I hope at this point it is not a secret that Lanny and I are doing whatever it takes and side-hustling our tail off to earn every extra dollar we can. In fact, I am earning some Swagbucks as I am writing this article as I have a video running in the background. We always say that every dollar counts and every dollar makes a difference in our pursuit of financial freedom. I’ve been thinking long and hard about that phrase recently, especially as I spend hours staring at a computer watching spreadsheets open at work or I walk to the water cooler for a needed break. After a conversation with Lanny at the water coolers one of those days, something he said caused a light bulb to suddenly turn on and I cannot wait to starting using my side hustle income in a different manner, to paydown my mortgage.
Last year, I called myself out and made a pledge to starting paying off my debt. After a new car, new house, and our outstanding obligations, my wife and I saw a lot of dollars leaving our bank account on a monthly basis to pay “interest” to our friendly “bank.” Quite frankly, it is not a lot of fun and I could think of plenty of better uses of our capital. Invest in? Donate to a charity? You get the point. I’m getting tired of paying down debt!
Each month, Lanny and I publish a Side Hustle Report where we document our side hustling adventures and tally the amount of extra income we earned in the previous month. I wear the amount of extra income with a sense of pride and I love the fact that we are both able to squeeze a few extra dollars from websites on a monthly basis. Last month, I was able to earn $36.62 in extra income while working a ton of hours at work. It may not seem like a lot, but it was a blast earning every one of those pennies.
What was this awesome conversation I had with Lanny at the water cooler? We were talking about our favorite question…should we paydown our mortgages or invest? Ah, the question we have been asking ourselves and all of you for years on this website. I’ve been wanting to formalize a plan to pay down my mortgage early. But what is the right amount in a rising interest rate environment with a fixed rate mortgage at 3.89%? That question has caused me a lot of grief over the past few months as I work to finalize a plan and get it into motion.
My monthly mortgage payment is $1,041 and I’ve come to the conclusion that I want to make at least one extra mortgage payment each year. So instead of simply transferring the money from my savings account and using the funds to pay down the mortgage, why not use my monthly side hustle money to pay down my mortgage? When Lanny said that phrase to me, that was when the light switch finally turned on. That’s the perfect use of all this extra capital that I am earning each month. From this point forward, I am committing to use EVERY DOLLAR I earn from all my side hustles to pay down my mortgage. Each month, I am going to make the additional payment based on the results posted in my article!
The results are already starting to show. Using this theory through the beginning of March, I had made $223 in extra mortgage payments based on the results of side hustles. In my amortization spreadsheet, this has shaved off ~.7 months of payments on my 360 month mortgage, saving me ~$730 in future payments to the bank down the road. In fact, if I finish the year applying at least 1 extra payment on my mortgage, I would shave off at least 3 future months of mortgage payments. That is a nice bang for the buck using extra capital that I earned on the side.
There are two things that I like about this approach. First, it is motivating as heck and encourages me to continue to push myself to earn every extra dollar that I can. Each penny will reduce my outstanding debt obligation and bring me that much closer to financial freedom and eliminating a HUGE monthly cash outflow. Why wouldn’t I spend all of my free time trying to earn as much extra cash as I can? Second, this allows me to continue to use my regular capital to pursue my investing goals, such as maximizing our 401k and growing my dividend income as much as possible without have to re-allocate regular earnings to pay down my debt.
The stakes have been raised and I’m really looking forward to this new challenge and motivation. What are your thoughts about this plan? Do you do something similar? If not, what is your mortgage paydown plan? How do you use your side hustle income?