For most of us, we figure that a mortgage is something we will have to live with for the rest of our lives. We pretty much accept that for the next 20 or 30 years we will be repaying the bank for our homes. The truth of the matter is that a mortgage can be repaid a lot more quickly, simply by being a bit savvier with your money.
If you make getting every extra penny you can paid into the loan, you will be in a position to have a completely debt-free life in a small space of time. Why wait until you retire to pay off your bond? Pay it off now and ensure that you can enjoy the savings whilst you are still young enough. Here is how to do this.
Start off by getting an access bond – find out exactly what the terms and conditions are before going ahead. Ideally speaking, you should have a loan that allows you to add extra money in as and when you please and then to access that money as and when you please.
Here comes the easy part – Let us say that your salary is paid on the last day of the month. Move as many of your standing orders as you are able to the 15th of the month. Have one credit card to use to pay for groceries. (You will, however, pay that off before interest starts to accrue – you normally have a 30 day grace period, as long as the whole amount is paid, with no interest – that is free money for a month.) Move the bulk of your salary into the bond and only transfer back enough to pay for the standing orders on the 15th. You will thus reduce your capital owing by that amount for two weeks of every month. At the end of the month, transfer out enough to repay the credit card in full. That saves another whack of interest. Well done, you have just reduced the term of your loan without setting aside an extra cent!
Of course, you do want to do some pruning of your budget as well at the same time. Look at ways to save on your utility bills, consider spending carefully before you actually lay the money on the table. Work hard to pay off any credit card debt and then apply that payment to the bond. You need to start living a simpler life – at first you may feel deprived but, after a while, it becomes like a fun game to see where you can cut back.