Some of you might being wondering why the title of my last post on mortgage acceleration included the words “tunnel vision” at the end.  The reason is because I really approached that experiment with tunnel vision.  I only looked at two different scenarios, I touched upon a decent amount of other scenarios, over a 20 year time frame.  I don’t really think that does the experiment justice.

Today we are going to look at 3 different outcomes built off of the mortgage acceleration experiment.

1.  Sell or Refi

I’m going to consider these the same because both will result in the mortgage getting paid off in a lot shorter time than 20 years.  If Elle were to sell she would then have the option to rent or buy another house and there are just too many scenarios to cover of what could happen.  What we are going to do instead is just look at how this house would work in the first 7 years or so.

In order to take a look at this I made the following table.  I’m using the assumption that if she were to sell the house she would get $123,239 which is the value of the original mortgage.  Whether she gets more than that is arbitrary because it would be an equal addition to each.  Then I am subtracting the mortgage payoff amount in each scenario and determining how much money she would put in her pocket.  For the life insurance value I’m using the surrender value of the life insurance.  If anyone is wondering there are no surrender charges on this particular policy.  Here’s what it looks like:

What we see here is that liquidity is costing a little bit of money in the early years.  It looks like the differences peak around year 3.  It will cost you upwards of about $770 for extra liquidity if you were to sell your house in the early years of this experiment.  Since cost is only an issue in the absence of value, do you see the value in the extra liquidity?

2. 30 year view

This is a 30 year mortgage so truthfully we should take a 30 year perspective on this.  What we learned from the first experiment is that over a 20 year period it’s a bit of a coin flip.  What about a 30 year period?

This would mean that Elle would have to be okay still having a mortgage for an extra 10 years, although I wouldn’t consider her being in debt.  With her paying off her mortgage after 20 years it would free up $811.57 per month for her to invest for the next 10 years at least and let’s say she gets a 6% rate of return.  After the 10 years it becomes arbitrary.  So let’s look at the two scenarios:

This is where I see a lot of people get surprised.  People assume that since the mortgage is paid off and Elle would be putting away almost 5 times as much money that it has to be better to pay off the mortgage and then save the difference.  When you look at it over a 30 year period it’s because of the head start the money on the side gets.  You might find out that that 30-year mortgage can beat a 20 or even a 15-year mortgage.

I even left out taxes.  The whole life insurance policy allows your money to grow tax-deferred and when accessed properly it can be accesses tax-free.  The investment account that she starts after paying off her mortgage mostly likely will have some tax consequences.  I’ll leave the tax discussion for another time but things can get real complicated really quick.

3. Life Happens

Well today we saw that if Elle were to sell her house in the first few years (or refinance her mortgage) as most people tend to do then there is a small cost for having more liquidity.  We also saw yesterday that over a 20 year tunnel vision approach to mortgage acceleration that the whole life insurance policy isn’t going to be the best way to pay the mortgage off exactly at that 20 year point because of an access problem.  Then, today, we took a 30 year view at the issue and realized that the life insurance begins to have more benefits after 30 years vs 20 years.

The basis of the experiment is still, what if life happens? The only reason the concept of liquidity, and not giving too much money too quickly to the bank, comes up is because of flexibility.  Flexibility to adjust to the curveballs life throws our way.  I don’t know enough about Elle’s situation to know what is going to derail her personally but what about you?  What things are going to affect you in a way that you might need to go into the bank and ask for help?

• job loss
• injury
• sickness/illness
• extended leave from work
• disability (waiver of premium)
• death
• natural disaster

It could be a bunch of things or anything.  You could probably think of more or better things that apply to you and your situation.  My point is that life will happen.  That is a certainty.  If you don’t have some flexibility to do things and make changes when something does happen, then things could get real bad real fast.

Related posts:

1. Mortgage Acceleration Experiment – Tunnel Vision
2. Your Mortgage: When 30 beats 15
3. The Way The Banks Want You To Pay Your Mortgage.

I was reading Accelerating Our Mortgage Payments to Save Money and it included a lot of personal information on her mortgage situation.  It listed out all the numbers that went into her decision making.  I took this as an opportunity to try out an experiment for all you readings.  I e-mailed @Elle_CM to see if it would be okay with her and to get a few more vital pieces of information.  Being a fellow Yakezie I’m sure helped and she agreed.  I can’t wait to hear what you think.

