to leave it at $400 a month.  Not only that, but the total amount of interest I will pay on this loan is reduced to $17,142.89.  Awesome.  I cannot wait to pay off this loan!

By increasing my monthly payments from $400 tot $600 a month, I was able to:

• shave 4 years off my payment plan
• save myself $4722.48 in interest payments

If you have a $500,000 mortgage and you do the same thing, you will end up saving yourself $56067.75.  An extra $200 a month can equal over $55K in savings on interest payments and you’ll pay off your mortgage 4 years earlier.  Ahh how nice it would be to own your home mortgage free!  That is enough incentive for me to put in extra payments whenever I can!

Should I Marry Into Debt?

Getting married is one of the biggest life altering decisions you can make.  If you marry the right person, you can enjoy a lifetime of happiness and do great things together.  If you marry the wrong person, you can ruin your life.

Not to scare everyone away from marriage, but it’s important to think about what you’re doing before you step into something that is so permanent and binding.  My husband and I had been dating through college so after we got settled in our lives, it was no surprise we decided to get married.  For us, we were lucky neither of us had debt and were able to start our lives with a stable income.  I can’t say the same for some of our other college friends who got engaged around the same time.  One of my closest friends asked me if she should be worried that her fiance had tens of thousands of dollars to pay back in school loans.  We also were friends with another couple who did not ask for advice, but everyone knew that at least one half of that couple had an obsession with shoes and bags and was proud of the fact that she had maxed out all her credit cards.

So is it a good idea to marry someone who has debt?  Well in my opinion, it depends.

Personally, I think school debt is fine.  Not everyone can afford to pay a college tuition and those who are willing to take a loan just to go to college are the ones who have their priorities straight.  Education is very important and college is a great investment.  Being in debt for education is not a bad thing and if that’s all there is to it, I say go for it!

As for the girl with the shoe/handbag obsession and the maxed out credit card pride…..well…if I was her bf I would find a way to end that relationship fast.  Finances is the number one reason why people get divorced.  You don’t want to be married to someone who is going to bring you deeper and deeper into debt and not care about changing that.  It can ruin your life, your marriage and your future.

What if they’re willing to change?  I do know people who have managed to get themselves out of debt after years of reckless spending.  If you truly believe that your partner is willing and determined to change their spending habits then I would wait a little longer before you get married and give them a chance to prove themselves.  See if their spending habits have changed, if they are paying off their debts and thinking about the future.  If you see a change that you think could be permanent, then I think it would OK to tie the knot.

Do keep in mind that although the debt incurred by your spouse before your wedding day is not yours, any debt incurred after you are married belongs to both of you.

Would you marry someone you loved who had debt?