An aggressive three-and-a-half year project to pay off three remaining rental real estate mortgages totaling $177,650 and thus progressively add the $1,476.46 of payments and interest to my monthly passive income and achieve Financial Independence.
This blog will track my adventures, help me to hold myself accountable and stay the course until the goal is met by July 1st, 2016.
February's rental mortgage payments brought the mortgage balances down a little. What was really cool to see was the effect that the unexpected $9,000 additional principal payment we made in January had on the interest for February. We applied all of the 9k payment to the lowest of the three mortgages:
Previous Balance of the lowest mortgage (January, 2013): $49,123
Principal & Interest Payment: $424.57 (Principal: 239.46 Interest: $185.11)
After making the $9,000 principal payment the February payment breaks down as follows:
Principal: 274.11 Interest 150.46
That means we saved $34.65 in interest and thus the same amount was applied toward principal reduction.
Following our February mortgage payments, our balances are as follows:
House #1 - $70,598
House #2 - $57,337
House #3 - $39,848
As of January, 2013 the balance of our rental properties totaled $177,650. We now owe $167,783, or $9,867 less than we did the month earlier. That's a 5.6% reduction of mortgage debt.
This is a wonderful start and we are pleased. The lowest balance should--barring unforeseen budget busters--be paid off by December of this year. Then, $400.00 of the principal and interest savings will be snowballed into House #2 thus speeding up its payoff.
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. Even as the DOW rose above 14,000 last Friday, I console myself with the knowledge that my ROI is not less that 4.375% on any money directed toward paying off the mortgages. When once I have paid off these mortgages, I can choose to spend or invest that which was previously sent to the bank. The freedom will be ours to choose!