BABY STEP 6 * PAY-OFF THE HOUSE

 BABY STEP 6 * PAY-OFF THE HOUSE

Home Sweet Home is even sweeter when the mortgage gets paid off early! I know, because I did it!

This is the next step in the Dave Ramsey Baby Step Program.

So, you have gotten rid of your debt in the first few baby steps, you have a fully funded emergency fund, you are working on your retirement fund, or have funded it fully...

This step could take quite awhile, but will be worth it! I took on an extra job to put all of the income from it towards paying off our mortgage.

Consider some popular strategies for attacking a home mortgage:

• Make half payments every 2 weeks rather than a full payment monthly.  The trick here is that a 52 week year has 26 two week intervals which equates to 13 payments.  One payment more per year than the 12 month calendar.  On average, this approach will shave 6-7 years from a traditional 30 year mortgage.

• Many folks are electing for a 15 year mortgage rather than the traditional 30 year term.  Given how mortgages are amortized, cutting your term in half does not equate to a doubling of your monthly payment.  Often it is only a couple hundred dollars.  An easy increase to handle if you’ve eliminated your consumer debt.

• Extra payments are valid if you have an irregular income stream or are unable to refinance into a shorter term.  Pay raises, gifts, bonus payouts, etc are easy ways to ply additional dollars against your mortgage.

• Tag Team… imagine paying half payments every 2 weeks against a 15 year term loan and tossing a healthy chunk of your annual bonus into the mix as well.  Suddenly 30 years looks like 15 which looks a lot like 9, which can begin to look even smaller