The "March" onward continues (pun intended). We made our mortgage payments a week early. Nothing wrong with capitalizing on a little more interest savings, right? Plus, we get the thrill of watching our debt drop by the thousands. Now that's what I'm talkin' bout!
The Stats:
Jan 1, 2013 March, 2013 Amount Paid Off
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House #1 - $70,908 House #1 -
$70,287 $ 621
House #2 - $57,619 House #2 - $57,054 $ 565
House #3 - $49,123 House #3 -
$36,173 $ 12,950
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Total: $177,650 $163,514 $14,136 (-7.9%)
That's a 7.9% reduction
of our total rental property mortgage debt in three months. It feels good to see it decline so significantly. The lowest of the three, (the one we are snowballing), has been reduced by 26% in three short months. Previously I had miscalculated that we would have this house paid off by the end of the year, but it now looks like it will be January of 2014, barring the inevitable unforeseen.
INCOME STREAM(S)
On the February update where I mentioned, "There is a part of me that would love to invest all these extra payments in Dividend Growth stocks, but we have a well thought out plan and we are determined to stick to it". Someone commented that he felt I should do both since it would be better to fund another income stream. That is a valid point. However, in addition to my response, I should have pointed out that each house is an "income stream". Even during the worst timing (including the housing bust of 2008 onward) I've never had more than two houses vacant at any one time. It is highly unlikely that I would ever see more than 3 of our 6 rental houses vacant at any one time. There is protection in numbers, especially when those "numbers" happen to be individual income streams in themselves.
Additionally, there is a degree of protection that is built into the numbers. Every month 8% of the gross rents is set aside and left in the bank to cover the inevitable vacancies that occur. Those monies can be drawn upon during vacancy periods to supplement our monthly cash draws when I reach the point where I will be relying on the cash flow to fund full retirement (I am currently semi-retired).
This pace is frantic and leaves little room for error in our monthly budget. We have some traveling coming up this Summer (Alaska) that we will need anticipate. We do have airline miles stored away and some vouchers that we're holding in reserve from having volunteered to be "bumped" on some flights. Additionally, I do have a "secret weapon" which I'll probably talk about during the next monthly update. Unfortunately, it's use comes at a cost. The most important tool in the arsenal is controlled spending. Like a tape measure in a carpenter's tool belt, it's the primary tool most financial bloggers are skilled in using on a regular basis. I am still needing to master mine.
So far, so good. Feel free to comment and let me know what you think. What are you doing? Share your story.
