Mortgage Killer Accelerator

Strategy 56 of 107

Raise insurance deductibles once a reserve covers them

Depends on people or program rulesFrom a lower cost of the same debt

What it is

First, set aside cash equal to the new home and auto deductibles.

Steps

  1. First, set aside cash equal to the new home and auto deductibles.
  2. Then raise the deductibles; the premiums drop.
  3. Send the premium savings to principal.

Repeat: Each renewal.

Measure: Monthly premium saved.

Try it in the calculator Enter its amount in "Monthly non-income amount to principal". Add a payoff goal of 5 years to see what is still needed.

Risks

  • A claim costs more out of pocket.
  • Do not do this without the reserve in place.

Who it fits

Average household, Married couples, Single, Higher earners, Newlyweds

Needs

Any homeowner with a mortgage.

How predictable

Depends on people or program rules (tenants, family, IRS records, lenders)

A worked example (hypothetical, not guaranteed)

Picture a hypothetical household (average household). They owe $300,000 at 6.5% with 30 years left. The required payment is $1,896 a month, and that payment, which comes from income, never changes in this example.

They follow the steps: first, set aside cash equal to the new home and auto deductibles.

Suppose it brings $600 a month on principal from this strategy, not from the paycheck. The loan would be paid off in 16 years 3 months instead of 30 years, saving about $196,219 in interest. To finish in five years, they would still need about $3,374 a month more from other strategies. That is why the five-year sequences stack several at once.

The amount above is chosen only to show the arithmetic. It is not an estimate of what this strategy will produce for anyone. Put real numbers from the fact finder into the calculator.

Sources and more information

Where to get help

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