How To Make One Extra Mortgage Payment This Year

When you owe a significant amount of money, per say on a house, it will take years before you pay it off. It’s like feeding money into a vending machine for months before you finally get your snack. Just because you have a long time to go, doesn’t mean you can’t shorten the time to reach your goal of being debt free. Reaching your goal early can cut down on the time, and saving you some interest as well. So how can you do this? Let’s look at the motivation and then your method.

Motivation

Give yourself the “why” behind the “how” for amping up your mortgage payment by crunching the numbers. Savings is what you’re essentially looking at. Let’s say you are trying to pay back $150,000 mortgage with a 4% interest rate. You have a 30-year loan, and 2045 is when it will be paid off (on paper). IF you are able to contribute an additional $712 each year, you can expect to pay off this mortgage by 2041. This is a full four years of savings!

Method

  1. Look at your budget - Look at your credit statements, your savings, debts, and your spending to better understand where you stand financially. This will give you clear insight into your spending and savings habits, which will show you how you can alter these habits and put a little more aside for your mortgage.
  2. Set a reasonable goal – Big ambitions become overwhelming pretty quickly. Set a goal you know you can achieve, so if it’s $10 a month, start there. Put that extra savings into your mortgage each month. Once you’ve reached your goal, bump it up a bit!
  3. Automate extra savings – You will always find a reason to divert extra savings somewhere else. Automate these extra savings to your mortgage to avoid the temptation to spend it elsewhere. Your band will have an option to automatically transfer this money into a special account, which you can use for your mortgage.

Follow up: check in daily with your finances

After you’ve reached your goal, and bumped it up to another goal, you still need to look at your success. Create an accountability group that will keep you honest with your success/failures. Keep at it, and don’t give it. Tackle it ferociously, and your home can be paid off sooner rather than later. 

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