Hypothesis

Elle can pay her mortgage off quicker and with more flexibility by putting the extra $150/month towards a whole life insurance policy rather than the principle of her mortgage.

The concept of saving the money outside of your mortgage is nothing new, I’m adding in the whole life insurance policy because of the liquidity, guarantees, death benefit and tax treatment of it.  In my last link rodeo, I referenced two great posts about saving instead of prepaying your mortgage.  I just disagree with using a retirement vehicle and using stocks/mutual funds.

Things Needed

I had all the information I needed in regards to her mortgage from the post itself.  I reached out to Elle to get her age (she told me she’s turning 29, I hope it’s okay if I right that) and information about any current life insurance that she has.

It turns out that she has a 30-year term life insurance policy for $150,000 for $239 per year and she is elite preferred (the best rate class, congratulations).  I couldn’t help but see what I thought of this premium since insurance has gotten so much cheaper.  I got a quick quote for her and it turns out that for $198 per year she could get a new 30-year term life insurance policy with a company that has a comdex rating of 92 and it would include waiver of premium.  That would save her over $1,200 over the length of the policy.

Process

Using a top rated (comdex of 99) mutual life insurance company, I would design a specially funded participating whole life insurance policy and project out (at current dividend rates) when the cash value in the policy would allow her to pay off the mortgage.

Her current loan is a 30 year fixed rate at 5% for $123,239.  This means her payments are $661.57 per month.  Elle’s plan is to pay an extra $150 per month to her mortgage.  This extra payment each month will allow her to pay her mortgage off in 20 years.

Findings

The whole life insurance policy I designed was set up with a total premium of $2,039 per year.  This is the $150 per month in extra payments plus the $239 per year for her current term life insurance policy.  I needed to make sure the death benefit was equal to her current policy, $150,000.  Then I tweaked a few things in the way the money goes into the policy and the type of whole life insurance policy that I used.

After the 20th year the whole life insurance policy is projected to have a surrender value of $63,663.  The mortgage payoff amount would be $61,972.

Benefits

Why would you want to use a whole life insurance policy to accelerate your mortgage?

• Liquidity – You can access the cash value of a life insurance policy the same day if you needed to.  If you put extra money to your mortgage, in order to try and get access to it you need to go ask your bank’s permission.  They may or may not okay you depending on why you need it (when you need it most the answer will probably be no) and then you have to qualify for it.  If there are fluctuations in the value of your home or in your financial situation, you may not qualify.
• Guarantees – The policy that I used is a participating whole life insurance policy.  This means a portion of the cash value is guaranteed and the policy will earn dividends.  The dividends are not guaranteed but the company I used has paid a dividend for over 100+ years straight.  In this policy after year 20 the guaranteed portion is $49,160.
• Death Benefit – Here I just wanted to make sure she would be in the same situation if not better.  Truthfully, if the amounts were larger this would have worked better because I hit minimum death benefits.  Because of those minimums there were higher internal costs than I had thought and wanted.
• Tax Treatment – The whole life insurance policy allows the cash value to grow tax deferred.  When done properly you are also able to access the cash value tax free.
• Mortgage Interest – This is an other benefit affected by the amounts we are dealing with.  It’s not a huge mortgage so the mortgage interest deductions probably wouldn’t be higher than the standard deduction though I didn’t ask Elle for more personal information.  The tax benefit would be extra money in the pocket.  With my concept, if Elle was getting the full mortgage deduction, she would pay an extra about $27,000 in interest.  In a 25% tax bracket that’s an extra $6,250 over the life of the loan.  There’s a lot you could do with this found money.
• Waiver of Premium – If you wanted to you could add the waiver of premium benefit to this policy which would mean that the premiums of your whole life insurance policy would continue to be paid in the event that you became disabled.  This could keep you on track to paying your mortgage off even if you were out of work.

Problems

There’s always problems right?  Well this might sound too good to be true and here’s the dilemma.

