Much delayed, I’m now sending a chunk of our 2015 cash savings to the mortgage prepayment.
My original goal/plan was $25k in 2015. I got cold feet when my job started getting crazy. Right now, I’m “only” sending $8,000, because that is an amount we can send without thinking about it. That is an amount we’re comfortable parting with, without thinking about it in any more detail. Once I do some scrutiny of our reserves and finish our taxes, I have little doubt we’ll be able to meet that $25k goal. But I’m impatient, and don’t want to wait for more analysis to take action. Most importantly, I need to walk T through our accounts status, and he needs to agree that we can part with another $17k of cash.
According to some calculator on the internet, this prepayment will save us about $10k in interest and shorten the mortgage by about 5 months. Yay! If we follow up with $13k in a couple of months, we’ll shorten it by another 10 months and about $17k in interest savings. We can also reap the benefits earlier if we want and improve our cashflow – our loan can be re-amortized for free once per a year.
Odds are that mortgage prepayment is not mathematically the most optimal thing to do with our money, but it buys down the risks of living in a high cost area.