“…the day I got my first statement and saw that only $5 of my $1251 payment was going to principal”

Yesterday we talked with Frugal Zeigeist, a personal finance blogger obsessed with paying off her mortgage. (Check out Part 1 here). We learned a little about why she’s chosen this pursuit as her personal financial focus. Was it caused by a bite from “Houselatium Payoffius”? (Okay, no more jokes about New Yorkers with bug bites.. you have heard of our bedbug problem, right?)

Now, let’s see what Frugal says when asked about any regrets (or other thoughts) she has placing her mortgage so high on her priority list.

What is the strangest thing(s) you’ve done in pursuit of paying your mortgage?

I don’t know that this is strictly related to paying off the mortgage because I started this when I was a broke-ass grad student, but whenever I go out West to see my family, I take a half-empty bag and go to Costco. Then I drag fifty pounds of toothpaste, vitamins, shampoo, conditioner, coffee, minced garlic, and other stuff back to New York so I don’t have to buy it locally at twice the price.

Are there any boundaries to your budgeting, or things you’re unwilling to do to further your goal?

There are three: First, I won’t compromise my 401(k) or IRA. If I can’t max both out while making accelerated mortgage payments, then the accelerated payments have to be cut back. Second, my parents are over 80 and not in the best of health, so I travel across the country every eight weeks to visit them and help out while working flex time. That adds up quickly, but family is non-negotiable. Finally, I’ll make compromises just about anywhere else in my budget, but I’m not drinking crap coffee. (Yay Costco!)

{Editor’s note: So true! Life is too short to drink crappy coffee! As a side note, Geezeo users spend an average of $17/month at Starbucks in October, and $23/month in December. Clearly, we’re a coffee-happy community!}

Have you done anything in pursuit of your goal that now seems foolish? Or, put another way, something you did in pursuit of this goal that now with hindsight you might have done differently?

I started prepaying my mortgage the day I got my first statement and saw that only $5 of my $1251 payment was going to principal. If I had started out with a fifteen-year mortgage instead of a thirty-year and concentrated on making higher prepayments earlier, I think I could have lopped another year or more off.

What are your recommendations for young people who dream of owning property in large, expensive cities like New York? How can they prepare for home ownership, particularly when it comes to hard work and sacrifice for longer-term goals?

For middle income earners, becoming a homeowner in New York is much harder than it was six years ago because of the drastic run-up in real estate prices. To anyone who doesn’t have a load of cash but wants to buy, I’d suggest researching income-based options for lower mortgage rates (yes, 4% fixed does exist if your income is low enough!), concentrating on where you can get the most bang for the buck ( e.g. neighborhoods that are in early to middle urban renewal), and recognizing that saving enough for a down payment requires discipline, dedication, and a willingness to compromise on lifestyle in pursuit of a larger objective. Doing your utmost to further your career and make sure you get paid what you’re worth is equally important. In other words, maximize the financial inflow and minimize the outflow.

Final thoughts: Once you pay off your mortgage, what will be your next big financial goal?

I have a series of goals: First, Fake Millionaire (real estate + financial assets = a million dollars); second, Real Millionaire (financial assets alone = a million dollars), third, swanning off into the sunset for a FABULOUS early retirement.

I applaud Frugal Zeitgeist’s hard work and dedication in pursuit of her financial goals. Good luck on your million dollar pursuits! Thank you, Frugal, for taking the time to give us a glimpse into your financial situation.

If you also share Frugal’s determination to pay off her mortagage make sure you subscribe to her blog, Frugal Zeitgeist.

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This entry was posted on Thursday, December 27th, 2007 at 11:46 am and is filed under Budget. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.