A New Year’s Resolution for Your Finances

ff15It’s shortly after New Year’s, and that means resolutions. And it’s not too late to set a New Year’s Resolution for your finances. The goals that are most successfully accomplished are those that are manageable, not too overwhelming. So let’s look at one financial goal that is manageable enough to be accomplished this year.

Pay a little bit extra on your mortgage every month. Make it small enough that you can manage it every month, but not so much that it is stressful. Start with a small success and then build on it.

Let’s see how paying just a little more on your mortgage could really benefit your finances in the long run.

For example, if you have a 30-year mortgage for $150,000 at an interest rate of three percent, paying an additional $100 each month would save you a total of $17,214 and you would pay it off six years early. If you were only able to increase the amount to an extra $50 per month, you would still save $9,719 and pay it off three years and four months early.

If you have a 20 year for $100,000 at 4% interest, and added $50 a month to your payment, your loan would be shortened by 26 months, saving you a total of $5,563. If the same loan had an extra $100 paid on it each month, that would be $9,883 saved and it would be paid of three years and eleven months early.

So making a small sacrifice each month to pay a little bit extra on your mortgage can save you a significant amount of money in the future.

Now for the question of where to get an extra $50-$100 each month. One recommendation would be to make this extra amount automatic. Have it taken out of your paycheck or bank account automatically. If you never see it, it’s a small enough amount that hopefully you won’t feel it too much. For example, if you are paying an extra $50 per month and get paid weekly, that’s only $10 or $12.50 out of the paycheck (depending on how many weeks are in the month).

Here are a few suggestions to help you with that extra money you need each month. Don’t buy lottery tickets. Take a lunch to work and eat out a few less times each month. Make your own coffee instead of stopping to buy some on your way to work.