Thursday, May 10, 2012

How To Pay Off A Mortgage Effectively

A lot of people end up with a mortgage that they are having extreme difficulties paying off, but it doesn’t have to be that hard. Provided that you have a good income and a steady job, you should be able to make a financial plan (otherwise known as a budget) and pay off your mortgage much sooner than the end term time.

How do you start budgeting if you’ve never done it?

It’s not important why you haven’t budgeted before, the real thing to worry about is why you are not doing it now? If you want to be serious about paying your mortgage off in a reasonable amount of time, there’s absolutely no reason to waste time without budgeting. But how do you go about doing it if you’ve never done a budget before? What if your money is usually all over the place and you are often in the red going for overdrafts, or you are finding that you are living month to month? What do you do to fix your situation and have a chance at actually paying that mortgage off before your retirement?

Step one: account for everything

The first step when you are making a budget is to record every single item that comes into the pot and every item that goes out. To make it easier on yourself, it’s recommended to buy software that does all the math for you, so all you have to do is plug numbers in. There are plenty of options available and many of them can be used on a variety of computers. There are even online versions that you can use from your browser or standalone software that you can buy. You can also simply use Excel or another spreadsheet program and make your own budget if you’re a bit tech-savvy with formulas.

But the trick is to record every bit of income you get and every expense you make. When you start doing this, you will have a clear idea of where your money is going and what your real value is. After just a few weeks of doing this, you will quickly realize some of the things that could be saved on. Let’s look at some of these in detail.

Saving on your budget to pay off your mortgage

There are quite a few items that often crop up in many people’s budgets and you can cut back on many of them to save, so you can pay your mortgage off faster.

Utilities — Every utility can have savings. You can save on gas and electricity by installing energy efficient devices in your home. You can save on the Internet, phone and the TV by using them less or not at all.

Food — While food should be the last thing you cut, you can certainly buy cheaper food. Incidentally, food that is healthier is also cheaper. Win-win.

Entertainment — If you are serious about paying your mortgage off in any reasonable amount of time, you should cut entertainment as much as possible.

These are just some of the things you can consider to pay off your mortgage faster!

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