How I Ditched My Private Mortgage Insurance (PMI)

When I purchased my first home 12 years ago, I had no idea what I was doing.  I saw the house on a Tuesday, put an offer in on a Sunday, and the road to homeownership began 5 days after my 24th birthday. Because I wasn’t really planning on buying a house at that time, I didn’t have a sinking fund for a house down payment. I simply had my regular savings funded my money I earned in my first real job out of college. Oh, and did I mention that all of this happened in the middle of the recession?

For a little financial transparency on my homebuying process, I took out a 30 year FHA loan on a foreclosed home that needed many repairs and renovations. My loan was equal to the purchase price, plus a little extra for repairs, minus my less than 20% down payment.

Because I purchased a home with less than 20% of the home’s purchase price, I was required by my lender to pay private mortgage insurance (PMI) as a condition of my mortgage loan. According to article 5 Types of Mortgage PMI, “when a borrower makes a down payment of less than 20% of the property’s value, the mortgage’s loan-to-value (LTV) ratio is over 80% (the higher the LTV ratio, the higher the risk profile of the mortgage for the lender)”. PMI was create to protect lenders in case higher risk homeowners default on the loan. While it sucks to pay extra PMI on top of my monthly mortgage payment, this condition did allow me to become a homeowner even though I could afford the 20% at the time.

After 12 years of paying private mortgage insurance, I called my lender today to get it cancelled. I did not need a script that some people try to sell online. I simply called on a whim and asked to cancel my PMI. To be honest, I was not expecting it to be cancelled but rather I was expecting them to tell me I had to get to a certain balance to qualify. I personally believe what helped sway the decision was the fact the value in my home, like many other homes in the US right now. Since the equity value increased it lowered my mortgage’s loan-to-value (LTV) ration and I am now able to save a little more each month on the mortgage.


Other Ways to Avoid PMI

Save 20% Before You Buy a House. It is easy for people in the personal finance community to dish out this piece of advice to potential homebuyers but depending on the circumstances, saving 20% on a home price can be difficult. The Statista Research Department explains that “after plateauing between 2017 and 2019, house prices in the United States saw an increase in 2020 and 2021. The average sales price of a new home in 2020 was 389,400 U.S. dollars and in 2021, it reached 408,800 U.S. dollars”. To purchase a house for $408,800 with you 20% down payment, you would need have $81,760 in liquid funds available.

Are You A Veteran or Active Military? One of the many benefits of a VA loan is that you are not required to pay PMI. This is beneficial because you can buy a home now without having to first save for a down payment.

Getting a Small Loan to Cover the Down Payment A homebuyer may be able to avoid PMI by piggybacking a smaller loan to cover the down payment on top of the primary mortgage. I personally wouldn’t recommend this option, but again, others in the personal finance community do.

The Ultimate Guide to Making Your Money Goals S.M.A.R.T.E.R

When it comes to goal-setting, the S.M.A.R.T. goal system reigns supreme in its methodology. According to this approach, goals should be specific, measurable, attainable, realistic, and timely. To make them S.M.A.R.T.E.R., goals must also be able to be evaluated and rewarded or readjusted.

This year, the hubby and I made the joint decision to focus our financial efforts on making a dent in the balance on his car. In theory, this is a good goal but because it’s vague AF without a clear timeline, among other things, it’s not a S.M.A.R.T. goal. So back to the drawing board we went.

How to Make Your Money Goals S.M.A.R.T.E.R by top Atlanta personal finance blogger, Danielle YB Vason of She Makes Cents

How To Make Your Goals More Specific

Ask yourself these questions: What do you want to achieve?  Why do you want to achieve it?  Who needs to be on board for this goal to be successful? If your written goal doesn’t address these questions, then revise.

We needed to improve our goal because we didn’t clarify what a “dent” represented numerically.  Was a dent $1,000.00, $5,000.00, $10,000 or more?  I realized quickly that we were not on the same page.  Making a dent in the remaining balance for his car became a more specific goal once we decided we wanted to get our balance down from $17,601.01 to $5,000.00 or less by the last day of this year.  To be successful at this money goal, my hubby and I would need to combine forces because our “dent” represented a $12,601.00 reduction.  This goal is important to us because the sooner this debt is eliminated, the sooner we will be debt-free (not including mortgages), we can move on to Dave Ramsey’s Baby Step 3, and focus on increasing our savings and sinking fund contributions.

