How to knock years off your mortgage

Eventually, most people reach a point where they are willing to sacrifice to get out of debt. Then many people will do anything to cut down their monthly payments.   Several schemes in the UK are supporting people in different ways.  From cutting down on smoking, to cutting out one weekend a month.  Each of these things are a hard pill to swallow, but looking back ten years from now, they can be counted as the smartest thing you’ve ever done.

It doesn’t matter what you cut out, smoking, an evening out, a weekend, a pair of shoes, a dress, tossing your cell phone, saving energy, or making due with an older car for an extra year.  All of these things can build wealth, and change your life.  In fact, they can change a struggling household to one who is ‘really’ experiencing the lifestyle they always wanted. 

Let’s use a £150 000 repayment mortgage as our example. Repaid over 25 years 6% interest a year. By saying no to a vice, saving on energy, or cutting out one luxury can release a minimum of £150 a month.  Add this to your monthly mortgage payments. So, instead of paying £966.00 a month, you pay £1 120.00. This reduces the mortgage’s lifespan by seven and a half years, and saves £35 000 in interest, leaving you a happy homeowner in 18 years, with an extra ₤35 000 in your pocket.

Saving Energy

There are several types of water heaters, furnaces, and air conditioners that can save as much as ₤100 a month.  Some new water heaters heat water as it is needed.  There is no water tank. 

Even something as simple as improving the drapes over windows, putting plastic over draughty windows, or stopping drafts under doors can save several hundred pounds a year.

Stop Bad Habits

Many people smoke, eat, or drink their wealth away. Cutting down 10 cigarettes can save almost ₤1000 a year.  Not only can cutting out smoking save money, after 12 months you qualify for non-smoker rates on insurance for both vehicle and house. This can save ₤2 000 – 4 000. 

Over eating and social drinking can reduce a mortgage saving tens of thousands of dollars.

Therapy Shopping

The newest trend in the UK is therapy shopping. This usually involves buying clothing you will not wear, at prices you cannot afford.  This can involve anything from a day spent down town, to a trip to Spain to pick up some deals. 

Therapy shopping can become addictive.  Surveys done last year reveal that many shoppers have name brand clothing in their closet that they’ve never worn, and that they regularly spend ₤2 000 a year on their wardrobes – per person.

New Car

A new car is an addiction.  Most addicts are fine until the new car commercials appear on television around December and January.  All of a sudden, their two or three year old car is not working right, not energy efficient enough, the problem really doesn’t matter.  The problem is only created to justify buying a new car. 

However, driving the old vehicle for even one year more, can make all the difference in your long-term wealth in the next 20 years. 

Car dealers are good. They want you to replace your vehicle every three years, even though they price them over five. 

Relationships

Spending to make ourselves more attractive, better dressed, more desirable is a constant struggle for many adults.  Others are in a relationship and hope that making large purchases on plastic surgery or clothing will make their mate stay with them.  Unfortunately, this never stops a relationship break up. It only leaves the person thousands of pounds in debt, with a different nose, or wardrobe.

You cannot buy happiness, and you cannot buy someone’s love.  It is hard to be outside of a relationship, especially when all of your friends are married.  However, a few months learning to like yourself may make all the difference. 

Envy

Some people are always keeping track of who owns what, and how much it cost.  The trend of ‘keeping up with the Joneses’ will put you on the fast track to being left far behind the Joneses.  This type of spending is often found in the business world.  Professionals justify spending large amounts of money on their home so they can entertain clients who never materialize.  They dress for success, preparing for promotions that go to someone else.  They try to outdo other people in the office by spending. 

Unfortunately, this creates stress and relationship problems, reducing productivity, and creating problems that result in no promotions or big clients.  Many young professionals fall into this catch 22 situation, losing many years before they realize it is what they do, not how they look, that limited their career.

Save Money

These all factor into debt problems and the current increase in insolvency.  Each one has been the focus of a survey over the last six months by a financial organization.  Each one has tried to find some reason why UK consumers are living in one of the healthiest economies, yet carrying the largest debts.

Each one of these things can be changed from a debt increasing burden, to a wealth building tool.  If you need more help, just visit any debt management charity for free help.