Wednesday, December 4, 2013

The Payoffathon

<<<WARNING!!!!>>>>  Be advised that the following post contains some really exciting news...

When I was a youngster living in California I thought it'd be really cool to do the annual Walkathon (walking marathon).  It was a 20 mile course and it took the better part of the day to complete.  It was for a good cause, the fight against Muscular Dystrophy as I recall.   While it was a selfless act aimed at doing my small part in the battle against a debilitating disease, it isn't as if I personally got nothing out of it.  First of all, I received the greater joy of giving.  I also got the really cool feeling of accomplishing something I still think is extraordinary: I walked TWENTY STINKING MILES!  It started off fun.  Thousands of people all excited and eager to reach the goal of walking all those miles for a good cause.  Then, as the miles drew on, it just got harder and harder.  The crowds began to thin and there were noticeably less and less people walking the walk as the day drew on.  Some simply got tired, others bored,  having lost their enthusiasm.  Now understand that you're not obligated to complete a Walkathon in order to benefit the cause.  You'll get credit for each mile you walk as you pass the checkpoints and get your card stamped.  Then your sponsors--who agreed to contribute "x" amount of money per completed mile--would be obligated to donate the resulting sum.  It's a neat concept and one not too dissimilar to paying off one's mortgage(s).
In the beginning, it's exciting and your full of energy and zeal to get the payoff race going.  With the course plotted, you're off and running!  Then, as the pay-down continues, it gets harder and harder to maintain that initial burst of enthusiasm.  As each additional payment to principle and interest leaves your bank account, all you have to show for it is a slightly reduced loan balance each month; very much like getting your Walkathon card punched at the completion of each mile.  How does anyone maintain the zeal to get to the end of a long debt payoff journey?  At some point you must decide upon whether you want to look at how far you need to go in order to complete the journey, or how far you've already come; what you've already accomplished.  The former can be discouraging  while that latter encouraging.  Then, (and I speak from experience here), as you get closer to the finish line, things reverse.  Now you begin see how far you've come and how little you lack towards reaching the goal...completing the long journey.  Yes, much of personal finance is mental and emotional.  It's rarely about cold, hard math.  That's why personal finance blogs are so popular.  They do what a simple calculator can't, they encourage us.  They stimulate us.  They keep us determined and resolved to complete what we've started, especially when we're beginning to feel tired and bored with the seemingly endless journey.  In the end, however, just as I will never forget that I walked TWENTY STINKING MILES, you'll be able to say: "I PAID OFF $75,000 or $100,000 or $200,000 STINKING DOLLARS OF MORTGAGE DEBT!!!"  It's a tremendous accomplishment and a race that's worth the sacrifice.
Well, this month I just had my Rental Mortgage Payoffathon card punched.  I paid off one of three remaining rental property mortgages.  The mortgage on House #3 is now officially history!   I walked into the bank, asked for the payoff statement and subsequently paid $1.00 for a cashier's check to pay off the balance of $3,499.63 (including a $13.00 "Release Fee").  Upon handing the check to the customer service rep, she took care of a few housekeeping details and returned to congratulate me.  Done!   I have now accomplished something really outstanding...I own--free and clear--five of seven houses (one of them being my personal residence)!

Jan 1, 2013 (Beginning Bal)                        December 31st, 2013                    Amount Paid  =======================================================================
House #1 - $70,908                                        House #1 - $67,437                        $  3,471
House #2 - $57,619                                        House #2 - $54,459                        $  3,160
House #3 - $49,123                                        House #3 - $   0                              $49,123
-----------------------------                                   ----------------------------          ---------------------------
Total:       $177,650                                                         $121,896                        $55,754 (-31.38%)

As you can see, we've paid off nearly a third of our total rental real estate mortgage debt this year alone.  I don't know if we can keep the same pace up this year or not.  I have some dental work I need done as well as a trip to England & Ireland we are saving for.  That trip will be paid off before we take it, rest assured.

I still lack two more checkpoints to finish this rental mortgage Payoffathon.  I should be able to accomplish that in approximately 2.5 years or a mere thirty months.  At that point I could conceivably go from semi-retirement to early retirement.  I relish the thought of greater freedom.  Freedom to pursue more fully the things that bring the greatest pleasure and fulfillment.  That's the goal.  That will be the final stamp on my Rental Mortgage Payoffathon.