Giving this goal a deadline of the last day of the year OR a balance of $5,000.00, whichever comes first, makes it measurable and timely.  It checks off both prerequisites because it identifies how and when we would consider this goal accomplished.

Are Your Goals Realistic & Attainable?

Setting unrealistic goals is a set up for failure and defeat- both of which can kill your spirit and drive to pursue future goals.  This is why if you follow Dave Ramsey’s Baby Steps the first step is to save only $1,000 because the gratification of reaching your first goal inspires you to move on to the second.  

Setting goals that are too easy can also be a set up for failure because an easy goal requires lower expelled energy and effort, which lowers motivation.  Finding the right balance is like Goldielock’s breaking and entering to find the perfect porridge.  Your goal has to be just right…

In her book, Boss Women Pray, by Kachelle Kelly, she asserts that “a goal can be both lofty and practical”.  When I read that, I immediately thought about how the idea of paying off my student loans was a lofty goal but also attainable.  The success in that was breaking the BIG GOAL down into smaller goals with specific benchmarks until the BIG GOAL no longer seemed so…well, big.

For the case of our $12,601.00 goal, it is a bit lofty in the sense that it requires us to expel higher energy, intention, discipline, and sacrifice for it to be achievable. Once we set down and figured out how much we could afford to put into this goal right away and then figured out how much we would need to save per quarter to stay on track, our joint goal also became practical. I even went so far as to break the goal down on a micro level to see how much we would need to save per month and per week to stay on track.  Seeing those numbers and that information all at once, made the goal that could seem too lofty become feasible with the right amount of effort and action.

Even though paying off $12,601 on the car loan doesn’t eliminate the debt completely, it is relevant because it does link to the larger objective of ultimately paying the car off in full.  Once we reach our goal this year, we will only be $5,000.00 away from a debt free life (not including mortgages). 

Going the Extra Step from S.M.A.R.T. Goals to S.M.A.R.T.E.R. Goals

The difference between the S.M.A.R.T. and S.M.A.R.T.E.R. goals acronym is the “E” and the “R”, which represents evaluated and rewarded or readjusted.  In your goal-setting journey, it is imperative that you evaluate your goals on a regular basis to make sure you are on track.  This is why the #SMCmoneytribe check-ins occur weekly (join the SMC Money Tribe on Facebook). If you find yourself off track and constantly dodging obstacles, then it is time to revisit the goal, tweak where it is necessary, and get back on the goal-setting journey.   If, however, your regular check-ins reveal that you are on track for the timeline for your goal execution, take a moment and celebrate that!  Taking the time to acknowledge where you started versus how it’s going, not only honors your hard work, but it may also inspire someone else in the process.


GRAB YOUR S.M.A.R.T.E.R. MONEY GOALS PRINTABLE?

Often women are left to fend for themselves with regards to money matters. As an active member of the #SMCmoneytribe, you will no longer have to walk the path toward financial freedom and a fabulous lifestyle alone. Should you get off track, you can always catch up or start over, we just ask that you don’t give up on this challenge, your goals, or yourself. YOU can do it and you have an entire TRIBE of people cheering you on.

5 Things You Should Do Before Starting the SMC Money Challenge

It is important to challenge yourself every now and then. This helps you push beyond what you have previously done before. The more you challenge yourself and succeed, the greater your confidence in your ability to do it again next time. Good habits form and eventually they become lifestyle changes. When you accept a financial challenge, like the SMC Money Challenge, it doesn’t just help you grow your skills and knowledge, it helps you grow your belief that you can. The 2021 SMC Money Challenge begins January 1st in the #SMCmoneytribe FB group but before you start, here are some of my favorite ways I kickstart my money goals at the beginning of each year.

