So I have a mortgage. It’s shiny and it’s all mine.
When I got the mortgage, I made sure there were no pre-payment penalties. In fact, my mortgage company seems to encourage extra payments. They even make it easy to specify where the extra money goes (you always want it to be applied to the principal).
But should I be making extra payments on the mortgage?
Right now, the answer is an easy no. Why? Because there are a lot of things I want to do to the house, and for that, I need money. So instead of putting an extra $100 to my mortgage, I’m putting that extra $100 into savings so that I can replace the fence and put in a gas fireplace and pave the driveway and have an attic ladder installed. All things that will improve the value of the house. But once those things are done, should I make extra payments?
If I planned this as my forever house, I would say yes. It’s an easy answer. But I’m not sure that this is my forever house. I have trouble envisioning where I will be in 30 years, when the mortgage is up. Do I think I will still be in this house? Who knows! Maybe. Maybe not. A lot can happen in 30 years.
I guess it’s not a decision I have to make right now. Right now, I need to scrimp and save to do all sorts of improvements to the house. But what do you think? Do you make extra payments to your mortgage?
Megan is a 30-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.