First, go ahead and splurge, but just a little. That's right, get it out of your system. Just splurge on something that you normally wouldn't treat yourself to but like a nice new outfit or handbag not a new wardrobe!
Step2
Now, take the rest of that tax rebate and put it on your mortgage. That's right pay down that mortgage.
Step3
As much as this is not the 'feel good right now' thing, for most people, your mortgage accumulates a huge amount of interest each month. Each month you make your house payment, you are paying so much interest and a tiny bit on the principle. Everytime you put a larger chunk of money on your mortgage, you are paying down the principal which results in less interest each month and more of your monthly payment going right to the principle of your mortgage. If you were to pay off a good chunk of that every time you had "a little extra money", you would be shocked how quickly that mortgage would disappear and you would be debt free!
Step4
Of course, the actual math is different for everyone but when you look at the interest you pay each month on your mortgage, don't you want that number to go down further and further as quickly as possible??
on 7/20/2008
This is probably a novel idea to many people. We have to give up the idea that we have to have something right now. A little planning for the future will pay off in the long run.
on 5/13/2008
Great advice! Increasing your monthly mortgage payment—even by a small fraction—each month will definitely save you more money in the long run. What a lot of folks don’t understand about fixed rate mortgages is that interest accrues daily; and the daily interest amount is determined by your principal balance. Thus, if you can decrease your principal, by paying a little extra, then you will save both money and time.
However, instead of using your stimulus check toward your mortgage, readers may also want to consider paying off high interest rate credit cards first. The reason: credit cards use compounding interest, which means that they earn money off your balance and the interest you have not paid back. Credit card debt can be overwhelming and costly to pay back if you’re carrying a high balance each month and only making the minimum payments.
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Comments
amylaine said
on 7/30/2008 great idea
vallain said
on 7/20/2008 This is probably a novel idea to many people. We have to give up the idea that we have to have something right now. A little planning for the future will pay off in the long run.
LilacGirl said
on 6/8/2008 Excellent suggestions.
bmi57 said
on 5/24/2008 Great advice!!! Thanks.
nwgrnewriter said
on 5/13/2008 Great advice! Increasing your monthly mortgage payment—even by a small fraction—each month will definitely save you more money in the long run. What a lot of folks don’t understand about fixed rate mortgages is that interest accrues daily; and the daily interest amount is determined by your principal balance. Thus, if you can decrease your principal, by paying a little extra, then you will save both money and time.
However, instead of using your stimulus check toward your mortgage, readers may also want to consider paying off high interest rate credit cards first. The reason: credit cards use compounding interest, which means that they earn money off your balance and the interest you have not paid back. Credit card debt can be overwhelming and costly to pay back if you’re carrying a high balance each month and only making the minimum payments.