Personal Finance

My not-so-mini payment

Last weekend, I decided to take a step towards paying off our mortgage early. I struggled with how much to make a payment for. In the past year, we’ve saved up a 6 months emergency fund if both my husband and I lose our jobs. Now that the money is just sitting there, it feels weird because its not doing anything for us other than standing ready in case we need it.

In the meantime, our new mortgage has an interest rate of 4.25%. After playing around with Bankrate mortgage calculator, I discovered that we could save about $64K in interest if we put dedicate my paychecks solely to mortgage repayment. We will also pay it off in 6 1/2 years! However in doing so, we would have to sacrifice two things. The first one was a family vacation this summer to California. This was an easy one to give up since we just went last year.

I am not even sure I am making the right decision for the second one. We would have to reduce our 6 months savings from covering us if my husband and I both lost our jobs to only covering us if my husband lost his job. I’ve gone back and forth with this one. \I’ve read a ton of articles and honestly, I still am not sure about this. Despite my hesitation, I went ahead and made a principle only payment equaling one month of my paychecks. We can abort this plan at any moment and refocus on building savings. I am curious what your opinion of this plan is.


11 thoughts on “My not-so-mini payment

  1. I guess it depends on what your risk level is. Perhaps if you want to be more aggressive with your mortgage you’d be willing to only stash a 3-month reserve instead of a 6-month. But honestly, I’m not sure what I’d do in this situation because I’m not even close to it in my own life. Right now I’m focusing on getting rid of all debt (except the mortgage). Once the debt is eliminated I will focus on a bigger emergency fund. My starting point for planning is usually Dave Ramsey’s baby steps.

    Liked by 1 person

  2. I understand why that would freak you out, but it seems to me that it’s highly unlikely you would both lose your jobs at the same time AND not be able to find anything at all to supplement (even at a lower pay rate). I say, if you can mentally handle the risk, it’s a small one. It sounds like you will still have a decent emergency fund.


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  3. Really depends on how stable you think your jobs are. If you are reasonably certain that you can repay it back to savings in a month or two, it is a gamble worth taking in my opinion. Having that mortgage monkey off your back is something I dream about. Good luck, can’t wait to hear how it worked out.

    Liked by 1 person

  4. This is a tough one. Like you I’m risk averse. An alternative suggestion is to first do a ‘fire drill’ on your spending, so if you lost your job, what expenses could you also decrease? I did this and found I could cut out around 20% (kids aftershool care, holidays, travel to work, treats etc) so now I’m comfortable I have plan – not ideal in that I don’t want to be in that situation, but I know what I’d do if I find myself in it.

    Liked by 1 person

    1. I like that term, fire drill. Our 6 months savings has definitely been fire drilled, only covering basics like mortgage, utilities, food and gas. I think feeling comfortable with a plan is important. So maybe I should listen to my hesitation.

      Liked by 1 person

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