For those of you who would like an update on my mortgage plan and current situation, here it is.
I have 4 acres outside of town with an old mobile home used for storage and an RV that I live in.
I have a house in town. I paid $131,000 for it in 2004. I bought it because I had a good paying job at the time and housing prices were still low. I was worried that if I waited prices would go up and I wouldn't be able to qualify for a mortgage. I knew I wasn't keeping my high-paying job forever because it was only contract work. So, I bought the house and visited it on the weekends(because my job was 3 hours away), decorating and landscaping to my hearts content. It was quite fun. Then I got laid off and I moved in to my house. The stress of not having a job and having a mortgage to pay was not fun. I was only out of work for 3 months but my current job pays much less.
I moved to my RV and tried to rent my home as a furnished short term rental. This was ok but required too much babysitting from me. I would stay in my house between guests and clean up after them. All the moving back and forth between my house and RV was exhausting.
Then I tried to sell the house with no luck. After my last short term renter left in February, I rented the house for longer periods of time. My current renters would like to stay for many years but I promised the last short term renter that they could come back next February. They pay me $4k for just one month so I'm not willing to tell them no. I'm not sure how that will work out. I would like my renters to leave for a month and then come back. I imagine that is a lot to ask. I might need to find another long term renter.
Last December I had $25,000 in the bank and I wasn't sure if I should invest it or pay down my mortgage. I finally decided that paying down the mortgage would be more motivating especially since interest rates were falling. The mortgage payoff plan had to be as fast as possible. My first plan had the mortgage paid in 5 years. That was too slow. Then I made a 4 year plan, 3 year, 2 year, and the super-duper fast 1 year 5 month plan if I sell my RV and most of my possessions.
The mortgage was $100,000 last December. I threw the first $25k at it to kick off my plan. Over the last 8 months I have paid at least $1200 extra a month and added any additional money I could find.
My current plan has the mortgage paid in 2 years from September. Here's what it looks like:
Nov. $1300+$500 ebay stuff
Jan. $900 (This is when my tenants should move out)
Feb. $3800 (This is from my short term tourist season renters)
Mar. $1300 (I hope to have renters again but there's no guarantee)
Apr. through Jul. 2010 $1300 (If I have continuous renters)
Aug. 2010 $1300+$5000 (From stocks if they ever recover)
Sept. $1300+$7000 (Use $7k emergency fund)
I know using my emergency fund could be a bad idea but if I owe $7k on my mortgage and I have $7k in the bank I won't be able to stand not paying it off.
So that's my plan for paying off the mortgage in 2 years (and a few weeks). A lot could happen though, medical bills, car repair, house repair...not finding new tenants for a few months, that would delay my plan for a few months. That's why I say it's my 2-3 year plan. I like to think of it as a 2 year plan because it's more exciting, it keeps me motivated.