I’ve always been a believer that multiple streams of income, along with a reasonable budget which includes savings, was a way to achieve financial independence. All of us are in different financial shape and the word “independence” when used with finances, is a relative term.
To date here is what we have been doing – Part 1:
Refinanced Home: With the recession the interest rates dropped. I was able to build this home on a few acres at a reasonable price resulting in a 20 year mortgage at 6.25% interest. We refinanced to a lower rate of 3.25%. Of course we were able to take advantage of this because of the past down-economy which might not be something found by the time others decide to start their planning for a future in an RV.
Fortunately our current mortgage holder (Wells Fargo) had a plan which would refinance the home at the lower rate, at absolutely no cost to us to include points. There was no appraisal and all the paperwork came in the mail. This lowered our payment considerably. We had 10 years remaining on our original mortgage contract and Wells Fargo agreed to keep our refinanced term at 10 years as well,.
As I said, the refinance lowered our payments. We have always made extra payments towards the principle equal to one payment extra each year. That lowers the length of the payoff considerably and reduces the interest charges. We applied the monthly savings from refinancing to the payment and that brought us down to owing for the next seven years rather than 10. We plan to increase the extra payments toward the loans principal in order to drive the payoff date of the loan even lower than seven years.
I’ve considered what some may be thinking – that paying off a loan where the interest is tax deductible might not be a good way to spend extra money. For us, we have not been able to file a long form tax return for two years because our deductions are so low it has been best to just use the standard tax deductions. One could write a complete article about the pros and cons of paying off a mortgage early. For us, financial independence includes being completely out of debt.
That’s it for tonight. The World Series baseball game is starting. We live in Kansas City and this is the first time since 1985 we have been this far in post season play. I’ll get around to posting another topic about our Financial Preparation which will include a lot more detail regarding what we believe will be our cost to full time in an RV and our expected income.
. 2014 World Series – Let’s Go Royals
Thanks for reading and posting your comments.
Mark from Missouri