As from April 2013 my Journey in Investing is to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

Since 2017 after retiring from full-time job as employee; I am moving towards Investing Nirvana - Freehold Investment Income for Life investing strategy where 100% of investment income from portfolio investment is cashed out to support household expenses i.e. not a single cent of re-investing!

Currently; it about 54% to destination!

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This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

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Wednesday, 12 May 2010

Will You Try To Pay Off Your Housing Loan ASAP If You Have One? - 2nd revisit

Will You Try To Pay Off Your Housing Loan ASAP If You Have One? - Revisit


The Total Money Makeover by Dave Ramsey – Baby Step Six Pay Off Your Mortgage Early
by Hank on May 9, 2010

After you have saved and contributed to an emergency fund, your retirement account, and your children’s education, you are now prepared to take the initiative and completely pay off your mortgage. Paying off your mortgage early is baby step number six in Dave Ramsey’s plan for building wealth which is outlined in his book, “The Total Money Makeover”.

If You Will Live like No One Else, Later You Can Live Like No One Else

By getting rid of your monthly mortgage payments, you will impact your cash flow significantly and will now be able to use that payment towards building wealth. As Ramsey repeats time and again in his book, “If you will live like no one else, later you can live like no one else.” Sacrificing now will enable you to have the life that you dreamed of later on in life and in retirement. Like a baseball team, September is not the time that you earn your playoff spot, May is the time to lay the ground work. Your 50s are not the time to buckle down and finally pay off debt. That should happen in your 20s or 30s if you want to have an absolutely incredible retirement.

Building Equity. You have a number of avenues that you can take with regards to prepayment of your mortgage. For wealth building purposes, prepayment makes sense as you will increase the equity in your property. An extra $1,000 that you are forking out for a mortgage payment can be allocated toward other investments that will increase your overall holdings financially if that mortgage was paid off. Obtain the necessary mortgage information and figure out, creatively, the best way to facilitate your payments.

Look at Your Loan Documentation. For example, examine your mortgage documentation to determine how much you can prepay and if there are any limitations or penalties for doing so. Some lenders require that you can only make so many additional payments in a year. Therefore, make certain you read and understand your loan and mortgage documentation so you can execute any additional payments with an extra measure of confidence.

Pay Attention To Your Statements. Because, at this stage in the game, you have become quite accustomed to saving, paying off your mortgage is simply an extension of the discipline you have acquired thus far. Making payments early can help you realize a savings of thousands of dollars as well. Just make sure that the additional payments you make are handled appropriately. Because mortgage payments are installment payments, it is good to alert the lender in writing of the amount for the additional payment or payments on a separate check and making a notation in the subject line. Ensure that you additional payments are being credited against payment to your principle only! You can also arrange with your lender to have the extra amount automatically deducted each month from your checking account.

Watch Your Real Estate Market. Make sure you stay apprised of the current interest rates and financial products offered from mortgage lenders. Develop an understanding of any penalties that are assessed for prepayment and shop for financial products that may aid you in saving money even further. I move around a lot, and I am always attune to how much my neighbors’ homes are listed or sell for.

Ways To Prepay. You can make great strides in saving if you even pay small amounts on the principal of your mortgage. Add the extra prepayment amount by regularly including a remittance or by making a lump sum payment. Did you know that if you make one additional mortgage payment to your 30 year fixed rate loan, that you can pay off a 30 year mortgage in as little as 22 years. That may be a lot of money in the lump sum format, but it may equate to less than $100 extra dollars per month if computed that way.

You can see why Dave Ramsey’s plan of taking baby steps works, especially when prepaying a mortgage. Some people try to prepay their mortgage when they are also holding a substantial amount of credit card and other consumer debt. By the time you have reached step 6 in Ramsey’s plan though, you have paid off your credit cards and prepayment can be readily achieved.

A Review of the Basic Steps for Saving, Eliminating Debt, and Building Wealth

Ramsey’s program and book, “The Total Money Makeover”, include the following baby steps to financial freedom…

Step One: Save $1,000 for an emergency fund
Step Two: Use the debt snowball method to pay off your debt
Step Three: Complete the emergency fund
Step Four: Invest 15% for retirement
Step Five: Save for your children’s college
Step Six: Pay off your mortgage
Step Seven: Start building wealth

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