How To Save Money While Paying Down Your Mortgage.
Your home is one of the most important assets that you own. Typically, real estate increases in value over time and you also have the benefits and comfort of a place to call home. However, paying the monthly mortgage is something that many US homeowners worry about, especially in challenging economic times.
How To Save Money While Paying Down Your Mortgage
Mortgages typically make up over 30% of the average US homeowner’s monthly expenses. With other necessary expenses like food and childcare costs, it can often seem impossible to save money.
Also, while you are repaying your home loan, there is still life to be lived. You may want to travel, purchase your dream car or invest in a meaningful project.
Now maybe you’ve just made your first mortgage application and are thinking ahead to figure out how you will stay on track with your payments. Or maybe you already have a home loan and are juggling your monthly payments with all your other expenses.
Either way, if you’ve ever found yourself wondering how you can possibly save more money while you pay your mortgage, read on. This article is packed with insightful tips to help you get ahead. Take note of these six money-saving strategies to set yourself up for reaching your savings goals faster, while still paying down your mortgage.
1: Set a Saving Target
It may seem simple, but many people never reach their savings goals because they never set an actual savings target. Without a clearly defined target, your savings habits are likely to be inconsistent and sporadic. The tried-and-true S.M.A.R.T. goal formula is a great way to approach planning your savings.
Specific: Determine the exact amount you want to save and what you are saving for
Measurable: Set targets and benchmarks to keep yourself accountable and on-track
Attainable: Set a goal that is doable based on your known situation
Relevant: Align your savings with goals and values that are meaningful to you
Time-Framed: Set a date for when you want to achieve your savings goal
A budget is the key to setting savings targets that are realistic and attainable for you. You can use an online app, a spreadsheet, or another budgeting tool to keep track of all your income and expenses each month. Be consistent with your budgeting – a weekly practice is ideal. You’ll know exactly where your money is going and you can curb unnecessary spending.
Also, automate your savings as much as possible. That way, the savings amount automatically goes to its dedicated account so you are not tempted to spend it.
By setting a clear savings target, you can start taking specific, strategic steps to see that goal become a reality.
2: Extra Mortgage Payments
Many lenders have options that allow you to make additional payments on your mortgage balance, without incurring penalties. Check with your lender to see what options are available to you.
This helps you to save by reducing your principal and lowering your monthly payments. Depending on how much you can pay, it is possible to shave a few years off the life of your mortgage. This can be a huge relief especially if you will have to make payments during your retirement years.
If you are fortunate to receive a windfall, unexpected gift, or even a salary increase, consider applying it to your principal balance and get yourself closer to mortgage freedom.
And remember, every little bit counts. Even if you do not have a large sum or don’t get a raise at work, you can still apply any extra amounts that you save to your mortgage. Just be sure to request that the amount is paid to the principal (not the interest) and double-check whether or not you will not be charged any penalty fees.
3: Improve Your Income
Most people think of taking on more hours at work, asking for a raise, or even getting a second job. If you think you can make a fair case to your employer for a pay increase, go for it. You won’t get one if you don’t ask.
However, there are many ways that you can earn extra income outside of your current 9 to 5 job. With a little brainstorming and creative thinking, you can add a few hundred (or a few thousand) extra dollars to your income line each month. Be sure that what you choose is something that you can manage within your current schedule. The goal is to boost your income not to become burnt out!
Here are a few ideas to jump-start your thinking: Read More..
READ ALSO: Applying for A Second Mortgage
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