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johnnywyoming
Posts: 3 Newbie
Apologies for the long post but I need to lay out the story. 
My wife and I have been working to be debt free for 2 ½ years and have had some progress. We are now working from a solid monthly budget, have paid off all credit card debt, and are now working on our $32,000 land loan, (will be down to $27,550 after tomorrow’s payment)! We have a $2,500 emergency fund.
We bought twenty acres of land 10 years ago with the plan to build an Earthship home on it (google the Earthship website). The idea was to be able to pay as you go and therefore no mortgage. After 10 years my health is getting in the way (I’m 63) and I had not done any serious work on the house for two years. Last winter we decided that if we didn’t make significant progress in the summer then we should consider doing something else. Well, no work was accomplished so we decided to bulldoze the house and put a modular on the property. We live in a 40 year old single-wide mobile home that we bought as our “temporary” home ($6,000) while we built the Earthship and it has mold problems that are getting worse and it is deteriorating. We cannot live in it much longer and we are not willing to sell our land and move into town, (we are twenty-five miles out in the country).
We do not regret stopping the work on the Earthship as it was a fantastic experience and we had a lot of fun doing what we did, but we should have started many years ago when we were younger!
Nevertheless, we are paying off the land at $2,500 extra per month ($3,000 total) and will have it paid off next summer. The bank will lend us the money for construction of the modular which has a price tag of around $215,000. After four months construction we will finance it as a VA loan or conventional depending on interest rates, PMI, etc. Will not need a down payment in either case as the VA does not require it, and as I understand it the ownership of the land is our equity in a conventional loan. During the four month construction period we will continue to pay $3,000 a month but with the land paid off we will use that time and money to pay off our truck loan which should have a balance of $7,000 at the beginning of the construction period, and have a bit left over for any closing costs.
With the truck paid off, we will only have the school loan which is $105 per month. I can qualify in six years to have the balance forgiven so will just pay on it until then.
So, with everything paid off except the school loan and new mortgage, we should be able to continue to pay $3,000 or a bit more and pay the modular off in six – six and a half years. (I’m not retiring for ten years and my wife as well). Or, we could pay the monthly mortgage amount and save the other $2200 - $2500 per month and have approximately $264,000 at the end of ten years. If we pay the modular off we would still have three years to save around $110,000 for retirement in addition to our 401ks expected to total $125,000. And we will have the highest amount of social security coming in due to our retirement age.
What do you think of this plan?? And which way would you go, pay off mortgage or put cash in savings?
My wife and I have been working to be debt free for 2 ½ years and have had some progress. We are now working from a solid monthly budget, have paid off all credit card debt, and are now working on our $32,000 land loan, (will be down to $27,550 after tomorrow’s payment)! We have a $2,500 emergency fund.
We bought twenty acres of land 10 years ago with the plan to build an Earthship home on it (google the Earthship website). The idea was to be able to pay as you go and therefore no mortgage. After 10 years my health is getting in the way (I’m 63) and I had not done any serious work on the house for two years. Last winter we decided that if we didn’t make significant progress in the summer then we should consider doing something else. Well, no work was accomplished so we decided to bulldoze the house and put a modular on the property. We live in a 40 year old single-wide mobile home that we bought as our “temporary” home ($6,000) while we built the Earthship and it has mold problems that are getting worse and it is deteriorating. We cannot live in it much longer and we are not willing to sell our land and move into town, (we are twenty-five miles out in the country).
We do not regret stopping the work on the Earthship as it was a fantastic experience and we had a lot of fun doing what we did, but we should have started many years ago when we were younger!
Nevertheless, we are paying off the land at $2,500 extra per month ($3,000 total) and will have it paid off next summer. The bank will lend us the money for construction of the modular which has a price tag of around $215,000. After four months construction we will finance it as a VA loan or conventional depending on interest rates, PMI, etc. Will not need a down payment in either case as the VA does not require it, and as I understand it the ownership of the land is our equity in a conventional loan. During the four month construction period we will continue to pay $3,000 a month but with the land paid off we will use that time and money to pay off our truck loan which should have a balance of $7,000 at the beginning of the construction period, and have a bit left over for any closing costs.
With the truck paid off, we will only have the school loan which is $105 per month. I can qualify in six years to have the balance forgiven so will just pay on it until then.
So, with everything paid off except the school loan and new mortgage, we should be able to continue to pay $3,000 or a bit more and pay the modular off in six – six and a half years. (I’m not retiring for ten years and my wife as well). Or, we could pay the monthly mortgage amount and save the other $2200 - $2500 per month and have approximately $264,000 at the end of ten years. If we pay the modular off we would still have three years to save around $110,000 for retirement in addition to our 401ks expected to total $125,000. And we will have the highest amount of social security coming in due to our retirement age.
What do you think of this plan?? And which way would you go, pay off mortgage or put cash in savings?
0
Comments
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Sorry but I think you should find an American bulletin board to discuss your situation on.0
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I think you need to post this on an American board too. You are talking about things most of us in the UK do not have any experience of- land loan, school loans, truck loans and modular buildings are not common over here and I have no clue what a VA or a 401k is.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
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enthusiasticsaver wrote: »I think you need to post this on an American board too. You are talking about things most of us in the UK do not have any experience of- land loan, school loans, truck loans and modular buildings are not common over here and I have no clue what a VA or a 401k is.
Loans are loans - they work the same way in the US as they do here. You borrow money and pay it back with interest.
VA = Veterans associaton. Looks like they could be a potential loan provider for OP.
401k = pension plan.0 -
Hi
pay off mortgage and when this done do as much into 401K for your futureDebt is a symptom, solve the problem.0 -
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