Archive for the ‘EMERGENCY MONEY’ Category

2010/02/05: Payday! Detailed financial planning. Getting ahead of schedule with my mortgage, long-term emergency fund, etc.

February 5, 2010

Today is that much-cherished payday for me.  Here’s what I’ve done today as soon as money showed up in my checking account:

1) Took 50% of my wife’s paycheck (50% is $205.50) from earlier this week and sent to our long-term emergency fund.  That is what is called PAYING YOURSELF FIRST.  That’s a checking account we have setup with IngDirect.com.  That’s a a high-yield savings account.

2) Took the other half of my wife’s paycheck (the $205.50 that was left) and transferred it to a special savings account where we are saving money to visit our families overseas next year.  To us that is as necessary as air, and we are trying to go every 3 years or so.  We do not go into debt for vacation!!

3) This is February, month two.  On month 1 (January), I sent two separate mortgage payments.  My next mortgage payment is due on March 1, 2011.  That is 13 months from now.  That is an important part of my long-term protection plan.  If I lose my job, I want to make sure I have plenty of time to find another job.  Can you imagine having to worry about making mortgage payments while you have no income?  I can’t even imagine!  This month (month # 2), I will make a single payment, which will be the next payment (of March 2011) plus the principal of the following month.  By checking my mortgage amortization table, it means that I will include an extra $816.  I will submit the mortgage payment on my next paycheck two weeks today, on February 19th.  Total that will be paid towards my March 2011 payment = $1,640.64 (March 2011’s normal payment) + $816 (April 2011’s principal) = $2,456.64.    That is how I am going to finish my mortgage very early!!!  In March (month # 3), I will be once again submitting two separate payments.  My goal is to be two full years ahead of schedule in order to have that much protection in case of an extended job loss, which unfortunately is not impossible, not in the new and more socialist economy.

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My Mortgage

January 22, 2010

2010/01/22:

Here’s what I’ve done today:

  1. Transferred $211 from my account to my long-term savings account.
  2. Sent an extra full payment to my mortgage company.

AS OF TODAY, MY NEXT MORTGAGE PAYMENT IS DUE ON MARCH OF 2011.

Making some payments ahead of schedule (my goal is two years) is part of my long-term emergency plan.   Only paying down the principal on your house can be dangerous if you lose your job.

2010/02/19

Current mortgage balance = $154,776.44.

First baby step for today:  More than double the principal on my mortgage

Double the principal:  It’s February, month 2.  I followed my plan and sent a single mortgage payment to my mortgage company but with double the principal.   It will work out to be a little more than double:

  • Payment due date:  03/01/2011   (I am building a large buffer for protection.)
  • Regular payment:  $1,640.64  (that’s principal, interest and escrow).
  • Extra amount towards principal: $940.00.  The principal is about $815, but I will know the exact amount applied to principal when the transaction is complete.
  • Breakdown:  Principal = $814.12.  Interest = $644.90.  Escrow = $181.62.  Extra towards the principal = $940.00.
  • Total payment today: $2,580.64

Next mortgage payment due date is in 13 months on April 20001.  As I read bad financial news today, I realize that paying my mortgage way ahead of schedule is a huge peace of mind.

Another baby step for today:  Long-term emergency

I made a deposit of $192.50 (50% of my wife’s paycheck) into our long-term emergency (trading) account today.  I’m investing it in oil this time.

I have almost $10,000 of my long-term emergency fund in CDs because I want the liquidity benefit.  The rest will be invested in commodities because I can afford the volatility in the commodity market with that money.  I am not planning on investing in company stocks with my long-term emergency fund.  Commodities is as far I am willing to go risk wise with that money.

2010/03/05

Current mortgage balance = $153,022.32.

Step for today:  Sent my mortgage payment which is due next year on 2011/04/01. That is how I am building a big buffer to protect me in case of a job loss.

Next step:  In two weeks, I will be sending the next payment which will be due on 2011/05/01.

Thought:  I am staying on track by not spending, not eating out and no car payment.

2010/03/19

Current mortgage balance = $152,200.89

Step for today:  Sent my mortgage payment which is due next year on 2011/05/01. That is how I am building a big buffer to ensure that my mortgage is covered if I experience a loss of income for any reason.

Next step:  From now on, I will be sending a single payment per month but  include two principal payments.

Continued Mission:  I am staying on track by not over spending, not eating out and no car payment.