1 month down, 299 to go?
I got my November statement from the people I owe lots of money. I have paid back a grand total of just under 220. And I am paying weekly, so I can see that my interest repayment is currently going down by six cents a week. Right now, 2:1, interest:capital. (Well, I’m paying a bit more than a third to interest.)
Of course I could as easily work these numbers out, but here I get to see that the bank agrees and I owe just that much little less.
December 9th, 2005 at 3:34 pm
I look up upon anybody who is paying debt as a kind of a Superman-mixed-with-Aquaman-mixed-with-Wonderwoman. At the rate I am going, I will be paying on my students loans out of my retirement IRA in my 90s.
Solvency is over-rated. (Please don’t tell me if it isn’t.)
December 9th, 2005 at 9:37 pm
Hey, six cents is better than five cents. (Sorry, that’s all I can do as inspiration.)
December 9th, 2005 at 10:16 pm
Well, I was lucky to not have student loans. I think actually at this rate it will take 21 years, though of course I hope that the future brings a higher salary.
Sheepish, maybe next month it will be *seven* cents!
December 12th, 2005 at 1:50 pm
This probably isn’t the most appropriate entry in which to post this comment (and I’m very behind on blog reading) but I noticed you’re finally in the house and I wanted to congratulate you! (Isn’t moving just a bitch?!) Don’t let paying all the money out scare you off; it’s definitely worth it. And we get to enjoy the holidays in our new homes! Take care, and enjoy. :-)
December 12th, 2005 at 1:55 pm
If you can afford to make extra payments against the principal, you’ll be amazed at the effect they have. If you have fixed-term adjustable-payment, your monthly payments the following year will drop noticeably. And if it’s fixed-payment adjustable-term, you can knock years off the term with amazingly little money.
You’ll also be amazed at tax time. Suddenly most of your rent is tax-deductable.
December 12th, 2005 at 3:59 pm
ACW, no tax deductions for mortgages here. I believe I am allowed to pay up to 15% of the original loan down on the anniversary date (it might be anywhere from 10-25%). I think I am adjustable term.
Cheeky, thanks. My main fears are losing my job (though I do have enough to live on for a while, as well as famiyl if it comes to it), having to get a new job in another city (ack), or the imminent collapse of society. (Yes, really.) But it is so lovely having my own place.
December 13th, 2005 at 3:43 pm
I apologize for my mindless americentrism; I’m seriously blushing here.
Detail about the advantage of extra payments: at a mortgage interest rate of 5%, every extra monthly payment you make near the beginning saves you about six payments at the end. So you can take a year off your mortgage by making two extra payments. This is a very rough approximation; if you want me to run numbers for your situation I can.
December 13th, 2005 at 5:12 pm
ACW, I am very jealous of those deductions, though.
Because it is fixed rate, I can only pay down capital on the anniversary, which is next end of Oct. But if I’m paying 52x a year, I’m paying 1 extra monthly payment a year, no? (I am paying 1/4 of the monthly payments.) I actually got the numbers initially — I forget what it cut off my loan, though. I should get some of the simulations. I should be able to do them myself, though realistically I am too lazy.
December 14th, 2005 at 9:33 am
You make a payment weekly? Is that common practice?
If you are paying weekly, I’d expect they computed the payment for that period, rather than dividing the notional monthly payment by four. Anyway, the arithmetic would remain roughly the same: at 5% on a 30-year note, extra payments made at the beginning are equivalent to payments roughly six times as large at the end.
December 14th, 2005 at 2:48 pm
It was certainly offered by everyone. But I’m being paid weekly, so it works out well. I think monthly and biweekly are the most common, but weekly cut some significant time off my loan from biweekly. I’m not really clear why monthly payments are calculated at the end of the month instead of the beginning, though.