Tag Archives: mortgage



Good Bye Status Quo, Hello Something Else

cow

It’s been a while and a lot has happened since my last post. So, I thought I’d put finger to key and give you the scoop on how I tipped a few sacred cows over the past 10 months.

Running again – Farther and faster than ever

I’m now putting in 35 miles a week with some of my longer run days up above 8 miles.  I’ve run PB 5 and 10ks.  Back in February, my body was feeling broken and old.  How did I go from not being able to run much at all, to running better than I ever have?  Simple.  I tried something else.

The main thing keeping me on the sidelines was my toe and it just didn’t seem to be getting better.  My podiatrist had me taking ibuprofen and applying ice after walks, both of which made me feel better for a couple of hours.  But, I couldn’t keep this up for the rest of my life, could I?  So I said goodbye to the doctor and hello to my own R&D.  I started by cutting up insoles from some old running shoes to make my own custom metatarsal pads.  I figured out exactly what shape worked best for my foot and discovered wearing it inside my sock kept it in place.  Before long, I was off the meds and ice, and back to jogging again.

My make-shift toe pad still didn’t seem like a viable long-term solution, especially if I wanted to get back to full running.  So, I started looking at my shoe options.  I after some research, I found Altras.  They’re specially made with a super-wide toe box to let your toes spread out.  The minute I put these on, I felt like my toes were free.  I decided to switch to Provisions and Olympus’s for trails.  I also increased how often I replaced my shoes.

Aside from the shoes and the pads, was there something different I could do with my running?  I started looking at workouts online and reading books such as Daniel’s Running Formula and Build Your Runner’s Body.  I learned that my workouts were too hard.  In order to prevent injury, I needed to incorporate more slow or easy runs into my weekly workout schedule.  In fact, most of the running I do now is easy.  I only push myself two or three days a week.  The other days I just run at a nice, leisurely pace.

With all these changes I believe I’ve completely overcome my toe problems.  Now I’m able to gradually slide up my weekly mileage, speed, and fitness level without injury.

Bacon, Butter, Beef and Coconut: the 4 Food Groups

Call it Atkins or call it Paleo.  Whatever you want to call it, most of my calories are coming from fat now and I’ve lost 9 pounds and at least an inch off my waist!  I never considered myself fat, but I don’t really miss that extra baggage, either.

It all started with a trip to the doctor.  I hadn’t had a physical since college, but with my Dad going through some serious medical issues this past summer, I was motivated to get myself checked out.  After taking a routine blood test, my doctor diagnosed me with high cholesterol or hypercholesterolemia.  He thought both my LDL and my overall cholesterol were too high.

This was a complete surprise to me.  I always felt like I was pretty healthy.  I ate right, I exercised, and I never really had any major medical issues.  High cholesterol was for older people who lived off of fast-food and surfed the couch all day, right?

Well, the doctor seemed to think it was pretty serious and wanted to put me on a drug called a statin right away to tank my cholesterol levels.  Whoa, hold on!  I’m not the kind of person that likes to just jump on a pill to make my problems go away.  What is this statin and is there some sort of lifestyle change I can make before committing to a lifetime of strange mystery meds I know nothing about?

So, once again, I ditched the doc and started my quest for more answers.  I found the EatingAcademy.com and picked up a few books including The Great Cholesterol Myth, Grain Brain, and Wheat Belly.  I discovered statins are bad, cholesterol (as it was measured in my blood test) doesn’t affect your risk for heart disease, inflammation and high blood sugar are much better indicators of heart disease risk, and fat consumption (saturated and monounsaturated) does not increase your risk of heart disease.  These new findings completely blew my mind.  The food pyramid I was used to (with bread on the bottom and fat on top), was completely turned upside down!

So I cut WAY down on the grains and sugars, and upped my intake of saturated and monounsaturated fats (also more veggies).  Think Buddy the Elf‘s diet, but the complete opposite.  As a result, my pants are way too big now.  Not to mention, my energy levels are steady throughout the day, I sleep great, and I just feel better overall.

Six Months and the House is Ours

Assuming no unforeseen mishaps or pay increases, six months from now we should be living in a completely paid-for house.  It’s hard to believe we’re almost there.  And now that we’re so close, it’s hard not to get impatient and day-dream about life after a mortgage.  Mrs. Pennypacker and I often think about buying a second house in the mountains.  Six months from now, that may be our next big ocean to cross.

