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Comment by crpatino | Hacker News Reader

Cut expenses, payoff debt, increase savings... on principle. Then when you see the first early warnings, do the same but twice as hard.

I am well on track to pay the mortage in 4 years instead of the standard 20, have probably 6 months of expenses in the bank, plus another 2-3 months of expenses in a different account because the wife has begin to have funny ideas about what to do with the extra cash. (I have already threaten that I will rather quit before she goes and blows up the war chest in some stupid vacation or something, but still so much for constant vigilance). While I am nowhere near as ready to be let go as of today, I know I will be landing on my two feet if that were to happen.

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are you saying that you are hiding money in secret accounts from your wife because she wanted to have a vacation?

It appears so!

Not really hiding, since she is aware the money exist. I am just keeping it in an account I alone have access to.

How are you paying off the mortgage in 1/5 of the time?

By paying off five times more a month than the bank really wants you to when they gave you the money.

(How is he able to do that? By working like a maniac, I guess.)

He/she would only have to pay 3.28 times his normal payment in order to pay it off in 1/5th of the time. It's paid off more quickly because by paying more, you reduce the amount of interest that accumulates.

On a $100k 20 year loan at at 5.7% (I know, example), interest paid would be around $67k (so total $167k). By paying 3.28 times more per month ($2300 per month versus the $700 normal rate), the interest paid ends up being only around $12k.

Also, by having refinanced recently, when the rates were stupid low. My mortgage interest rate is lower than my student loans interest rate, and on at 15-year mortgage. Along with making extra monthly payments, you're in the 7-year payoff range. All depends on how much of your income you put to the extra payments. I don't make mad bills, but it's still quite feasible.

If you're lucky, you might be able to pay down lump sums of your mortgage every year without penalty.

I have a mortgage through Tangerine (formerly ING) and can pay down 25% of the original amount during any calendar year - assuming I have the cash, and feel that avoiding that interest is better than the return I could otherwise get investing the cash.

Ok, this caused lots of discussion, so here it is.

I am Mexican, living and working in Mexico. Interest rates for a house are in the ballpark of 10%. This can be either very bad (on a 30 year mortage, you end up paying back about 3 times as much as you originally borrowed), or very good (early payments go straight to capital and have a disproportionate effect on the total amount paid, specially during the first few years). We also have a government mandatory housing fund, paid by your employer, at 5% of your salary (meaning everybody's salary is 5% less than what otherwise would be, but still).

So, we did the rational thing. We rented while we were young and our careers were taking off, we tried to avoid lifestyle inflation when we got raises, and when we finally bought a house we threw every spare cash we could afford until the monthly interest came out of our employers fully. That happened last December (after sinking Christmas bonuses into the mortage).

So, while it requires discipline, it's not that impressive. In this country, paying your mortage using the plan designed by the bank is the same as making minium payments to your credit card. You just keep paying interests without making much of a dent on the capital.

Wow. Your marriage sounds awesome.

I know, I am a terrible person. 8 months into a Death March project does that kind of thing to your sanity.

Right now I am counting on her being smarter than I am.

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