Trim The Fat Tuesday: The Update

Though our Trim the Fat Tuesday challenge is officially history, we're still reaping the benefits of all those savings. Though we're longer actively seeking budget cuts, we've taken our total savings from the project and added it to our monthly mortgage payment. This has very quickly brought our equity in the house up to about 25%, which is well over the amount needed to ditch our PMI (that extra amount you have to pay for on a Fannie Mae loan if you have less than a 20% down payment).

Our PMI was $400 per month (!!!!), so we were totally psyched to get rid of it.

Too bad Wells Fargo (henceforth known as the Evil Empire) wasn't as eager. They can make us pay it for five years, even if we have built up our equity. Since that's a ridiculous waste of money, we hightailed it to our friendly local lender, a place not unlike the Bailey Building and Loan:

This photo is from a great article about the Institution for Savings on boston.com

We were able to refinance with the same rate and get a 20-year loan instead of a 30-year. 

That's right: all those little cuts to our budget just shaved ten years off of our mortgage. It also saves us about $72,000 in interest over the life of the loan and $15,000 of PMI. Our monthly payment is also $100 less, so that's even more to throw onto the early pay-off savings pile.

That doesn't even include the extra money from our Trim the Fat Tuesday savings that we'll still be adding to our mortgage payment every month. Once that's factored in, we should be able to pay this off in more like eight years instead of 20. 

So even though our official savings project is over, it pays to keep up with where your money is going. If we had blindly gone along with paying that extra PMI instead of refinancing, we would have wasted a lot of money. The snowball effect of Trim the Fat Tuesday just keeps rolling along!

Savings per month: $100

 Total savings per month to date: $1828.50 (this month's savings plus the savings already in place from previous months!)

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