Post holidays I have been slammed at work, so I have not finished our 2012 Annual Spending Plan nor have we completed our 2012 Savings Plan. My goal is to get it done this week, since we are one pay period into the new year.
I'm still researching and contemplating whether to continue our mortgage prepayment plan from 2011, and if yes, how much.
I think the answer to question #1 is yes. I think we will either continue a monthly principal prepayment or we will set aside prepayment amount into a savings account (meaning we will allocate funds for principal prepayment but keep it liquid in a savings account).
The answer to question #2 is still unknown and somewhat dependent on our spending plan. But, today we received our 1098 for the mortgage on our primary home. We paid down our mortgage principal by $11,847.53 in 2011, $5000 of that from prepayments and the rest from our regular mortgage payment. We also paid $13,365.03 in interest in 2011. So, I'm thinking that we might increase our principal prepayment at least a couple thousand more, if possible, so that we are paying as much in principal as we are in interest.
there was an interesting thread on the Morningstar blog where the question was asked something like what advise to you have in retirement. Popular answers were track all your expenses, eat at home more often and 2 to 1 where comments to be debt free vs people saying keep the mortgage and invest instead. Since it could be old school to be debt free and it was retirees responding there were some good comments on why it made sense. The goal can be to be mortgage free at retirement and set your pre-payments to align with your expected retirement time.
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