Friday, August 1, 2014

Update - August 2014

Another month bites the dust!


We are ahead of schedule.  The red line is a straightline progress showing approximately $3,400 per month added to the principle with the payoff goal of $177,650 in 42 months.  The blue line shows where we actually are...ahead of schedule by many thousands of dollars, $12,604 of them to be exact. 

We have essentially sunk every extra dollar available into this accelerated plan.  Bonus distributions, rental proceeds, saved income, all dollars given a purpose and sent out to accomplish their noble mission.

As a result of this laser-like focus and keen determination, the balances are shrinking quite nicely.  During the past three months we were able to accelerate the mortgage payoff by adding a total of $32,000 to our regular payments.  That's nearly $11,000 per month!  It was only January of last year that we owed $177,650.  Here we are just 20 months down the road with only $85,000 left to go.


Jan 1, 2013 (Beginning Bal)                           July, 2014                       Amount Paid Off
=======================================================================
House #1 - $70,908                                         House #1 - $64,829                     $  6,079
House #2 - $57,619                                         House #2 - $19,852                     $37,767
House #3 - $49,123                                         House #3 - $ 0                             $49,123
-----------------------------                                    -----------------------------               -----------------------------
Total:       $177,650                                                            $84,681                   $92,969 (-52.33%)


What helps us to stay the course?  Keeping the goal and its benefits clearly in mind.  For example, we keep anticipating how when house #2 is paid off, the real payoff comes.  How so?  The lack of that mortgage will mean an additional $498.01 in cash-flow each and every month.  What a sweet relief to know that the only mortgage we have left will be the last and final house #3 whose PITI payment is $710.38 per month.  Piece of cake!  

But something else that makes for sweet meditation is to think about how that additional $500 per month reward for our financial discipline is the equivalent of a dividend growth portfolio totaling $120,000 paying a 5% dividend.  Or, a portfolio totaling $150,000 paying a 4% dividend if you're slightly more conservative.  Moreover, that reward will have only cost us a few thousand dollars because we bought the house right to begin with and subsequently let the tenants pay for a chunk of the house.  Ultimately, we have only paid a few thousand dollars for an income-generating machine worth so much more. That's rental real estate done right.  

Obviously, we can't maintain that pace indefinitely.  In fact, for the next two months we'll probably pay the minimum as we are travelling to England and Ireland and want to cash flow the trip. No debt here!  We've already cash flowed the airline tickets, but we still have hotel and misc fees to pay.  So, come November the pace will return to a more normal speed with an anticipated payoff of house #2 by February or March at the latest which would actually put the payoff of house #2 right on schedule.

While achieving your goals, it's easy to give out.  Paying off debt or building a dividend producing portfolio can take years.  That's not a sprint, it's a marathon.  But while running that marathon, take time to picture yourself enjoying the rewards of your hard work and self-discipline.  Picture yourself crossing the finish line.  Feel the accomplishment.  See yourself with your minds-eye enjoying the additional cash-flow or or lack of stress-related debt.  See it.  Touch it.  Enjoy it.  Resist the temptation to dwell on how far you still have to go.  Look back on how far you've come, your achievements!  If you can maintain that powerfully motivating imagery and mental discipline, I can just about guarantee that you'll eventually achieve your worthwhile goals.