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Reaching that Magic Number

Most of us who save our pennies and hoard our dollars are saving with some particular goal or number in mind. Sometimes we’re saving for something small like a special dinner out with friends, a new dress, or new rugs for the dining room. Sometimes we strive for something larger like a kitchen renovation, new photography equipment, or a two-week vacation. Outside of these small and medium sized goals sits that one humongous goal that feels like it’s never within reach.

Ever since I bought my first house I dreamed of saving enough money to pay off my mortgage. I don’t actually intend to pay off my mortgage in one fell swoop but I love the idea of acquiring enough money to cover our debts and to date our mortgages are the only debts we hold. When we bought our second home my goal expanded by quite a large margin, as our second home was more than double the price of our first one.

At some point quite awhile back we hit the first goal and accumulated enough cash and securities to cover the first mortgage. With the first mortgage “covered” I started taking a peek at the bank accounts to see just how far we have to go on the second mortgage. My off-the-cuff calculations are similar to calculating net worth. I compare our debts against our assets and figure out how far we have to go to get to the plus side. The difference between my numbers and typical net worth calculations is the absence of retirement savings or home equity. My true goal is to have enough cash and assets in non-retirement accounts. Of course, even those numbers are invalid considering the taxes I’d have to pay on capital gains.

We still have a very long way to go to meet the magic number that would cover our second mortgage, but the good news is that every month our mortgages shrink ever so slightly. We hold 15 year mortgages on both our homes, so while our savings grows our mortgage falls and sooner or later the two will meet in the middle.