My husband and I are looking forward to the day when we are free of our mortgage, which is our largest monthly expense.
In fact, I'm so eager that I use three different strategies for paying down my mortgage faster. I figure anytime I can use different ammunition, it does the "deed" more quickly so I can own the deed to my house sooner.
At this stage in the game, my husband and I owe about $107,000 on our home that we purchased 8 years ago for $183,000. I hope to be under the $100,000 point by next year.
Changing the loan to shorter term
The most important strategy I used to pay down my mortgage more quickly was to change the loan to a shorter term. Our mortgage company offered us a free refinance to keep our business about two years ago. We switched from a 30-year fixed mortgage to a 15-year fixed mortgage at a lower interest rate. Having a shorter term forces us to pay off our home in less time. We were already 6 years into our 30-year loan when we refinanced. Essentially, we cut 9 years off our original obligation when we refinanced to a shorter term. This strategy is more powerful when you can obtain a lower interest rate from the bank as we did.
Rounding up our monthly payment
I'd love to pay the exact amount for my mortgage every month only because it's an unusual number arrangement of $1,222.02. However, we have been rounding our payment up to $1,500 almost every month for the last several years. It's nice that we don't always have to increase our monthly payment, but we have gotten used to thinking our mortgage payment is actually $1,500 a month. In fact, sometimes I have to remind my husband that it's not the actual total payment due each month.
Increasing how often we pay
Although some people advocate being on a biweekly payment schedule, we found that wasn't necessary since we have online banking. Having half the mortgage amount paid automatically every other week is fine for people who won't do it on their own. I prefer to follow the "snowflake method," which means throwing an extra $20 toward the mortgage every few days.
Some people rather receive a tax break by deducting their mortgage interest, but we take the standard deduction so that doesn't apply to us. Even if it did, I'd still be more interested in having a major boost to our cash flow to the tune of $1,222.02 a month by making our largest bill disappear.
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