Saving Money

Financial Fasting a New Trend

Financial Fasting works much like diet fasting does when one reduces calories for a day of two a week.  This is particularly helpful for those just emerging from a life transition, such as divorce. Fasting may be short lived, such as when one wants to lose a few pounds before a special event. Or it can be long term, as some of my European friends do. Think of your finances in a similar vein. UK’s Women & Home magazine’s August 2013 issue has an article describing this latest trend.  Cut down on expenses for one or two days a week and spend your normal amounts on the other days. This will get you ahead of the financial game and put some extra cash in your bank account.

You may want to just have a designated time period for this financial fast, such as three months with an option to extend it.  For me, seeing a short-term goal makes it easier to do.  The article suggested the usual, bring your lunch and leave your credit cards at home on fasting days.

It also suggested viewing the financial fast as a trade.  You are giving up some extra frivolous expenditures for something that you would really enjoy, such as a facial.  You could have a special ongoing goal as my sons and I do. We have a vibrant pottery canister that is our “Travel Fund.”  We forgo extra clothes, gadgets, etc and put that money into the Travel Fund.  We fast financially, by going to coffee shops instead of expensive dinners.

Give this Financial Fast a go and see your dream reached a little quicker.

How to pay off your mortgage

Tips on paying off your mortgage quickly.
1. Have your mortgage automatically withdrawn form your bank account with a set addtional amount to go to the principle itself.  For example, I doubled my mortgage amount with the other half going directly to my principle.
2.  Put ALL extra dividends, bonuses, tax refunds, inheritance, etc directly to your principle.  Make out a mortgage slip and send that in as  an extra payment to your principle.  It doesn’t matter if they are small amounts as long as they are clearly marked “principle”.  If you get large sums of money sporadically, such as artists do after shows or when paintings sell, put a good chunk of that to the principle.  I am friends with an artist family and they blow big chunks of money on frivolous items, but moan about their mortgage.  Any extra money that comes in, that is not your salary, put towards the principle.
3.  Check your mortgage policy.  Is there a prepayment penalty?  If so, see if you can have that mortgage transferred to another institution, which doesn’t have such restrictions.  Maybe you can have your mortgage loan refinanced at a lower rate.  Your monthly loan payment can be reduced if you put a certain  amount down on your mortgage.  For example if I put at least $5000.00 down, with a small fee, my loan payment was recalculated and my monthly payment became less.
4.  Some people are putting large amounts of money into their savings accounts and investments, which don’t accrue the same amount of interest, as the interest owed with a mortgage.  For example, last year I paid $1648.00 in interest with my mortgage, but did not earn any where near that with my small savings and investments.  I pulled money out of my small investments, sold heirloom silverware, etc and paid off my mortgage!  Now instead of paying $1648.00 in yearly interest, I can EARN some interest.
5.  More ways to pay off that mortgage:  Do you use great aunt Sally’s sterling silverware ?  Do you need your predivorce wedding china and crystal?  Then sell it.  Wouldn’t your deceased relatives be glad that you have a  completely paid  roof over your head?  You can put an ad in your local paper, sell items online or take them to a consignment shop.  I’ve sold some less expensive heirlooms at garage sales.  This money adds up and put  it towards your principle.
6. Live simply and put extra money  not spent, towards your mortgage.  Buy kids clothes at the thrift stores, some items still have the tags on them.  Go out for lattes instead of dinner or lunch.  More in later blogs about saving  money.  Stay focused on your mortgage goal and you will accomplish it, as I did.
7. Read some books or articles by experts, such as Suzy Orman to get you on track.
8. If you have a larger living space than you need, could you downsize and sell it, buying a smaller abode?
Could you take in a paying roomate, if you don’t want to sell it?
9. Be creative and you will be surprised how quickly you can obtain this goal.

New way to cancel your mortgage

Here is an ingenious way to get rid of a mortgage.  My neighbors had a big mortgage and a business that was feeling the effects of the recession. This is what they did. They switched houses with another family and moved into one that had the mortgage paid.  They gave up their bigger, close to town house, for one that was more out in the country.  They no longer had a mortgage, so could get caught up financially. The commute into the city only added about 12 minutes per way, so it wasn’t too bad for them.
If you need the equity out of your house and don’t want to sell it, then you may want to consider a credit line which is tied to your house.  Check out the interest rates to see if this would work.