I’ve already written extensively about why we decided to be different and pay off our house.  It’s a similar story to the toe and the diet – me just looking at normal and thinking, “there has to be another way.”

How did I get here?

I questioned.  Maybe it’s the Gen X in me, or maybe I’m wired differently, or maybe my parents raised me to be a rebel.  Society tells us to take pain pills and apply ice to our injuries.  Everyone says eat less fat and eat more whole grains to be healthy.  In America, you take out a mortgage and keep making payments until you retire or die.  In all these cases, I wasn’t satisfied with normal.  I had to find a better way.  It’s like that old T.J. quote…

“Question with boldness even the existence of a god…”
– Thomas Jefferson

Are there any principles or societal norm that you’ve flipped upside-down lately?



Mortgage Pay-Down Goal, Check…Well Almost

yellow house mortgage

It’s been six months since Mrs. Pennypacker and I set our last mortgage pay-down goal and I’m sad to say we didn’t quite make it.  The goal we set in July of last year was to have the mortgage paid down to 30% left by the end of 2015.  As of now, we’re at 30.5%.  Yeah, I know.  We’re pretty darn close.  Okay…really…now that I look at it some more, we’re sooo close, I’m just going to round down and call it accomplished.

Goal-Over-Reach

I can’t think of any particular reason why we fell slightly short this time.  No big, unexpected expenses came up.  Our income stayed pretty steady.  I think it’s just a small case of goal-over-reach.  It’s no big deal.  Setting goals isn’t a perfect science.  Sometimes you make it to the top of the mountain ahead of time and sometimes you come up a few feet short.  The key is to adjust your goals so that next time around you’re right on target.

A little easier this time around

Since we set our sights a little too high last time, this time around we’re going a little more realistic.  Our goal will be to get paid down to 23% at the beginning of July.  I’m likely to get a raise at my day job and Mrs. Pennypacker may get a bonus at her job, so we may end up surpassing this number.  But, we’re not counting these chickens just yet.  Our goal should still be reachable, even if our income stays flat.

So, when’s Mortgage D-Day?

The crazy unicorn dreamer in me says we’ll pay the entire mortgage off by the end of 2016.  If both Mrs. Pennypacker and I get raises this year, and we throw a little savings in towards the end, it just might happen.  On the other hand, the realistic dream-killer in me says we’ll pay it off by the middle of 2017.  I suppose we could live with another 6 months.  But, it just sounds so nice to say it will be done in a year.

Is this the right thing to do?

We still believe it is.  Most experts think the stock market will be fairly flat next year.  By paying off our mortgage early, we get a guaranteed 3% return on our money.  That certainly beats any savings account out there right now.  Plus, once it’s paid off, we’ll have more money to invest elsewhere.

The best thing about paying off the mortgage is the flexibility and security you gain, by not having that giant beach towel of a mortgage payment soaking up your paycheck every month.  Without that payment, if one of us gets laid off, we’d still have enough income to cover our day-to-day expenses.  And, if one of us wanted to switch gears and go after a dream job that maybe didn’t pay that well, we could still support ourselves.

But what about the tax deduction?

We’d rather have our house completely paid off and pay zero interest, than keep paying interest just so we can get a 25% discount on that interest.  Besides, if we really miss the tax deduction, we can always just give more to charity.

Rewards?  Sure, why not.

We like to reward ourselves when we accomplish a goal.  Last year we bought new flooring.  Six months ago we bought a new bbq.  This time around we’re buying a new laptop and a new couch.  The laptop is in the mail and should be here next week.  The couch is still being decided on by Mrs. Pennypacker, but I’m sure it will be forthcoming.

Did you accomplish your goals for last year?



Clean up Your Entire Financial House Before You Retire

Financial House

An article by Sharon Epperson from CNBC caught my attention the other day.  The title: Why You Shouldn’t Pay Off Your Mortgage Before You Retire.  That’s crazy talk!  I mean, if you’re still making payments on a mortgage, keep working!  But, then I read the rest of the article.  It turns out the title doesn’t quite represent what the author is trying to convey: if you’re getting ready to retire, cleanup the rest of your finances before worrying about the mortgage.  This actually makes sense.  However, I think your mortgage should also be thrown into the pre-retirement cleanup mix.

