For all home owners it is important to remember that successfully managing your finances is a balancing act, there has to be some give and take.
Today credit is so easily available that most of us have come to confuse our wants for our needs.
Being a two-car family, having luxury holidays – these are all wants.
In order to budget for our wants, it is important to set some clear goals with dollar values assigned – having a second car will cost us $10,000 a year; family holiday $8000. From here, go through your budget and prioritise your expenses.
See where you can find some savings for the necessities to make more room for your wants, and then see what wants you are willing to compromise on or forego.
When it comes to a mortgage, paying it off faster is always better.
Don’t underestimate the power of small compromises. Small lifestyle changes can quickly start to add up to big savings over the year.
Just by swapping to shop at a cheaper grocery store I saved $30 a week on my groceries. By putting this saving on to my mortgage it shaved four years off my loan and saved $47,000 in interest.
Making repayments now at a higher interest rate, rather than sticking to the minimum repayments, will not only help you make a bigger dent in your mortgage, it will protect your lifestyle once interest rates start to rise.
While everyone else is scrambling to find the money for the higher repayments, you can sleep safe and sound knowing that you’ve got it under control.
You can also look at dividing your monthly payment in two and then paying fortnightly instead of monthly. This way, you end up paying 26 payments a year, which adds up to 13 monthly payments rather than 12.
This simple change can make thousands of dollars’ difference to your total loan repayment, cut years off your loan and it won’t have too much of an impact to your day-to-day finances.
Remember that old saying, ‘ask and you shall receive?’ Well it can also apply to money matters, particularly when it comes to saving on things like your mortgage.
If you have a variable rate and are paying more than four per cent on your mortgage, then you are paying too much.
There are a lot of better offers out there, perhaps even with your current bank, but quite often these are reserved for new clients as incentive, which means existing and very deserving customers like yourself miss out – unless of course, you ask for it.
So hop online and do your research, then call your bank and ask them to make you a better offer or you will walk.
Assuming you stick to your existing repayments, even a 0.10 per cent discount could save you thousands over the life of the loan.