the beginner’s guide to hacking a money challenge

  1. Download & Print your money tracker for the year. Sometimes it is easy to forget the progress you are making.  In the SMC Money Challenge, there will be weeks where the progress seems minuscule and other times where the progression of better money habits and actions is obvious.  Using the tracker will help remind you at the end of the 52 weeks just how far you’ve come.
  2. Pick a S.M.A.R.T.E.R money goal.  Are you paying off debt, saving for a rainy day, putting money in a sinking fund for a specific purchase, or investing? Now is the time to make sure your goal(s) is clear and attainable.  Is it specific, measurable, achievable, relevant, time-bound, evaluate, and reviewed?
  3. Tell Your Money Where to Go.   If you are using the challenge to pay off debt, I recommend that you make a principal payment toward your debt instead of putting that money in a savings account or sinking fund (that is one of my easiest tricks for paying off my student loans 11 years ahead of schedule).  However, if you are using the money you save in this challenge for sinking funds or boosting your emergency fund, I would consider opening a high-yield savings account and transferring your challenge money into it each week instead. 
  4. Set a Reminder.  Add a reminder to your phone or calendar to remind you to check-in.  By saving something every week, you get to practice your savings habit over and over again.  Remember, it can take anywhere from 18 to 254 days for a person to form a new habit and an average of 66 days for a new behavior to become automatic.  YOU WILL NEED A REMINDER if you want to make it through ALL 52 weeks.
  5. Invite a Friend. There is nothing better than getting support and supporting people you know, IRL (in real life). Iron sharpens iron. Glow up together with your friends to become real #squadgoals.


ARE YOU READY TO JUMPSTART YOUR MONEY GOALS?

Often women are left to fend for themselves with regards to money matters. As an active member of the #SMCmoneytribe, you will no longer have to walk the path toward financial freedom and a fabulous lifestyle alone. Should you get off track, you can always catch up or start over, we just ask that you don’t give up on this challenge, your goals, or yourself. YOU can do it and you have an entire TRIBE of people cheering you on!

How I Reached My 2020 Money Goal Despite A Financial Pandemic

At the beginning of 2020, I set a goal to get my mortgage balance on our rental property under $40,000. I wrote the goal down on a post-it, shared it in the #SMCMoneyTribe group on Facebook, and dedicated one month of my SMC Money Challenge savings toward a large principal payment on my mortgage. Four weeks later, the Coronavirus pandemic hit followed by a financial pandemic and I forgot all about my BIG GOAL. At that point in 2020, my focus was trying to find toilet paper and make sure my family was fed.

Top Atlanta financial blogger, Danielle YB Vason, shares how she reached her 2020 money goal despite the financial pandemic

I started the year with “discipline” as my power word but “pivoting” became more appropriate. I had to pivot when some of my income sources became unreliable and my 2020 money goal got further and further out of focus. Then one day, after months of quarantining, I found my little post-it displaying my BIG GOAL. I took a moment and thought about how it would feel to have my mortgage look like most people’s new car payment. I thought about the long term money goals that my husband and I have for our family of three (plus 2 fur babies). Then…I thought about what it would feel like if it was paid off completely. Could I reach my goal by getting my mortgage under $40,000.00 this year? I wasn’t sure, but I sure as hell was going to try.

Since I wasn’t planning on traveling anytime soon due to the Coronavirus, I pivoted and used my travel sinking fund to make a principal payment in addition to the monthly mortgage & escrow payments. Then anytime I had extra money from a sinking fund, I would send another payment. One principle payment was as low as $15.00 but I didn’t care because that meant I was $15.00 closer to my goal. On December 11, 2020, I sent my last principal payment of $80.00 and with that payment, I hit my BIG MONEY GOAL for 2020. My current mortgage balance is $39,977.20. I am so proud of myself and I can’t wait to see what 2021 brings.

I walked into 2020 with excitement and hope. I plan to leave it with excitement that I survived and gratitude for both the big and small wins of this year.


WANT TO REACH YOUR 2021 GOALS?

Invest in your money and lifestyle goals with the #SMCMoneyTribe by following along. You will be informed, inspired, and empowered to use your “cents” to live the #fablife.