What is even cooler is when those people get to the point they are using an envelope system to pre-save — – for EVERYTHING — and there is no debt.

The best Christmas ever for me and my wife was in 1998 when we were debt free except the mortgage, and had an envelope pre-funded with $600 at the start of Christmas shopping season. That will be a feeling that is hard to beat.

Again, thanks a ton for your reply.

Erick

When I sold my condo earlier this year that obviously required paying off the mortgage in full prior to the end of the 5 year term.

I paid 3 months interest as a penalty.

One thing you could do if you want to pay down as fast as possible (and have the money to do so) is to pay the maximum annual prepayment now, and then pay the maximum again in January since the prepayment can be made (only) once in a *calendar year*, not once in every 12 month period.

That gives you the biggest reduction possible in the amount of interest accruing each month so much more of your payment would then be going towards the principal.

As for Trent’s situation, he wasn’t looking at paying it all off at once but rather at doing it over an 8 year period. So this method should work even if he had a prepayment penalty clause.

For those trying to set a measure for “how am I doing so far” with regard to net worth, consider the metric used by the authors of “The Millionaire Next Door”. Your net worth should be roughly 1/10 your age times your annual realized income. For example, a 40 year old earning $40,000 per year should be able to net out to at least 40/10 * $40,000, or $160,000. In the book you are doing very poorly if you have half of that number, and you are a “Prodigiious Accumulator of Wealth” if you have twice that worth.

I’m 37, and am just above their line for tracking well.

Unless the interest rate on your money market account is greater than the interest rate on your mortgage, it may benefit you more to go ahead and tap down your mortgage principal when you can.

Fortunately, house prices in our area never took part in the bubble and are not taking part in the bust.

I like only have 2 posts per day, but I vote for posting them an hour earlier. Those of us on Eastern time don’t see your first post until 9 AM. I like to browse your site first thing in the morning when I get to work and I am still seeing yesterday’s post. Just a random thought. I love the site, and fewer posts are making for better discussion.

I am just waiting for one of your really controversial posts to come out and stay at the top longer to see how many comments it can generate…lol.

We own one car now and intend to stay that way- it was bought (cash on the barrelhead) one and a half years ago and we will need to keep it in excellent condition to avoid car payments on a new one until our 4th kid is at least in kindergarten and hubby can pick up part time work to support buying a car. We do save and have our 2 month emergency fund plus- but keeping out of car buying is our biggest money saver. I bus daily- what it costs me wouldn’t ever pay for insurance on a second car, let alone gas and upkeep.

Trent: just curious: why the focus on newer vehicles? You’re looking at spending around $30K on cars – wouldn’t it be better to just keep the ones you have and put that money towards the house first? Maybe replace only one of the cars? I have a paid-off house in part because I still drive a 20 year old-car (and my wife drives a 13 year-old car). Yeah, it’s old, but it still runs great and is quite reliable.

By the way – I know you’ve mentioned that you are religious, and I sense that you do give credit to God for your blessed life. However, I also believe that God expects us to do the best with what we have – “unto whom much is given, much is required” – and I admire your dedication to share what you’ve learned with others.

Great post – thanks again!