If I wrote the article, I would call it: Why You Shouldn’t Retire Before You Pay Off Your Mortgage.  Or maybe: Why You Should Clean up Your Entire Financial House Before You Retire.  If you’re getting ready to retire and you’re babysitting any debt, including a mortgage, keep working.  Clean the whole mess up first, before you retire and you’ll have a lot more freedom.

A mortgage can be a huge amount of money.  So, how do you pay down what’s likely your largest single piece of outstanding debt?  More cash.  And how do you get more cash?  By cleaning up your financial house – pay down your other debts and save for an emergency.  The money you no longer send to your credit card, your car, or student loan, can be used to accelerate your mortgage paydown.  To keep you from taking on more debt during an emergency, say when the furnace goes out or you lose your job, save up an emergency fund and be your own credit card.

Cleaning up your financial house isn’t complicated, but it can be challenging.   Here are the steps to follow:

1. Create a monthly budget 

Brew up a basic budget.

2. Start a small emergency fund

Let’s say around one month’s worth of expenses.

3. Pay off all consumer debt

This includes credit cards, car loans, student loans, and lines of credit.

4. Bulk up that emergency fund

Up to six months of expenses.  What would you need to survive for six months if you had zero income?

5. Save for retirement 

Don’t even think about saving for retirement until the first four steps are complete.  Then start chucking 10-15% of your income into various investment accounts.

6. Pay off your mortgage

You can do other wealth-building things with your money, too.  But, if you’re closing in on retirement, focus on the mortgage.

Financial house cleaning is not a temporary thing like some crash diet you might go on to lose 50 pounds by summer, so your high-school jeans will fit again.  It requires a life change.  You’re not cutting out all debt for six months to get into retirement shape, just so you can put the debt weight right back on.  You have to completely change how you look at debt and your overall financial health.  Once you do that, how you view money will be forever changed.



We Crushed Our Goals: Mortgage and Carpet, Check

Fiesta Grill

Six months ago, Mrs. Pennypacker and I set two goals for ourselves:

  1. Pay the balance on the mortgage down to 39%.
  2. Buy and install new carpets.

Six months later, I’m happy to say we crushed our goals! The mortgage is now down to 38%. We actually were on pace to get it down to 37%, but I’ve been so busy with my day job lately that I forgot to add an extra payment to the last one we sent in. Still, we’ll take it.

The carpets are all in. That one was fun. I’ll never forget the look on Mrs. Pennypacker’s face when she unwittingly wandered into our house full of fancy new flooring.

So, what are we going to do to reward ourselves?

We’re buying a new BBQ grill. We haven’t decided what kind yet, but anything would be better than the one we have now. It’s about nine years old (which isn’t necessarily a bad thing). The handle for the lid broke off a few years ago, so we’ve since had to use our finger-tips to finagle the remaining plastic nub. The ignition switch is borked, but we’ve gotten used to lighting matches. The built-in thermometer is dead, but we’ve improved our other senses so we can more or less detect when the meat is cooked. The drip-pain broke, so every time we cook, the dogs are gifted with a scrumptious pile of grill drippings. Again, the new one doesn’t have to be anything fancy. It just has to work.

So, what about the next six months?

I think we can be a little more aggressive this time. I say we can knockout 8 percentage points and get that mortgage down to an even 30%.

Six months ago I was not real hopeful about getting the mortgage completely paid off by the end of next year. But, as we get closer to the end, I can feel the optimism oozing back in. I think we can continue to ratchet up the extra payments next year and get that remaining balance pretty darn close to zero.



Basketball Coaches Preach Divide and Conquer

Divide and conquer your way to financial independence

 

Most people can accomplish the tiny financial goals in life like going to the grocery store or paying the monthly bills.  Even the slightly larger goals are generally doable like buying a new TV or finding a new job.  But, what about the bigger goals like buying a house or saving for a car?

It’s difficult to sustain the drive needed to accomplish big goals.  Things like paying off a mortgage or saving for retirement can seem daunting, even dismissed by some as impossible.  But, if the big goals in your life are divided into smaller micro-goals, the odds of conquering them go up.

Basketball coaches as a group have mastered the art of divide and conquer.  I was watching the Duke vs San Diego State basketball game yesterday and something one of the color commentators said stuck with me.  Grant Hill mentioned that Mike Krzyzewski, the coach for Duke, takes the big goal of winning the entire NCAA Tournament and breaks it into smaller chunks.  Instead of looking ahead at who they might play if they make it to the final four, he keeps his players focused on no more than two games at a time.

