The Train Hit

In my next article I wrote for Moneyville (which I don’t believe has been published yet), I comment on the fact that right after you pay off the mortgage there is no immediate impact to your life.  The reality is you still need to go to work the next day and nothing changes until you start seeing your paycheque without those big payments coming out.  Well that train has finally hit.

Yesterday was my first cheque without the mortgage and it finally has hit how very little of that money I need to pay my bills for the next month.  Actually it works out that I can get by with just one of my two cheques every month to pay the bills.  Yes that means we can now save over 50% of our take home pay. Life is good!

So I’ve already submitted some paperwork to do an extra lump sum contribution to my pension plan which should consume nearly all of my next paycheque.  You might be wondering why I would bother with making an extra contribution to a plan where I can’t touch the money until I turn 50.  Well I found out that really isn’t entirely true.  While about 2/3 of the money is truly locked in, the remaining 1/3 is considered voluntary contributions and I can transfer those to an RRSP when I leave the company without the age restriction.  Also my plan is so bloody big the fees with it come out to be comparable to ETF fees (aka dirt cheap).

Overall I’m off to work on a Friday with a big smile on my face.  Have you ever had that issue with delayed reaction to a big change in your life?  How long did it take to sink in for you?

4 thoughts on “The Train Hit”

  1. After I paid off my mortgage in May, 1998, I saw my personal savings rate skyrocket. I was able to use parts of both biweekly paychecks to add to my investments, the equivalent of living off one of them.

    My personal savings rate, already between 30% and 40%, jumped to between 50% and 60% for the next 3 years. After that, in 2001, I switched from working full-time to part-time, unafraid of reducing my pay by about 40% because I would still have more than enough coming in to cover my pretty low expenses. In fact, my personal savings rate remained around 50% (mainly because of the tax reduction and higher investment income from all the added savings).

    Because I was now focusing on an early retirement, I did not make any big changes to my 401(k) contributions, only a little bit more from my pretax pay to offset the reduction in the company match (after I switched to part-time).

  2. Lately I’ve been able to put a lot more towards saving and investing as well. I’m finally starting to contribute to our TFSAs and should be able to max them out pretty quickly at this rate.

    Having the extra cash flow certainly makes you feel good along with the feeling of not owing anybody anything. Still, that won’t be enough to stop me from getting another mortgage when the time is right.

  3. I have a big smile on my face because the dividends on my investments pay for most of my mortgage, once my mortgage is covered by dividends I free up alot more cashflow to invest, once my mortgage is paid off I will have more than enough to retire, lifesgood

  4. Not long after I paid off my mortgage, I had to start paying $1000/month child support starting in 1990. Well that was good timing on my part. heh.

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