Can you afford to quit your job and be part of the Great Resignation?

[Timjoebillybob]

I'm not sure I'm following. Anything above and beyond my minimum payment goes to remaining principal.

For example, my monthly payment is about $1300. I recently sent them a payment of $1700. so the first $1300 goes toward my normal principal and interest and escrow, and the extra $400 goes to principal only.

Which is why I tell new homeowners, that ANY extra payment helps.
ESPECIALLY at the beginning of the loan.
Granted, at the beginning of the loan, people usually have less extra to give.
But, if you were to take a $1000 payment..
at the beginning you might pay $100 principal and $900 interest.
So, if you paid $100 extra, it would all go to the principal, and it would be like you made 2 months payment.
But, if you paid $100 near the end, when a $1000 payment is $900 principal and $100 interest..
You only made 1/9th of an extra month payment.

If you just send in extra it will be applied to the end of the loan aka $900 principle and $100 interest. If you specify what payment you want it to go to it can be the $100 principle/$900 interest payment.

 

[DoggyDaddy]

Half a week, and my FINAL vacation will be over, and I will retired and poor like Doggy Daddy.

I'm not retired!

 

[actaeon277]

I'm not retired!

Okay, I must have thought of someone else.

 

[DoggyDaddy]

If you just send in extra it will be applied to the end of the loan aka $900 principle and $100 interest. If you specify what payment you want it to go to it can be the $100 principle/$900 interest payment.

I use my credit union's online bill pay to pay my mortgage, so I'm not sure how I'd specify which payment I'd want it to go to, especially past payments that have already been made.

 

[DoggyDaddy]

Okay, I must have thought of someone else.

Well, you were half right.

 

[actaeon277]

I found it. It was doddg.

I got the first 2 letters right

 

[BehindBlueI's]

Yeah, that is where we are. We were doing the half payment every two weeks but when I ran the calculation, it doesn't really save us much at all.

The only benefit to doing this is you make extra payment each year. 52 weeks/2 = 26 half payments = 13 full payments vs 12 payments for one full payment each month.

 

[BehindBlueI's]

I use my credit union's online bill pay to pay my mortgage, so I'm not sure how I'd specify which payment I'd want it to go to, especially past payments that have already been made.

*Most* places today automatically apply the extra to principal. Your contract may even specify this to be the case. You should have lines that designate extra money to principal, extra to escrow, etc. on your payment form regardless of if it's online or paper.

In the past, especially some shadier places today, would apply your extra payment to your next bill and that would mean you'd basically just pre-paid interest. Maybe nobody does it now, I don't know.

 

[xwing]

With the Dems raising taxes and fees, it makes less sense to work. After years of keeping costs low and putting the money into savings / investments, I will likely retire next year (at the age of 45). When I pay significantly more to the government in high taxes than I spend on myself, why bother continuing full-time employment? I can likely get by on my "side gig" plus investment income. As a plus, my "side gig" is gun related and I enjoy it.

So, yes, I can "afford" to quit. And I probably will.

 

[DoggyDaddy]

*Most* places today automatically apply the extra to principal. Your contract may even specify this to be the case. You should have lines that designate extra money to principal, extra to escrow, etc. on your payment form regardless of if it's online or paper.

In the past, especially some shadier places today, would apply your extra payment to your next bill and that would mean you'd basically just pre-paid interest. Maybe nobody does it now, I don't know.

Well, actually I don't pay my mortgage "on" the mortgage company's website. I just send them the money via my credit union's website.

But interestingly enough, last month I waited until the 7th of the month to send my payment (was waiting on a large check to clear in my account and be released to me). It's not late until the 15th, but apparently February's bill had already come out. So when I sent $5K for January's payment, they paid it, then paid February's entire payment and the remaining 2400 or so went to principal.

I called them and told them what happened and they made an adjustment, so that it covered January's 1300, with the remaining 3700 going to principal instead. Now I'm back on track and am just going to be making larger payments each month.

 

[jkaetz]

Well, actually I don't pay my mortgage "on" the mortgage company's website. I just send them the money via my credit union's website.

But interestingly enough, last month I waited until the 7th of the month to send my payment (was waiting on a large check to clear in my account and be released to me). It's not late until the 15th, but apparently February's bill had already come out. So when I sent $5K for January's payment, they paid it, then paid February's entire payment and the remaining 2400 or so went to interest.

I called them and told them what happened and they made an adjustment, so that it covered January's 1300, with the remaining 3700 going to interest instead. Now I'm back on track and am just going to be making larger payments each month.

This doesn't make any sense. You want the extra cutting down the principal, not giving free money to the lender in the form of early interest. I hope you just have the terminology flipped.

 

[DoggyDaddy]

This doesn't make any sense. You want the extra cutting down the principal, not giving free money to the lender in the form of early interest. I hope you just have the terminology flipped.

D'oh! I did have them flipped. Fixed it now. Thanks for catching that!

 

[jamil]

Okay, I must have thought of someone else.

I mean. It’s not like he’s young or anything.

 

[DoggyDaddy]

I mean. It’s not like he’s young or anything.

But I'm immature!

 

[indyblue]

After my wife passed away I got her whole life policy payout plus a second smaller policy I didn't know about. I took the money from the second one and applied it to my mortgage by "recasting" my loan to reduce my payment since I am now a single earner.

It was a good option for me since I have a relatively low interest rate at 3.875% and wanted to keep it and no re-financing or re-application needed.

I invested all of the whole life proceeds and contributed to my IRA/401 shortfalls. This makes my early retirement possible although due to health insurance I will need to live frugally until I'm 65 in ~5 yrs and SS kicks in (won't do early SS no reason to take the hit).

I was only able to buy my Corvette because I got a great price selling my '05 GTO.

 

[COOPADUP]

1.5 years left on the mortgage. That extra amount will greatly enhance the retirement budget.

 

[gregkl]

After my wife passed away I got her whole life policy payout plus a second smaller policy I didn't know about. I took the money from the second one and applied it to my mortgage by "recasting" my loan to reduce my payment since I am now a single earner.

It was a good option for me since I have a relatively low interest rate at 3.875% and wanted to keep it and no re-financing or re-application needed.

I invested all of the whole life proceeds and contributed to my IRA/401 shortfalls. This makes my early retirement possible although due to health insurance I will need to live frugally until I'm 65 in ~5 yrs and SS kicks in (won't do early SS no reason to take the hit).

I was only able to buy my Corvette because I got a great price selling my '05 GTO.

You don't have to answer since it's fairly personal, but if you are not taking SS and are retired, what are you living on?

 

[indyblue]

1.5 years left on the mortgage. That extra amount will greatly enhance the retirement budget.

I could pay off my remaining mortgage, but as long as I am making more with it invested than the interest I'm paying I figure it isn't worth it. If the markets continue to decline where I need to protect my investments by moving to less risk and growth is less than that, then I'll consider it.

 

[indyblue]

You don't have to answer since it's fairly personal, but if you are not taking SS and are retired, what are you living on?

Savings and will draw from retirement account.

For the past several years since her death I saved nearly all of my income.

I do occasional IT consulting and may end up taking part-time work just so I can afford my hobbies. It’s also why I started reloading, it gives me something to do and saves money on ammo.

 

[AtTheMurph]

The only benefit to doing this is you make extra payment each year. 52 weeks/2 = 26 half payments = 13 full payments vs 12 payments for one full payment each month.

with inflation higher than the rate on mortgages, why would anyone ever do this?