If you’re not familiar with how the March Madness basketball tournament works, here’s the simple explanation:  In order to win the tournament, a team must win six games in a row over a span of three weeks.  Lose once and you’re out.  In order to be the team left standing at the end, Coach Krzyzewski has to trick the minds of his players into thinking they only have to win the next two games.  If they start thinking five or six games ahead, the goal becomes bigger, less tangible, and possibly unattainable.

Besides dividing the tournament up into bite-sized chewable nuggets, each basketball game can also be sliced into smaller slivers.  You might hear a coach emphasize to his players the importance of winning each half or even each ten minute segment of the game.  Don’t worry about the end of the game.  Just try to make the next basket, grab the next rebound, or block your opponent’s next shot.  The concept is simple.  If you win each chunk, you’ll win the game.

For most of my life I was terrible at long-term thinking.  I just floated along, limiting my attention to the next day, week, month, or maybe year.  However, as I’ve grown, I’ve started paying more attention to the big goals that lay further out on the horizon – saving for big purchases, paying off the mortgage, investing for the long-term.  But, instead of letting myself get intimidated by the size and scope of these goals, I’ve adopted the divide and conquer strategy used by basketball coaches like Mike Krzyzewski.  I fool my brain into thinking I’m only accomplishing micro-goals:

  • Put away 15% of my income in retirement accounts this year – win
  • Pay off five percent of my mortgage over the next six months – win
  • Save $300 for a new car this month – win

With each of these small victories, I secretly get closer to winning the big prize – financial independence.

Have you tried the divide and conquer strategy with your big goals?

 



I’m Not a Big Bond Guy, But I Might be When I Grow Up

Now, when I say “bond guy,” I don’t mean the mysterious love interest of Daniel Craig in one of the latest 007 movies.  I’m talking about the investment flavor and I’m not a big fan.

The advise handed out by your typical investment advisor, might be to diversify your investment portfolio in some mix of stocks and bonds.  The more conservative, old-school investors such as Benjamin Graham, might suggest a 50/50 split.  The trendy tip now a days is to invest your age in bonds and the rest in stocks.  So, if you’re 35, you would invest 35% of your portfolio in bonds and 65% in stocks.  Once you reach 70 years old, you’re bond percentage will have ratcheted up to 70%.  The idea behind this being, as you get older, you’re less able cope with the ups and downs of the stock market.

This article by Financial Samurai, makes the case for a little more aggressive diversification strategy: all stocks until you’re 35 years old, then start gradually mixing in some more bonds until you’re 75 years old.  Then you just cruise along with the rest of your life at the comfy-cozy 50/50 mix.

My strategy is a little more cut and dry – no bonds.  Why?  Well, I’m a really long-term investor, meaning, I buy investments with the intent of holding on to them for twenty plus years.  In the long run, the biggest risk is not market volatility, but loss of purchasing power and bonds have an average return that is half as much as stocks.  I don’t care if the market dips 50% like it did in the last crash of 2008.  The only reason to worry about a crash is if you’re looking to sell your investments and I’m not.  In fact, when the market crashes, everything is on sale and I’m pushing my shopping cart up and down the stock market aisles looking for deals.

Now, when I say “no bonds”, I don’t mean one hundred percent stocks.  You see, Mrs. Pennypacker and I currently own a home on which we pay a mortgage.  Even though we have a really low interest rate (under 3%), we pay extra on our mortgage every month.  This has two big purposes:

 

1. As we get closer to paying off the house completely, we lower our risk.  It becomes less likely that we will lose our home to foreclosure.

 

2. By paying extra on the mortgage, we in effect earn 3% on that extra we pay.  Not much, but it’s better than a savings account and it’s better than a 30 year U.S. Treasury bond.

 

While the stock market is booming, we’re diversifying our portfolio by “investing” in our mortgage.  Once I’m older and wiser and the house is paid off, I may look at putting a small share (no where near 50%) of our portfolio in short-term bonds (This is actually the Warren Buffet strategy – “…Put 10 percent of the cash in short-term government bonds and 90 percent in a very low-cost S&P 500 index fund…”).  But, more than likely, I’ll just stick with cash.  It’s more flexible and liquid than bonds, making it easy to buy more stocks if a sale comes my way.