You love money, who doesn’t?! but how do you make money love you back? Money money must be funny? Well, only when you have enough to live by. When you don’t, it’s not so much a laughing matter. Money, love it or hate it, we still work for it, none of us wants to live a day without it. Almost everything we do depends on it. Even charities need money to run and do their good deeds.
Is money a devil or an angel? Maybe both? Money may have two faces but money itself isn’t a problem. It’s our money habits that determine whether money will work for us or against us.
The concept of one dollar saved is one dollar earned still rings true for me to this date. It’s old school like a grandma’s advice but it’s stood the test of time and proved to be a steady way to getting money in shape. In my experience, it’s helped me get through those tough days when I was a bit low in cash.
What do you do with your money? If buying a home is on the cards, you can be sure that it’ll be one of the biggest investments you’ll ever have in your life. Unless you’re self-funded, that is, using your own money, otherwise it’s a whole new board game waiting for you to play. And? You want to play to win!
Buying a home isn’t for the fainthearted. The first challenge most new home buyers face is to save enough funds for a deposit. To achieve that, it means the spending habits will need to be modified, if their finance isn’t already in good shape. Of course, you don’t want to squeeze yourself too much or it’ll feel like you’re suffocating. When it comes to money savings, a little goes a long way. It’s doable even if you’re someone who gets regular pay cheque every fortnight/month, with no other source of income. Start saving today and you’ll see your money tree grow bigger beyond your imagination. I’d say a realistic time frame to give yourself is 2 to 5 years if you’re a newcomer.
So, what are things you can save on? Try small things first and bigger ones later.
- Coffees: If you buy coffees 5 times a week, try to reduce it to 2 or 3 times a week.
- Grocery Shopping: Buy in bulk and put those essential items in your trolley only when they’re on special.
- Transport: If getting off the bus one stop earlier means you can save $1.00 each time. Do it. It’ll make a great work out. Win win!
To get more serious about savings, the following 3 saving tips aren’t negotiable:
- Eating out: Cutting down on restaurant bills and do more home cooking. Cheap and cheerful.
- Holidays: Take day trips in your city that don’t require overnight accommodation. I’ve always preferred my own pillows.
- Entertainment: Do those fun and free activities instead of those that require you to spend money on. I’m not sure if the best things in life are free, but the funniest things definitely are.
Once you’ve got your hard-earned money saved up for a deposit (ideally 20%), it’s important to talk to a reputable home mortgage provider first (personally, I’m conservative, I prefer banks) to see how much you can borrow from there, before you begin your home hunt. That way, it’ll give you a good idea of what the house price range you can afford to buy. It’ll also give you a quick snapshot of what repayments would look like should you decide to take up the loan.
When you got your mortgage account set up, congrats! All the paper work and nitty gritty stuff is behind you. What you’ll see in your first bank statement for the first time is tonnes of money, a big number – in negative! Welcome! You’ve signed your life away! Mortgage, it’s daunting to just look at it, let alone paying it off. Have I scared you off already?
In Australia, the average loan size is $384,700.00 in 2018 according to the Australian Bureau of Statistics (ABS). That’s one hell of a debt to carry. The number is even bigger in Sydney, $462,100 to be precise. Imagine, you’ll have it on your shoulders for the next 25 years or 30 years. How old will you be when you finally get it down to zero? If not careful with money, you’ll soon feel stuck in a rut and be miserable for a long time.
The bottom line is you want to get out of debt as quickly as you can. Let your income work harder for you by having it in an offset account to reduce the loan interest. Beware! Not everyone wants you to be debt free sooner, especially your bank. Our love-hate relationship with banks is here to stay. On one hand, they lend you money so you can buy a home, on the other, they have an eye on their self-interest – interest on your loan, so to speak. When it comes to money, it’s very point-blank, very much black and white (or red). Either you have it or you don’t. If you do, sweet! Be my guest. If you don’t, you’re a stranger, they don’t want to know you. Simple as that.
So, here it is. My Quick Guide To Paying Off Home Mortgage Years Faster. Sounds fancy! I know it’s a bit basic and raw… Huh? Have I just heard someone say… Who do you think you are Ted?! What makes you qualified to speak on this topic? Hmmm… Not bragging here but I’ve followed own advice and paid off my mortgage in 13 years as opposed to 30 years – the life of the loan. That’s 17 years faster! I guess I must’ve done something right, right?
Please also check out my previous blog post: https://tsaited.com/2018/10/29/say-bye-bye-to-mortgage-years-earlier/
I hope you’ll find it helpful.
Ted Tsai 