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Below I’ve included some quick spreadsheet calculation:

Working a 2nd Job weeks 52 hr/week 40 pay rate 7.50 15,600 Money Not Spend on a Mortgage month 1,300 months/yr 12 15,600

In the spreadsheet above, I paid off my previous $15,600 a year mortgage! That’s works out to be $1,300 extra dollars a month that’s available for me to invest, spend, burn, whatever… So if you look at my calculations for working full time at $7.50 per hours, it seems to be equivalent, but it’s not… The thing is that the money from the working full-time at $7.50 is before tax is taken out versus my mortgage saving (which was paid with after tax money, which is commonly called discretionary income).

So based on my own personal scenario, I’m really averaging the equivalent of working a second job at $10.50/hr (see calculation below), but obviously without working… While this isn’t obvious at first, if you consider all of the various forms of taxes taken out of your paycheck, it makes sense. So the calculations below is based on the number that I would have to make (gross income) to have an equal amount of discretionary income.

After Tax Calculation Working a 2nd Job weeks 52 hr/week 40 pay rate 10.50 21840 Money Not Spend on a Mortgage month 1300 months/yr 12 15600 6240 40% Taxes 21840

I think some people think that once the house payment goes away, the previous mortgage owner is now only breaking even, but what really happens is the previous loan payment flips to the positive side by an equal amount that was being spend on interest and principle (all my numbers above doesn’t include my real estate tax and insurance payment since the don’t affect my calculations).

So after I paid off the house, I went from paying $15,600 on the mortgage to investing, saving and a little bit more spending of the extra $15,600! There is no subtle transition, the jump to positive side was immediate!

Anyway, I thought that it would be worth analyzing a bit further than I did late time. Please leave any questions in the comments below!

Tell me if you realized all that I mentioned above,

Thanks,

MR