Monday, December 2, 2013

Update - December 2013

2013 is about to wind up and be retired to history.  I know it's been a tremendous year of accomplishment for many of you out there.  You've set and achieved goals:  Investing, debt reduction, weight loss...umph...ok so we didn't reach ALL of our goals, but, hey, this is a Personal Finance blog and not Weight Watchers, so we won't sweat the last one too much.
What have we accomplished this year?  Well, aside from nearly paying off one of my rental properties (more on that later) we travelled to Mexico and saw some really cool sights and met some awesome people.

Pyramid of the Sun - Teotihuacan, Mexico
While I obviously think it prudent to prepare for the future, I must remind myself that I'm living in the present.  There is a whole world out there to see.  There are people we love and need to enjoy while we have them.  Here is a moving retrospective that helps put things in perspective while we zealously work toward achieving Financial Independence.  (The following excerpt has often been rumored to have been written by Comedian George Carlin, but that is apparently not the case.)

"The paradox of our time in history is that we have taller buildings but
shorter tempers, wider freeways, but narrower viewpoints. We spend more,
but have less; we buy more, but enjoy less. We have bigger houses and
smaller families, more conveniences, but less time. We have more degrees
but less sense, more knowledge, but less judgment, more experts, yet more
problems, more medicine, but less wellness.
We drink too much, smoke too much, spend too recklessly, laugh too little,
drive too fast, get too angry, stay up too late, get up too tired, read too
little, watch TV too much, and pray too seldom. We have multiplied our
possessions, but reduced our values. We talk too much, love too seldom, and
hate too often.
We've learned how to make a living, but not a life. We've added years to
life not life to years. We've been all the way to the moon and back, but
have trouble crossing the street to meet a new neighbor. We conquered outer
space but not inner space.
We've done larger things, but not better things. We've cleaned up the air,
but polluted the soul. We've conquered the atom, but not our prejudice.
We write more, but learn less. We plan more, but accomplish less.
We've learned to rush, but not to wait. We build more computers to hold
more information, to produce more copies than ever, but we communicate less
and less.
These are the times of fast foods and slow digestion, big men and small
character, steep profits and shallow relationships. These are the days of
two incomes but more divorce, fancier houses, but broken homes.
These are days of quick trips, disposable diapers, throwaway morality, one
night stands, overweight bodies, and pills that do everything from cheer,
to quiet, to kill.
It is a time when there is much in the showroom window and nothing in the
stockroom. A time when technology can bring this letter to you, and a time
when you can choose either to share this insight, or to just hit delete.
Remember; spend some time with your loved ones, because they are not going
to be around forever. Remember, say a kind word to someone who looks up to
you in awe, because that little person soon will grow up and leave your
Remember to give a warm hug to the one next to you because that is the only
treasure you can give with your heart and it doesn't cost a cent. Remember,
to say, "I love you" to your partner and your loved ones, but most of all
mean it. A kiss and an embrace will mend hurt when it comes from deep
inside of you. Remember to hold hands and cherish the moment for someday
that person will not be there again. Give time to love, give time to speak
and give time to share the precious thoughts in your mind."

I appreciate those words (regardless of who wrote them) as they help us to step back and meditate on whether we have our priorties in the proper order.  While I pursue my goals and ambitions, I never want to lose sight of what's most important in life:  Meaningful relationships with our Creator, our families and our friends, and the true enjoyment of life's experiences with them and not at their expense.

Now...on to this month's achievment:

Jan 1, 2013 (Beginning Bal)                           December, 2013                       Amount Paid  =======================================================================
House #1 - $70,908                                        House #1 - $67,437                        $ 3,471
House #2 - $57,619                                        House #2 - $54,459                        $ 3,160
House #3 - $49,123                                        House #3 - $  3,486                       $45,637
-----------------------------                                   ----------------------------          ---------------------------
Total:      $177,650                                                          $125,382                      $52,268 (-29.42%)

So, so close to paying off House #3.  I'm aiming to pay it off by December 31st, essentially right on schedule.  That way I can clear it off the books and simplify tax preparation for the next tax season while beginning to re-focus on House #2 starting January 1st.  Next step:  Request a "Pay off Statement" from the bank while scraping the money together to make an early final payment.

Stay tuned.  I may have a celebratory post later this month.......