Becoming a better budgeter, wising up on spending and making the most of any savings can help you master your mortgage and own your home outright sooner.
In fact, according to Mortgage Choice, if your goal is to pay off your home loan sooner, there really is no better time to start than today. Best of all, becoming a savvy saver doesn’t need to be hard if you follow these simple steps:
Step 1. Become best buddies with your budget
If you don’t already have a budget, now is the ideal time to start one. Ensure it takes into account your regular spending.
I personally break my budget into:
- Home and investment property loans – interest, principle and on-going fees
- Home an investment property expenses – water, electricity, council rates, strata fee, maintenance, management and insurance
- Personal expenses – lifestyle, food, phone and random living expenses
- Car expenses – petrol, insurance, registration and servicing
The key is to be brutally honest with your budget and know exactly where you stand. Once you know where you stand you can focus on cutting costs, saving and investing.
Step 2. Slash your spending
Consider ways to cut your daily spend. For instance, a daily caffeine hit at $4 per weekday equates to $80 per month. Did you know by making a coffee an every-second-day spend and contributing $40 extra per month to your mortgage from day one (based on a $300,000 loan over 30 years at 6%) you could reduce the total loan term by almost 2 years? Where can you save money?
Step 3. Review your insurances
With the range of insurances available today including life, health, car, income, home, landlords and many others sometimes a simple call is often all you need to get a better deal. You will also generally receive a 10%+ discount if you have multiple insurances with the one provider.
Step 4. Save with friends
Ask your parents or friends to oversee your savings plan. If you have someone holding you accountable, you will be less inclined to fall behind on your savings plan.
Step 5. Pay off or cancel your credit card
Credit card interest rates can be ridiculously high. Make paying off your credit card a priority. With the easy access to debit cards these days you should be able to continue to shop freely without the high interest rate charges.
The information provided in this article is of a general nature only and in no way constitutes legal or professional advice, or specific advice in relation to any finance. In all cases we recommend you receive professional financial advice for your own personal circumstances.