• Access – For life insurance policies, you can surrender up to the cost basis, in this case $40,780 and then you would be able to take a loan for the rest of the monies.  The whole life insurance policy that I used uses non-direct recognition so that the loan is collateralized rather than taken directly out of the cash value.  But you are only allowed to loan up to 90% of the cash value at one time.  90% of the approximately $23,000 left in the policy is about $20,700 which would be enough to pay off the mortgage.  Then you just have to figure out how to work with the loan on the policy.  This might be an alternative to getting another term life insurance policy later in life?
• Rate of Return – I hate talking about rates of return because it’s kind of arbitrary.  You can’t control it.  All you can do is try to position yourself for better rates of return by taking more risks.  I used an online calculator to calculate the rate of return on this policy to be 5.28% which is dependent upon the access mentioned above.  If the economy improves this rate could improve as well because the dividend rate within the policy would likely improve but it’s not going to get much higher.  It will never compete with stocks.
• Early Years – As we all have probably heard, the cash value will not equal what you pay in the early years of the policy.  For this particular whole life policy the cash value outpaces the cost basis in the 7th year.  Of course  with the alternative (money to your mortgage) you might not be able to access any of it.

Conclusion

This experiment is a bit of a coin flip for me.  My original hypothesis is about 50% right.  It turns out she can’t pay off her mortgage quicker but by having the money in a liquid side account (cash value life insurance) she would have a lot more flexibility.  My take away from this is that, as I already knew, it doesn’t work for everyone.  Hopefully, a few readers will understand the concept, rather than the numbers, and it will open their minds to another way of doing things that might be worth taking a look into.

For the record, for this to work in a more ideal situation you would need at least a $200,000 mortgage (to avoid some minimums I mentioned) and someone who itemizes their deductions.  Larger mortgage amounts, thus larger incomes will only make this concept work better from a tax standpoint.  In higher tax brackets, the whole life insurance policy would give added tax benefits rather than using a side account that could add a lot of tax headaches.

What do you think?

Maybe we need another volunteer to show what this might look like at higher dollar amounts?  If you want to learn more about the concept or how it works for you, contact me.

This story continues with the full picture of mortgage acceleration.

Related posts:

1. Mortgage Acceleration Experiment – Full Picture
2. Your Mortgage: When 30 beats 15

When you look around at people’s lives there seems to be 2 things that show up in most people’s financial worlds.  If they aren’t there directly it’s 2 things that the people are working towards.  Any guesses?  They are both marketed to widely by the largest financial companies in the US.  Give up?  The 2 things are your 401k and your house.

Chances are you read everywhere how you should be contributing as much as possible to your 401k.  Most of these messages are initiated by two groups, the financial companies and the government.  Then you add in that your whole life you are told that you need to own your own house.  It is instilled in us at such a young age that most people never even question it.  They work to get a mortgage, in order to get their own house.  I have to ask, is this a good thing?

As I was reading The Best Way to Avoid the Worst Financial Problems from @wisebread it reminded me of the 6 principles of the Evolution of Wealth.  Honestly, I have put aside the principles that I originally wrote up.  Why?  Well I really don’t have a reason, basically because life happens and I’ve tried to let this blog go where it goes.  It was the following paragraph in that post that jumped out at me:

I can give it to you in once sentence: Keep the cost structure of your household flexible. That is, arrange your life so that you can react to a fall in your income by reducing your expenses.

This screamed principle #1: the power of LUC.  Did I forget the k?  No.  LUC stands for liquidity, use and control.  These are the main features of flexibility.  Now let’s look at the 2 most popular financial tools that play a major role in everyone’s financial world.

How does a 401k provide flexibility?  Does it provide liquidity, use and control?

1. Liquidity – Fail!  When flexibility is most important, it is difficult to access the money that you put into a 401k.  There are penalties and fees associated with the access as well as probably having to jump through a few hoops.
2. Use – There’s only 1.  It’s saving for retirement.  The money is in your account doing 1 thing, or should I say hopefully doing 1 thing.  People loose track of the main purpose or maybe the only purpose of a 401k.  Saving for retirement.
3. Control – Do you even have any?  The government dictates when and how you can access the money.  The employer or plan administrator dictates the rules surrounding access and investments.  Might you just be a pawn?

How about your house?  Any flexibility there?

1. Liquidity - Is it easy to get money out of your house?  I guess you might be able to convince me if and only if you have a large equity line of credit established.  Oh, what did you say?  Banks are taking those away?  Guess this is a FAIL too.
2. Use - You could make an argument for some use here.  It provides shelter.  It provides some tax benefits.  It might provide some rate or return (emphasis on maybe).
3. Control - This should be a good one…who controls your house?  Let’s see, you need to ask permission and prove that you should be able to pay just to get a mortgage.  Then if something bad happens, just when you need there help the most, the bank says ‘NO’.  Doesn’t sound like much control to me.

