Paying more off your home loan while interest rates are low can save you thousands in interest over the term of your loan. This can be achieved by better budgeting and using your finances more effectively. Let’s look at how you can accomplish this.
Taking control of your finances so you can reduce your debt, save and invest allows you to get ahead. But rather than budgeting, many of us dream of earning a larger pay check. While this sounds like the answer to your financial problems it is often difficult to achieve, whereas budgeting is easy and can resolve your financial problems if used effectively over time.
How to Budget
To reduce your mortgage, you need to use your money more effectively. This can be done by keeping an expenditure diary so you can track your spending habits. Grab a notepad and pen and jot down the following:
1. Your after tax income – This includes wages, government payments and any investment returns. After a week tally up what you earn. If any payments are monthly, then times the payment by 12 and divide by 52. This then gives you an accurate weekly amount.
2. Your spending – Track your daily spending for a week. This will allow you to identify where you are spending your money. Include bills, rent and other expenses.
3. Your total costs – Subtract your total spending from your income and then work out what you are spending monthly and yearly on specific items.
4. Where you can save – Look critically at your spending. For instance, if you buy lunch daily, then consider making your lunch and taking it to work. It’s cheaper. The money you save you can then put towards your mortgage.
Are you looking for a more cost effective mortgage? Contact eChoice, and review your mortgage today.