Mortgage Killer



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I love the idea of being part of a Mortgage Pay Off Club!

Currently our Mortgage stands at $118,252.61. Not shabby I must say.  One reason for our pretty good situation is that 3 years ago we decided to STOP putting any more money into our RRSP’s, for our investments tanked in the recent ‘recession’ period.  Given that we have no faith in the marketplace as evidenced by our quarterly RRSP investment statements, we decided to take the funds that would normally go to our RRSP and pay down our mortgage. In some ways it is like investing in a guaranteed fund like a GIC, where the return is low but you know you are not going to lose any money in the end.

In recent months I have questioned whether we should continue with this strategy. M and I are both making decent money right now and not taking advantage of the RRSP tax credit that is available to us.  Although we both hope to continue on this track, reality is that at some point down the road one of us might have to work part-time or not at all to support our eldest daughter, and should this happen the same tax advantages won’t exist at a much lower tax bracket.

Assuming that we don’t change any variables then we will have our mortgage paid off in 3 years and 38 months. Now, I recognize that it is not realistic to assume that our interest rate will stay at 2.4% but I would like to stick to the goal of having our mortgage paid off in 4 years max.

This date translates to August 1, 2016.  My husband and I would be 42 years of age and the girls 11 and 9. I recognize that if we take some of the money going to the mortgage and put more towards RRSP and then reinvest the return we would be ahead slightly overall but I think the psychological satisfaction of having our mortgage paid off at such an early stage in our life will give us great confidence and strength to handle any obstacle that might be put in our paths.

What do we need to do to make this happen?

1.  There is no question the variable rate will go up so every few months we will have to see how the increased rate affects our final date and make up the difference possibly from what we normally would allocate to RRSP’s or maybe cut back on other expenses.

2.  We are in the process of making a conscious choice to live off of one salary. I am still working on this but essentially we will live off of Mike’s salary and put all of mine towards saving initiatives (RDSP, RESP, RRSP, and the good old Emergency Fund).