Might the 2 most widely used financial tools also be the worst based on Principle #1 and wisebread.com‘s “Avoiding the Worst Financial Problems”?

Related posts:

1. Max Out Your 401k Math
2. 401k, God or Devil?
3. 6 Reasons Not to Max Your 401k

I wanted to share with you a lesson I learned from Douglas Andrew and his writings.  For anyone that has read his books before Douglas is a little over the top but as with most financial books there are at least some great pieces to take out of it.  For anyone who hasn’t read his books he talks about utilizing the equity in your house versus paying off your house in full.  If you are interested in learning more about his books a great one to start with is The Last Chance Millionaire.  I will warn you that it is definitely extreme and might be a little over the top for you.

To get back to the post…Probably the thing that sticks with me the most when reading Douglas Andrew’s book is his visual representation of separating the equity from your home.  Now I’m going to attempt to paraphrase his example in my own worlds and hope not to butcher it too much.

In one hand you have a pitcher with water in it.  This will represent you personal accounts and the water being your cash.  In the other hand, you have an empty glass.  The glass is your house.  Let’s say your house is worth $100,000 and you have $100,000 in water (cash) in the pitcher.  This means that your total assets are $200,000.

Then you pour all your water (cash) into your glass (home).  Now the pitcher is empty but the glass is full of water.  You’ve reduced your assets by $100,000 and eliminated your liability (mortgage).  So your net worth is still $100,000 and you have a full glass of water.

Now let’s assume your house appreciates by 5% next year.  It’s now worth $105,000.  If you water (cash) is still in your glass (home) that means that your assets are $105,000 and your net worth is $105,000.  Now let’s pour the water back into your pitcher (personal account).  You still have your house worth $105,000.  We brought back the $100,000 liability.  How did your cash do?  Did it earn 5% as well?  Then that asset is also worth $105,000.  This is what it looks like now:

The point being that when all your cash is in your house you only have one asset working for you versus two.  The rate of return on the equity in your home is always zero.  The equity isn’t an asset.  People want to talk about it and count on having it down the road and maybe even plan on using it.  All it is, is imaginary.  If you want to make it real at some point you most likely go to a bank and ask the bank’s permission and prove to the bank that you should be allowed to access your equity.  Is it really yours?

Follow my feed, follow me on twitter and e-mail me your thoughts.

Related posts:

1. Parents know best?
2. Bob or Jim?

In the first part of Bob or Jim? we looked at the similarities between the two neighbors.  Then we saw how their goals differed slightly.  Bob wanted to pay of his house as quickly as possible and Jim wanted to save money instead.  Finally, we looked at it from the bank’s perspective and said which would the bank prefer.

In Bob or Jim Part II we looked more closely at the numbers.  We wanted to see how far apart Bob and Jim would be today.  It turns out not very far apart.   They only differed by about $12,500 on a balance sheet.  The big difference was the ability to access their money and the control they had over it.

Now it’s time for the future.  To recap Bob and Jim both bought their houses at the age of 35 in 19997.  They then refinanced in 2003 to lower their interest rates.  We also learned that today, Bob would have about $80,000 left to pay on his mortgage.  Jim would still owe $193,000 on his mortgage, except that Jim would have about $100,500 in his side account so this would leave his balance sheet at -$92,500.  Not a huge difference but definitely a difference.

On his current pace, Bob is set to pay off his mortgage in full in 2013.  After that point he might feel a little bit behind with this savings.  However, he could begin to put aside the $1423 mortgage payment plus the extra $580 he was paying.  So he should be able to save a total of $2,003 per month.  That’s $24,036 per year.  That won’t really fit into an IRA or maybe even a 401k, of course hopefully the limits have gone up a lot by then though right?

Then there is Jim.  Jim who refinanced in 2003 isn’t set to pay his mortgage off until 2033.  However, we do need to look a the side account.  In 2013, when Bob is set to finish paying off his mortgage, Jim will have about $164,000 in his side account.  He will owe about $172,000 left on his mortgage.  Not quite in the positive yet, within the next year that crossover will happen.  So doing things Jim’s way will result in paying your mortgage off about 6 months later than Bob.  Not too bad huh?

