Wednesday, May 9, 2012

Mortgage Tips - The Biggest Financial Tip To Help With Your Mortgage — Budget!

Many people are struggling to pay off their mortgage, car, insurance, furniture, utilities, groceries and other monthly expenses. Compound that with expenses on families such as education, medical and other surprise costs that always seem to come out of the blue at the wrong time, and it can be maddeningly difficult to climb the financial ladder. Worse, just when you think you are out of the frying pan, you often land right in the fire as another unexpected expense broadsides you out of nowhere.

But there is an easy and effective way to eliminate all these problems and stay current on your mortgage. It’s not a miracle fix and it’s not going to let you pay off your mortgage all at once. It’s also certainly not the latest “get rich quick” scheme, or advice to buy lottery tickets and pray to whatever god, force or power you believe in. No, it’s none of this nonsense! It’s as simple as keeping a budget.

But what exactly is a budget?

To be able to pay off your mortgage and other expenses in time which will reduce stress, you need to understand exactly what a budget is. Many people have some vague ideas about what a budget is, but they do not understand the fundamental principle behind it.

The first point of a budget that you need to understand is that you MUST give a task to every single dollar that comes into your house. You can make your life much simpler by searching and purchasing a budgeting software or if you’re good with Excel, then creating your own budget that does all the calculations for you. Either way, whatever software you use (even if you just use an accounts book and write down your mortgage payments, utilities and income by hand), you absolutely must record every dime and nickel that comes into the household.

Give the dollars a task!

The next crucial step to freeing yourself from mortgage miseries is to give every single dollar that you earn a task. For some people the equation is easy, because they get paid once a month. For people who run a business or work freelance, it can be tricky, but the point is to record everything you get and as soon as you get it give that money a job to do. The point of the budget is to allocate your resources in a way that there is a clear plan that you can stick to and in the long term — save.

The first goal

Your first goal with any budget you start is to get together at least three months living expenses as soon as possible. Therefore, for the first few months of your budget while making your mortgage payments, groceries and other expenses, try living a bit more frugally and put aside an amount every time you get money that slowly builds towards this three month buffer zone. Once you have your buffer zone of cash, dump it in a high savings interest account and forget about it.

By doing this, you will have taken the first step towards financial freedom from your mortgage and will not only have covered for future emergency expenses, but you can start spending your extra money elsewhere.