Paying off a 30 Year Mortgage in 5 Years

I set a goal to pay off the mortgage by 2020. Now it’s time to think about what it’s really going to take, and how I’m going to do it.

First, let me address something briefly.

Doesn’t investing provide a better return on investment than paying down the mortgage?

Yes, it does. I’ve read plenty of personal finance books, websites, blogs, etc. I understand that expected returns for investing are north of 8%, 10% or even 12%. I understand that I’m only getting a return of less than 3% by paying down the mortgage, once you factor in the tax deduction for mortgage interest. I understand that I am potentially “missing out” on 6-10% compounding over 5 years on over $100,000. I should be investing instead of paying down the mortgage.

But let me explain why I won’t be doing that. Expected returns aren’t guaranteed returns. The market could take a wild downswing, and those expected returns can turn into real losses.

Think of it this way. You are completely debt-free. Would you borrow $178k at 3.25% so you could possibly gain about 8-12% on it? For most, the answer would be a resounding “YES, PLEASE! WHERE DO I SIGN?!” For me, the satisfaction of being completely debt-free is worth much more to me than taking on debt to potentially have an additional few thousands of dollars.

The rich rule over the poor, and the borrower is slave to the lender. -Proverbs 22:7

With that being said, I want to say that I do believe in investing. All of my retirement accounts as well as my wife’s retirement accounts are invested in the market (stocks and mutual funds). We continue to invest 15% or more of our income plus employer match into retirement accounts. I’m just saying I don’t want to use debt as a tool to invest.

What will it take to pay off the mortgage in 5 years?

It’s February 2016, and the mortgage balance is currently $178,304. I have to pay it off in 58 months to reach my goal by 12/31/2020.

$178,304 / 58 = $3074.21, and that’s not factoring in interest.

The current principal and interest payment (P+I) is $827.76. According to the amortization estimator I’m using, if I pay an additional $2,500 in principal every month in addition to the regular monthly payment, the last payment will be due on 12/1/2020.

In addition to the big goal I set, I’ve set some intermediate goals to ensure I’m on pace for achieving the goal.

I’ll keep track of my goal of paying off the mortgage below.

Month	Months left	Intermediate goal	Actual balance	On pace for goal
2/19/2016	58	$178,304	$178,304	Y
3/18/2016	57	$176,700	$174,480	Y
4/19/2016	56	$173,600
5/19/2016	55	$170,500
6/19/2016	54	$167,400
7/19/2016	53	$164,300
8/19/2016	52	$161,200
9/19/2016	51	$158,100
10/19/2016	50	$155,000
11/19/2016	49	$151,900
12/19/2016	48	$148,800
1/19/2017	47	$145,700
2/19/2017	46	$142,600
3/19/2017	45	$139,500
4/19/2017	44	$136,400
5/19/2017	43	$133,300
6/19/2017	42	$130,200
7/19/2017	41	$127,100
8/19/2017	40	$124,000
9/19/2017	39	$120,900
10/19/2017	38	$117,800
11/19/2017	37	$114,700
12/19/2017	36	$111,600
1/19/2018	35	$108,500
2/19/2018	34	$105,400
3/19/2018	33	$102,300
4/19/2018	32	$99,200
5/19/2018	31	$96,100
6/19/2018	30	$93,000
7/19/2018	29	$89,900
8/19/2018	28	$86,800
9/19/2018	27	$83,700
10/19/2018	26	$80,600
11/19/2018	25	$77,500
12/19/2018	24	$74,400
1/19/2019	23	$71,300
2/19/2019	22	$68,200
3/19/2019	21	$65,100
4/19/2019	20	$62,000
5/19/2019	19	$58,900
6/19/2019	18	$55,800
7/19/2019	17	$52,700
8/19/2019	16	$49,600
9/19/2019	15	$46,500
10/19/2019	14	$43,400
11/19/2019	13	$40,300
12/19/2019	12	$37,200
1/19/2020	11	$34,100
2/19/2020	10	$31,000
3/19/2020	9	$27,900
4/19/2020	8	$24,800
5/19/2020	7	$21,700
6/19/2020	6	$18,600
7/19/2020	5	$15,500
8/19/2020	4	$12,400
9/19/2020	3	$9,300
10/19/2020	2	$6,200
11/19/2020	1	$3,100
12/19/2020	0	$0

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