We’re still left with the almighty question, where will they both be in 2033?  Jim will have just paid off his mortgage but we need to look at his side account.  His side account will have approximately $815,144.  So where will Bob be?  Using the same side account as Jim, Bob will have approximately $754,183.  So the second to last time I’ll ask, who would you rather be, Bob or Jim?

Don’t forget scenario B already.  Jim took out the extra $100,000 during his refi.  Let’s see where this would put him.  Jim will then have approximately $828,411.  So you see it leaves him in a little better situation.  Then we take into account more accessible cash, flexibility and what else?  Oh yeah, more interest payments.  Wait you don’t want to pay more interest?  Well the numbers say you are better off paying more interest and we haven’t even talked about any deductions on your taxes you might get from paying more interest.  So we haven’t even accounted for more money in your pocket.  Last time I’ll ask I swear.  Who would you rather be Bob or Jim?  We both know it’s not all about the math so I can’t wait to read your responses.

Don’t forget to subscribe to my feed and follow me on twitter.

Related posts:

1. Bob or Jim? Part II
2. Bob or Jim?
3. Your Mortgage: When 30 beats 15

Yesterday I asked the question, Bob or Jim?

Make sure you read that post so you can be up to speed on where we are.  I’ll give you a short synopsis.  So Bob and Jim are neighbors that moved in together in 1997.  They both paid the same amount for their house($250,000) and both had 10% down so ended up with the same mortgage($225,000, 30-year fixed rate at 8%).  The difference is that Bob wants to pay down his house and Jim wants to build his savings.  They each have an extra $350 per month to do something with.  Jim starts saving all of it.

So fast forward to 2008.  To continue where we left off Bob and Jim were both victims of the economy.  Both out of work for an extended period of time.  Things were getting worse.  Tightening budgets and they couldn’t pay their mortgages.  If you want to make it even worse you can say they are both in a car accident while driving back from the unemployment office.  Just as their unemployment ran out, they where broadsided at a light.  Back injuries and their laid up for a long while.  Neither had disability because they lost their insurance when they lost their job.  (Most people don’t realize a proper individual disability policy will pay out even if you lose your job)

So what are they to do?  Bob thinks how he is good friends with Paul down at the bank who he got his original mortgage with and his refinance.  He’s built up all this equity.  He can tap that in the meantime and it will help him until the economy recovers or his back gets better.  So he goes to see Paul.  Paul can’t help though.  The bank has tightened lending and Bob had no income.  He can’t prove to the bank that he can pay that loan back.  The bank says no.  All Bob’s money is in the house.

Jim, however, had been saving money outside of his house.  Yes he owed more on his mortgage but he had built up some money that he could access.  It turns out that he had about $100,500 saved in his side account.  He could access this money until he could get back on his feet.  Or maybe the bank would at least talk with him to work something out since he had some assets to offset his liabilities.

In fact, Jim wasn’t too bad off.  He had a mortgage for $193,000 but a savings of $100,500 so his balance sheet would show him $92,500 in debt.  If your remember Bob still owed $80,000 on his mortgage with no savings.  Who would you rather be?  Which is in a better situation? 

How about scenario B…Jim takes out an extra $100,000 when he does his refi in 2003.  The he would have a mortgage of $284,000 but savings of about $200,000.  Does this change your decision in the first part?  Why does it change things?

To Be Continued…

I bet you can’t wait for Bob or Jim? The Final Chapter

Related posts:

1. Bob or Jim? The Final Chapter
2. Bob or Jim?
3. Your Mortgage: When 30 beats 15

It was 12 years ago that Bob met Jim, they were both 35 at the time.  See back in 1997 they just happened to be moving into their new houses on the same day.  It turns out they were moving in right next door to each other.  They had each just bought a brand new house in a fairly new neighborhood.  To tell you the truth it was one of those neighborhoods where all the houses kind of looked a like; same design, same amenities.

They both had recently been married and were raising their families in their new house.  As they got to know each other and their families became friends it turned out that they both paid $250,000 for their houses.  They both put 10% down and then started paying away.  The difference is that Bob wanted to pay his house off as soon as possible and Jim wanted to save money, inside and outside of retirement.

Well when they had moved in they were both sales people.  They were both making $65,000 a year which was good money at that time and things were good.  They were both contributing 6% to their 401ks respectively.  Another difference arose.  Since Jim wanted to build his savings he was saving $350 a month outside of his 401k.  Bob on the other hand, wanted to pay his house off.  So he paid an extra $350 per month on his mortgage.

