All of our blog entries try to preach that you should have or be in the process of building a proper emergency savings fund for 2010 (not 1979). That means you should set as your goal to build 15 to 18 months of your expenses in money market savings and certificates of deposit (you should keep about six months in pure money market savings).
This blog entry we focus on P A Y I N G O F F Y O U R M O R T G A G E.
Most people don’t think paying off their mortgage is within their reach, but you can make a huge difference in the beginning of your mortgage and continue to pound away with a few tricks.
Let’s get started:
First, you want to make sure you can prepay your mortgage principal without any additional fees or penalties.
Once you know this, you can move to step one: See if your mortgage company will allow you to go to paying your mortgage through a biweekly program. If this is possible and you think you can swing it, do it. It can really add up over the course of even just a few years. Over the course of your mortgage, this one thing may allow you to knock about 6 years off your mortgage. Does that sound like a winner?
How about adding more speed to your pay off?
Look at your mortgage amortization schedule.
You will see the payment you make, the principal, the interest and the balance all together across the page. This allows you to see where your money is going.
The goal of looking at your amortization schedule is not to make extra whole payments. The goal with this is to focus on additional “principal only payments” to boost pay off earlier and save thousands on interest.
You will quickly see the amount going to principal is much smaller than your payment each month. As you begin to focus on paying your mortgage early, we want to focus on the principal amount on the “next payment” each time you make a payment. Take that amount – not the entire payment – and make an extra payment for “Prepayment On Principal.” I would even recommend sending it in as a separate payment each month. This will “speed things along.”
SAVING IS NOT OPTIONAL
Even paying your mortgage at a faster or rapid speed, you should still be focused on putting steady savings away. You should work to build 15 to 18 months of expenses in emergency savings (money market savings and certificates of deposit). This amount will build a lot faster than most people think…if you start and stay committed to steady and regular savings. You can check out our “1% Savings Plan” in previous blog entries or you can get it at http://www.MiddleClassMoney.com.
We always believe you should include your children in the hunt to pay off debt and find money for regular savings and regular investing. If you have a focus on how to supply extra and regular savings and paying down your mortgage, you will really see progress over time.
We are big believers in paying down and paying off debt. If you have credit card debt, you absolutely should start there. However, if you don’t have credit card debt, work to get rid of your mortgage or at least pay it down, down, down.
I am not your financial advisor. You should do your own research about how much money you can put toward mortgage payoff. At the same time, we don’t believe saving on a regular basis should be optional for anyone today. You have to save. Good times and bad times do and will happen to everyone. Save regularly now and don’t stop – be safe later. It’s the best advice you will ever get.
With an eye on paying down your mortgage and continuing to regularly save, you will have a twin wealth-builder on tap for your future and your family future.
You can do this.
HELPING YOUR KIDS GET AHEAD
If you think I was born saving money, you are wrong. My own family didn’t believe in saving. They don’t believe in having a 401k. They have had “emergencies” all their lives. These emergencies always get in the way of saving money regularly. I was not brought up to save and invest regularly and I have made every mistake you can think about when it comes to money. My parents thought they were shielding me from the realities of bills and worry. In fact, they were isolating me. I learned nothing until I had made many of the mistakes they made. I have had to learn the absolute hard way how to get savings on track and make it a part of your life without killing your lifestyle. I have had to learn the hard way how companies mislead with marketing. It is my mission to share what I have learned about regularly saving with my own children and also share it with you. That’s why we have a lot of “free” (blogs like http://www.boostmywealth.wordpress.com and http://www.stickyasset.com/blog and groups on Facebook like “Coupons & Coupon Codes”)!
In this country we don’t do enough to teach our children about money, managing money, saving regularly (and automatically), compound interest and steady investing for a long-term future. As a parent, we are always concerned that they get a good education and go to a good college so they can make a lot of money or have a valued career path. The truth is that we could do our children the biggest favor and one of the best things by sharing with them sound saving and investing principles.
You can join our free Facebook group (or have your children do it, too) by searching in the Facebook bar on your “wall” for “Live The Lifestyle Your Family Deserves.” Click on “become a fan.” It’s free and it ties our free blogs into that group.
If you want to give your children the same information we are giving ours, you can purchase the only thing we sell on any of our blogs or groups. It’s called “How To Survive Any Financial Crisis” and you can get it for only $4.95 at http://www.middleclassmoney.com.
Thank you for reading our blog and good luck!
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