Ever wondered if you could pay off your home loan early. Or maybe you would like fewer credit card bills. Or even just to save on interest costs of those credit cards.
For the fortunate few with excellent credit and small amounts left on their primary mortgages, a second home loan at a lower interest rate than credit cards offer may be an alternative. You pay off the credit cards and have only one extra payment in lieu of five or more. But what about the others that have higher mortgage balances and not so pristine credit. Money management of debt may be a bit more elusive.
The next scenario involves a household with some extra money to pay down debt. But where it should go is the question. For illustrative purposes, this household has a monthly mortgage and five outstanding credit card balances. One credit card offers a significantly lower rate than the other four and is not fully utilized. So if there are no or reasonable balance transfer fees, the couple should transfer some of the cards to the card with the lower rate to save on interest charges. Another scenario may have the couple’s credit cards all having reasonable interest rates but one. In this case, the balance on the card with the highest rate should be paid off first. This is basic money management of debt.
In our last scenario, we have a couple who has only a large mortgage and extra cash. They should utilize one of the following tips as part of their personal money management of debt plan. Make half of their house payment on the first and the other half on the fifteenth of the month. The whole payment is made, but they have eliminated half a month’s interest compounded over the life of the loan. Or if they have significant cash, they can vastly reduce their mortgage term by doubling their house payment amount each month. By learning how to budget your money correctly, you can have more money to enjoy the things you love.
No matter what your life circumstances are, there are always some money savings tips you can practice. As you see in our different scenarios, different family situations require completely different solutions. And some families will need to innovative techniques to enhance their current extreme situations. Not a problem as there are as many money saving techniques as there are stars in the sky.