In 2003, mortgage rates dropped.  Both Bob and Jim headed to the bank.  They were paying 8% interest on their original 30-year loans so this could save them a lot of money.  Jim, who had not been paying extra on his mortgage, still owed $212,000 but by cutting his interest rate to 5.5% he was able to cut his payment from $1,651 per month to $1,204 freeing up an extra $450 per month for him to save.  Bob had been paying extra to his mortgage and only owed $180,000.  He went with a 15 year mortgage at 5%.  This cut his payment from $1,651 to $1,425 and then put the $230 savings and put that towards the mortgage as well.

Now it’s 2008.  Both Bob and Jim advanced in their careers and are now sales managers making six figures per year.  Unfortunately, they both got laid off and they couldn’t make their mortgage payments.  At this point Bob only owes $80,000 on his mortgage while Jim owes $193,000.  The bank is knocking on their door.  Bob says ‘I have all this equity’ and goes to refinance.  The bank says you don’t have a job so the bank says no.

Let’s imagine they are the same exact financial situation.  No job, horrible economy, lending is tightening.  Things are going bad fast and getting worse.  Remember last year?  Which house will the bank foreclose on first?  Bob’s owing $80,000 on a $400,000 house or Jim’s owing $193,000 on a $400,000 house?  Banks are businesses remember out to make money.  Which can they make money off of the quickest?  What if we went one step further and said Jim took $100,000 out of the home when he did the refi in 2003.  Now he owes $290,000.  Does that change things? 

To Be Continued…

Continuing your reading with Bob or Jim? Part II

Or skip ahead to Bob or Jim? The Final Chapter

Related posts:

1. Bob or Jim? Part II
2. Bob or Jim? The Final Chapter
3. Saving $71,000 in mortgage interest continued…

I’ve heard a lot of talk lately about paying off your mortgage.  In order to do so earlier, some people talk about taking out a 15-year mortgage instead of the more traditional 30-year mortgage.  By using a 15-year mortgage your home is paid off 15 years sooner (obviously) as well as you pay less interest and usually at a lower interest rate.  Sounds like a good deal right?  So if you have the cash flow a 15-year mortgage is the way to go, right?  Wrong.  Well maybe let’s leave it at it depends for now and here’s why.

Let’s say you have a $300,000 mortgage.  I looked up the rates on bankrate.com.  I found that current 30-year mortgage rates are 5.16% and 15-year mortgage rates are 4.67%.  Using these rates the monthly payments are $1,639.93 for the 30-year and $2,321.13 for the 15-year.  This leaves a difference of $681.20.

Scenario A

You take out a 30-year mortgage for $300,000 at 5.16% with a monthly payment of $1639.93 and save an extra $681.20 per month.  This savings over 30 years (360 months) grows to $684, 276 with a 6% rate of return.

Scenario B

You take out a 15-year mortgage for $300,000 at 4.67% with a monthly payment of $2321.13.  Once you pay the mortgage off you continue to save $2321.13 per month for the subsequent 15 years.  This savings would grow to $675,028 with a 6% rate of return.

I would say that scenario A beats scenario B.  If not just for having an extra $9,000+, how about for having more liquidity if something were to happen.  Or maybe because of paying more interest you would actually have more tax deductions and would technically pay less taxes over the 30 years.  How about that?

Okay well let’s be fair what happens with different returns.  I mean it is the power of compounding that gives scenario A the edge.  The money there is compounded over a longer period of time.  Well at 8%, scenario A: $1,015,233 and scenario B: $803,200.  I guess that helps make my point.  Let’s go the opposite direction with a return of 5%, scenario A: $566,935 and scenario B: $620,412.

Conclusion

For those of you with or thinking of a 30-year mortgage, I think this might just make you feel better about it.  It can work better for you by providing more tax deductions, more liquidity and with solid returns you will be in a better financial position in the end.

For those of you thinking about a 15-year mortgage, can you get a 6% rate of return or better?  That’s a big question.

Yes, I’ve probably oversimplified this a bit but hopefully it makes you think.  That’s the point right?

Related posts:

1. Mortgage Acceleration Experiment – Full Picture
2. Saving $71,000 in mortgage interest continued…
3. The Way The Banks Want You To Pay Your Mortgage.