June Mortgage Update: And 1K interest left

Last month (May):
Years left: 1.833333333
P =$1,112.22, I =$102.19, Escrow =$809.48

This month (June):
Years left: 1.75
P =$1,116.62, I =$97.78, Escrow =$809.48

One month’s prepayment savings: $0

I’m now at the point in the loan where the amount of interest left to pay is almost exactly $1K. So if I paid it off today, I would save about $1K over the next 1.75 years. (If my calculations are correct, that’s an effective interest rate of less than 3%.) $1K seems like a lot of money, but it actually isn’t that great of an investment on $23.5K. Depending on the vagaries of the stock market, I could be making more like 3K on that in a retirement account or 529 plan. Of course, that isn’t a risk-free 3K. I could lose all 23.5K, though that’s pretty unlikely (losing some amount is less unlikely!).

Of course, most likely I’m not putting that money into the stock market. Most likely I’m spending it on riotous living over the course of a year long research leave. I guess that’s worth 1K to me. We’ll see!

In my situation, would you pay off the mortgage to save the 1K, invest the money to hopefully get more than 1K in earnings over that time frame, or spend that 24K on daytrips, sushi, and rent for a house someplace walkable (or possibly part of a kitchen remodel when we get back)?

21 Responses to “June Mortgage Update: And 1K interest left”

  1. Holly@ClubThrifty Says:

    That’s a hard one. I think it’s fun when the end of your mortgage is in sight, even if you don’t actually pay it off.

    • nicoleandmaggie Says:

      I feel so much less motivated to pay it off now– we could pay the entire thing down in an emergency at this point so there’s not that worry, and losing less than $100/mo to interest seems like not such a big deal as it was when the P/I numbers were reversed. (And, of course, we’ll still be paying an enormous amount to property taxes and insurance once the mortgage principal is gone, so it’s not like we’ll be completely losing a regular bill… just cutting it in half.)

  2. First Gen American Says:

    At that point in my mortgage payoff journey, I just wanted it off my to do list. It wasn’t about maximizing interest. It was about simplification and having one less bill to worry about. I expected it to feel different/better/relieved once I had accomplished the task, but it really didn’t. If anything, it had the opposite effect for a while, as it wasn’t the cure for all the ills in my life.

    In time though, the debt freedom did teach me to say F-it to the really icky stupid parts of my job and be a little more choosy about what I did and didn’t do with my time. What is incredible about that, is that, inadvertently, it’s made me a better employee because by saying no to more stuff, I can focus on the vital few things that really move the needle. (The execs around here call the trait “courage”. Both to say no and to speak up.) I wouldn’t have had the guts to be like that without that financial safety net as my industry is very volatile and layoffs are a pretty regular occurrence.

    It was a growth and transformative experience for me. More than I would have thought. Perhaps tenure is what checked those career boxes for you so the mortgage thing isn’t as important, hence the lack of drive to pay it off.. Don’t know. It would make for a good ask the grumpies topic.

    • nicoleandmaggie Says:

      One of the things that’s going to happen when this bill goes away is that the escrow portion is going to split into two bills, one from the insurance company and one for property taxes. We’re also going to have to do something about our linked bank account to keep it free. So it’s actually going to be more hassle once the mortgage payment is gone!

  3. Leigh Says:

    Good question. If you weren’t going on the research leave, I would probably pay off the mortgage mostly so it’s done and then do the kitchen remodel once you’ve saved the money back up. Plus, then you wouldn’t spend any more energy thinking about whether or not to pay down the mortgage :) But you are going on the research leave, so I would probably not pay off the mortgage and instead spend the money on a nicer place while on leave.

  4. chacha1 Says:

    at the moment I’m heavily in favor of riotous living. :-)

  5. Norwegian Forest Cat Says:

    Having lived in an apartment that was a total hellhole with a terrible landlord a few years back, I say that you shouldn’t underestimate the positive effects that adequately riotous living will have on your mental well-being. I’d expect that those effects increase exponentially when accounting for other family members, since the effect was simply multiplicative for me + Norwegian Forest Kitten. :) Besides, it’s not like you’re going to forget to get back on the financial responsibility wagon once your research leave is up… unless that’s the plan, in which case – what will you blog about???

    • nicoleandmaggie Says:

      I definitely don’t have the skillz to be a fashion blogger. (Today I’m wearing a college tshirt with ripped jeans because that’s what was on top.)

      (Norwegian Forest Kitten! Love IT!)

  6. Debbie M Says:

    When I was that close, I decided to pay mine off ASAP because I was super annoyed with my lender and wanted to give them as little of my money as possible.

    However, in your position, it seems like the best option for long-term happiness is … drumroll … riotous living!

  7. J Liedl Says:

    I’m all for sitting cautiously on a wadge of money earning some sort of return after the last several months hemorrhaging funds having to a) replace more of the windows in our house $$$$ b) add a second car to the household along with concomitant expenses $$$ c) pay for travel and others on long-haul roadtrip to visit family $$ & d) cough up the deductible when the windscreen got cracked on our brand new car during said roadtrip (curse you highways of WV) $ & e) be on the hook for untold monies diagnosing and treating elderly dog’s debilitating cough (preliminary diagnosis pending bloodwork is heart disease which will then be treated by ongoing $$ for medications). It’s a good thing I had built up both an emergency fund and a house maintenance fund. Now I need to build those both up all over again.

  8. chacha1 Says:

    horror story: my parents just shelled out over $40,000 for new windows in their house. Custom house means custom windows. Moral: don’t buy somebody else’s dream home.

  9. Revanche Says:

    Half invested and half in sushi! (I have an unreasonable dependence on sushi as a comfort food these days.)

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