This is a tough one for us, so we are hoping to gather some comments from you for ideas. This is one of the big expenditure times of the year for us. We have to buy all of the school supplies on the list, then new shoes for everyone that will hopefully last all year. After reading the stringent list that the school puts out, I beg my wife to homeschool so we can get away from the school's stupidity! ( We are still in discussions about homeschooling) They tell us that we have to have a certain name brand of scissors! What, is there a bonus plan tied to this!
And then to fight the crowds in the school supply aisles. Do these people only come out once a year and practice their social skills at this event?
I promise, the next post I'll try to be more positive. Please leave your comments and let us know how you do it.
Wednesday, August 15, 2007
Mortgage Monster.....
Here is a post of an article that we wrote for syndication. We will be submitting it shortly. It definitely applies to the debt free attitude that we have. We tried to write it with a bit of an entertainment twist. We will see how it does. We hope it helps someone......
I admit the article is a bit "dorky". It is a little fun though....
- The Mortgage Monster!
I have to admit. I have been telling my kids for years that monsters are not real. I am here to confess, I was wrong. This monster has attacked most of us reading this. We have fallen victims to the dangerous hungry monster. This monster is so hideous; it robs us of our children’s future, it steals our retirement! It is the Mortgage Monster!!!!!!
In all seriousness, debt in general is a destroyer of families. Most divorces occur in this world today because of money problems. Debt and irrational spending is the biggest part of these money problems. What is your largest debt? It is most likely your mortgage. If it is not, you are smart, renting, or flirting with disaster.
Did you know that even with today’s fairly low interest rates you could still pay a hundreds of thousands of extra dollars for your house by the time you pay your mortgage off? It is true. On a very conservative $130,000 mortgage at 6.5% interest for 30 years, the borrower will pay a total of $159,984.40 in interest alone. So, after you have paid the entire loan back you have spent a total of $289,984.40 the original cost of the house plus interest. Now look at the same loan, with $170,000 principal. The borrower will pay $209,210.37 in interest charges! Let’s say you live in one of the “hot markets” and you have to borrow $350,000 for that little ranch that you have had your eye on. You will pay $430,727.23 in interest charges over the life of that loan! That does not include any improvements or repairs that you may have done to the property. If you bought those improvements and repairs on credit, it would be even more disastrous!
Why do we do it? Why do we let our wallets fall into the jaws of the Mortgage Monster? Many believe it is the only way to buy a house. Housing costs can be out of reach, but don’t you think that is the way that the lenders want it? Of course they do, they want to protect their business, and they want to continue to make a ton of money. I could go on and on about the many reasons why we fall prey, but there is plenty of information about this subject.
I am not saying that mortgages are completely evil. In fact, to some they are a necessary evil. I myself used to have a huge mortgage, and then I wised up. We came up with a plan. We decided to sell our house with the large mortgage and by an older “fixer upper” in an older neighborhood. This house was considered to be way below our means. People made fun of us for moving into this house in this older neighborhood and giving up our beautiful large house in the new neighborhood. People would say: “Why would you want to give up that house? It was so beautiful.” It was also about $100,000 more in cost. Do you know what that translates to? It translates to about $220,000 in interest payments over the life of the loan. We realized our house does not make us the people that we are…
This time we are going to do it right! Our mortgage on our new house is much lower; we put a large sum of money down from the sale of the big house. We ended up borrowing $114,000 on our house. You are probably saying: “What? Wait a minute! I thought you hated the Mortgage Monster?” Well I certainly do! One thing we learned, was if you need a mortgage, learn everything you can about how the process works. There are a lot of dishonest people out there that will try to take advantage of you. We can see that from reading the papers today. Many people were talked into loans that can't repay.
My lovely wife and I came up with a fantastic plan to pay off our mortgage. We found out the best way to kill the Mortgage Monster was to feed it so fast that it could barely grow. Seems a bit backwards doesn’t it? It doesn’t seem backwards if you follow the principles of compound interest. You see, the Mortgage Monster needs time to digest your money to make it big and fat. If we can keep it from getting big, fat, and happy, we can make ourselves happy!
We sharpened our pencils and found every extra penny in our budget . We took every available surplus that we had and put it into our mortgage payoff fund. We will have paid off that $114,000 mortgage in about three years. We are still doing it, methodically. We have about $5,000 dollars to go. We will have it completely paid off within 14 months of the time of this writing. We will also have saved about $115,000 in interest charges! Then we will be completely debt free! We will no longer have to work so hard to feed the evil Mortgage Monster.
This has not been an easy task. Although not easy, it is very do-able. We had to take a hard look at our lifestyle and make some difficult choices, but it is well worth it knowing that we are the best managers of our resources that we can be. Do you know what the best part about it is? We will save about $115,000 in interest payments! We will be able to take the money that we were paying towards mortgage payments and invest them in our children’s education and our family's future. They will have a future! Hopefully it will be a future without mortgage payments to the Mortgage Monster.
Rick Bolt
Husband of one
Father of six
Mortgage Monster Conqueror
http://allbolt.blogspot.com
http://largefamilyfinances.blogspot.com
I admit the article is a bit "dorky". It is a little fun though....
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