Kids grow up so fast
Well, I realize Bailey is not a kid, but she IS growing fast! When we got her at just 6 weeks, she was such a munchkin, so tiny and soft and all of 6lbs. Now, she’s a whole 12.5lbs, cute as ever, and smart as a whip. {MORE} She has had a super busy summer thus far. To start our summer off, she had her first visit to Chattavegas for Memorial Weekend.
She did really well with her first long car trip, got to see a few of our friends, and she met Hannah, Nana and Poppa, and managed to pick up a body full of fleas. (Fortunately by the time we made it back to Indy, we had removed all but 2 or 3 of the fleas.) Then in June she took her first plane ride. We flew to South Carolina for my grandmother’s 84th birthday, and Bailey was a trooper. She wasn’t too fond of her suitcase, but she managed to attract lots of attention (as if that’s difficult!), and she only barked on the plane once. Let’s see, a week after that she went under the knife. Yes, Kyle made me get Bailey spayed. Once I read about the advantages for Bailey, I was slightly convinced. I just hated to put her through pain and stress, but she did really well. We dropped her off in the morning, and then I picked her up around 3:00, and she was soo drugged, she hardly wagged her tail when I came in the room. A few days later she was back to her good bouncy self.
And throughout all this time, she has been going to school. She goes once a week for an hour, and she’s the star student. She has two classes left until she graduates. (And from what I hear, she’s getting a graduation cake from her trainer!) So far she has learned to stay, lay down, roll over, and she’s learning to walk much nicer on her leash. She also knows all of her toys, and can find each one when asked. I’m such a proud mom-can you tell?
Investment vs. Over-Paying your Mortgage
I happened to be running some numbers the other day when I noticed the effects of investing alongside the effects of over-paying your mortgage (meaning the extra amount of money you pay to the mortgage principal amount every month). Conventionally, I’ve always heard that overpaying your mortgage by $100 a month, will cut years off your loan, and save you thousands of dollars in mortgage payments, but how much time will be cut off, and how many thousand dollars will be saved?{MORE}
First of all, lets look at the average scenario. You purchase a house for $150k, at an interest rate of 7%. After 30 years, you will have paid $341k in mortgage payments, and all you are left with is your $150k house (which you hope has appreciated, but for the sake of the example, neither appreciation or inflation have been taken into effect). That means you paid $191k more for your house than it was worth. I’m betting most people fall into this category.
Scenario 2, with the same home price and interest rate, you pay an additional $100 towards your mortgage payment every month. So if your regular payment is $950, then you pay $1050. The extra $100/month will allow you to pay off your loan in 23 years, and will reduce the amount of interest you pay from $191k to $140k. That’s 7 years and $50k of savings!
Scenerio 3, with the same home price and interest rate of the average scenario, but instead of applying an extra $100 to your mortgage every month, you apply it to some sort of investment that yields at least 5% (most CD’s will give you that much or better). Your outgoing amount every month is the same as scenerio 2, but now you are back to using the full 30 years to pay off your mortgage. However, at the end of the 30 years your investment (obtained from the $100/month payments) has turned into $77k. If you do the math, $77k will counteract the interest you paid in your house, creating a deficit of only $94k. That’s $50k better than applying the $100 to your loan, and almost $100k better than doing nothing at all!
So think about that a little the next time you purchase a home. You could get into a situation where your investment will completely neutralize all the interest you paid over the course of your mortgage. It would be like getting a check back from your mortgage lender.