However, we do well with big giant goals, so I think it's time to focus on our next priority - paying off our second mortgage on our house in Seattle. (As a refresher, we are renting this house out, and considering it part of our larger retirement portfolio. At some point, we may need to sell to afford a house in California, but would really like to keep it if possible.)
By paying off the second mortgage, we will ensure that we will be cash flow positive on the rental, reduce our monthly payments, as well as put us in a better position for buying a house in California, when & if the time comes.
Down to the nitty gritty details & the BIG GOAL. To pay off this second mortgage in one year - by May, 2015!
Current balance: $148,703.
Plan to pay off (obviously, these numbers are all based on estimates of things like, stock price, predicting timing of a house sale, etc., & will need to be adjusted monthly based on actuals):
- M's stock options (vesting in September) - $48K
- My stock options (vesting in October) - $23.7K
- Sale of beach house (expected by September?) - $40K
- Monthly stock vests (October-May) for me - $9K
- January bonus for me - $5K
- Regular monthly payments - $12K
- Rolling beach house payments into second mortgage (September-May) - $13.5K
If all of these things work out, and I tried to build in some flex, we can pay off close to $150K in a year! That would be amazing & would make me extremely happy!!!!!!
I have a feeling, if we measure this as a very doable & trackable goal, we will achieve it (or, come a lot closer than if we don't pay attention). Isn't that the case with all goals? The focus & intensity ups the importance and makes it easier to achieve. . . :-)
What about you? What big goals are you working on, thinking about, or hoping to accomplish?
If I remember correctly, that is on a HELOC. Will you be able to advance on it for a down payment for a new house? Those are quite the stock options. Do those numbers figure in taxes? I've never had stock options before. Are you better off selling right away in your current tax bracket? With the sale of your vacation house, you will likely have to pay capital gains on the appreciation so it might make more sense to wait?
ReplyDeleteAll good questions! We would prefer not to advance the HELOC for a down payment on a new house, although I suppose it's possible. I estimate a 50% tax rate on the options (although, it's realistically a little lower), as we also have other deductions taken out of that amount (charitable donations, 401K). The numbers listed are the after tax numbers. It's high tech - the options are great, but it's also what drives the cost of housing to absolutely insane amounts here, so . . . ? We won't be making that much on the vacation house, we've just paid it down quite a bit, but the difference between purchase price & sale price will be very small. The number I estimated includes taxes.
DeleteThat is awesome! I wish we could pay off our mortgage in one year :) Your plan sounds very doable.
ReplyDeleteWell, it's not our entire mortgage - just our second. But still, it will be a huge accomplishment for sure.
DeleteWow.. And I thought coming up with $30K was a lot in a year. I'm sure you'll reach your goal but good luck nonetheless :-)
ReplyDeleteNow THAT'S a BHAG! lolz
ReplyDeleteI hope you realize it by next May.
Sounds doable if all those bonuses and options come through.
Good luck! 8-)
Fingers crossed! There are a lot of moving parts for sure, but I tried to estimate conservatively. We shall see!
DeleteI think you are good on the beach house selling by September - it's my understanding that sales are picking up out at the coast again. The RE company we used to sell our house in PDX just opened up an office out in your town and apparently are doing quiet well. You can do this!!
ReplyDeleteThat's what i'm hoping for! A house just sold on our street, so as soon as the sale price is listed, we should have a good sense of whether our pricing is accurate or not. The market is so small there, it's very difficult to get accurate comps.
DeleteSetting up goals is a good way to start one’s year. Particularly on the financial side, since this will give you an insight as to how you will spend your current and incoming funds. And with regard to your mortgage, it is best to check up on your mortgage loan once a year, to see if there are new options and opportunities that can help lower your mortgage payments and rates. Good luck!
ReplyDeleteChad Nelson @ Iron Point Mortgage
It's good that you have financial goals. Having a definite plan may mean your money isn't going to be wasted. I hope that you're keeping those financial goals up until now. I wish you all the best!
ReplyDeleteTasha Reeves @ WCMTG