The other night I spent a few hours crunching some numbers through a loan calculator to see what impact paying more on the mortgage each month would have on the length of the loan. The post itself got a range of comments, with some being generally positive and some questioning if it is possible. After all, life pressures get in the way with things like car repairs and worse, kid repairs that impact on resources.
Are they excuses?
Yes and no. Yes, they are because despite all of these random things that come up, most people who have some average kind of life (making them part of the "most"), should be able to find some way to put a bit extra onto their loan each month. If they can't they should probably look at the way they are managing their finances. However, being consistent with this might take some time, so rather than putting it in straight away (unless you can draw on it again), it might be better for the sense of security to build up a little buffer for emergencies first, and then start consistently putting away.
I was talking with a colleague today about our bonuses and how I am unlikely to get my full bonus this month, because of various disruptions. And, it isn't just the lack of bonus that is the issue, I just don't like missing deadlines. But, I also mentioned that I was playing with this calculator and have decided that I am going to try and put all I can onto the loan now, so the thought of missing the bonus this quarter, seems worse than it normally would.
We continued the discussion as we were walking from one coffee machine to another, and then a couple other colleagues jumped into the conversation too. After getting them up to speed, they had said they had "looked into it" but had never actually paid off more. This makes me question whether they actually had looked into it, because it is largely a no-brainer. But, they all had some level of excuse to go along with why they hadn't.
There is always something, isn't it?
And for reference, the people I was talking with undoubtedly earn more than I do, and their bonuses are far meatier. So, why wouldn't they want to reduce the loan?
Perhaps it is because many people have got so accustomed to low interest rates, that they thought they would never go up again. Or maybe like most people, they think that one in the hand is worth two in the bush, even though that is a false analogy in this case, as they know what they are getting, unless they really didn't look into it.
Which is likely.
Because it is human nature. We tend to avoid what we don't really want to do. And let's face it, as much as we might want the result of paying off our mortgage earlier, the end is likely still a long way down the road, but spending that money comes out of the bank account now. The tunnel is too long, the light is not strong enough to guide us.
Financial health is in the head.
If the mindset isn't right, it isn't likely that it is going to happen, and we are living in a consumer world that encourages the polar opposite behavior than what is required. We are no longer patient. We are no longer able to be uncomfortable. We are no longer willing to sacrifice our gratification now, for something in the future. At least most of us.
Most of us. The average.
Are you average?
In many ways that matter, I am average or below and my "natural mind" is not suited to do what I am doing. It would far rather sit back and do nothing of substance, winging it through life, subsisting, surviving, and always wanting and wishing.
I am a dreamer.
Dreams can visualize a future that does not exist, but if we want to get there, we are going to have to make dreams a reality. We are going to have to act. At the moment, I want to reduce my mortgage significantly over the next eight years in the hope that I will be able to knock it out completely a decade before I retire. I want to be able to spend that time living a good life with my wife, traveling a little, without having to worry about how much I am working, or have to count every penny.
But, the future is an unknown and things can change drastically for the better or worse, but with the direction we are going, it looks like it is going to get increasingly bad for those with too much debt, and that is most of us. I don't mind being average, but I don't want to financially suffer like the average person because I chose not to put a little bit extra into a loan when I had the chance. I don't want to look back at today and say,
I wish I had...
I have collected too many of those already.
Taraz
[ Gen1: Hive ]
Posted Using LeoFinance Alpha
I hear you man, it’s often the people who make the most that also make the foolish decisions. We have friends who make a lot of money considering, not millions but likely the most out of anyone we know our age. They piss their money away frivolously! It’s so annoying. Going on vacations every 2 months to money pits like Disney, just doing dumb shit instead of traveling on day trips to the mountains or something local and save some money to drop it into their mortgages (they have 2 houses). It’s baffling. They save a lot of money in the “system” aka 401k/super annual I think you call it. The money in there though is far more volatile than paying off an asset like a house and the benefit that has for your bottom line every month where you can take those vacations and not have to worry as much about the monthly payment.
I think you should just try what I do and throw a few extra dollars a month in to start, it’s better than nothing! Will you notice the 16$ extra a month? Unlikely but your loan will!
Thanks for that calculator though dude I saved that site for later! We are going to make some adjustments to our payment and bump it up a little bit. It’s nice to see the way it saves us even if we bump that up 30$ a month. Over the loan it’s huge!
And this is it! The value of a pizza, or two beers a month can knock a year off a loan.
It is definitely worth exploring at the least and if for example a small bonus does come, we are making the decision to put at least half of it on the loan while we get the multiplier effect. The difference doing it now or starting in five years is mammoth.
These days I read that one of the basics of success is not to have debts and if you do, you must pay it off fast enough so you don't feel like you are working just to cushion the debt. But I have also read that buying today and paying tomorrow can be a great game if you know how to move your pieces well. So, it's no wonder we spend our nights crunching numbers and thinking about numbers. Life should be more relaxed. Greetings, @tarazkp
How many can play this game well?
I also think that they are not patient and they might want to hold the money today instead of paying extra onto their loan. I remember that some of my colleagues said to me "They always need money today, who cares the future"
Until that future arrives. We underestimate the future heavily.
"Live in the moment!"
The future has moments too.
Which might be my next post :)
Any time I sign up for a loan the first thing I ask is if there is an early pay off penalty. If there is then I won't sign. That's a big deal for me. It's kind of hard to believe there are loans out there that do penalize you. The rich just find ways to get richer I guess.
It is a strange concept really. They should be wanting you to try to pay the loan early, knowing most will fail and they will make more. Plus, paying off one loan can lead to the next loan.
Yeah for sure. It's been pretty rare that I have come across one that has a penalty, but like I said, if it does that is a deal breaker for me.
I'm a person who if has a loan on his head, can't sit and relax until I pay the loan. I don't know when I'm going to die, but I don't want to go with this burdon.
I don't either. More, I don't want my daughter to have the burden.
Forget paying down a mortgage, I can barely find a halfway decent job to pay my monthly rent in New York City. It's been 6 months of throwing resumes and cover letters into the void. Got some calls back, had a few interviews, but nothing lasting -- just a few contract positions. I'm slowly burning thru my crypto stash instead of growing it during this accumulation phase. Need to get serious about stacking those Sats/SPS again.
Take anything to tide you over until you find something more suited, even if it is a part time gig. I don't know how it works in the US in detail with social security and the like, but I would hate to be burning stacks at the moment. Good luck!
Financial discipline is hard, very hard to maintain. Unlike fitness discipline, whereby the results are visible, financial discipline is a very long road to walk and the results are not always what you expect. There is no guarantee that if you stop spending $20/week on coffee and put it into your home loan, you will see an impact. I want my smashed avo now and anytime I want it!!
How come that is such a big thing in Aus now!? :D
It is amazing how undisciplined we are financially. I do think that some level of personal finance needs to be taught in schools, even if it isn't ideal - just so people are aware of the mechanisms in play and encourage more to get interested.
I don't blame them for looking into it but there aren't many people who want to give up the money to do so. In a way, I guess they don't want to cut back on spending and I prefer not to have so much debt.
It is a preference. But it is a bit like people who can't talk about other religions, as there is a fear that they might find a conflict with their own. People don't want to change what they are comfortable with, even if it isn't working.
Interesting timing. yesterday I saw episode of House. A patient was very smart so he drank some drugs to be less smart because being less smart made him happier. Perhaps being too much above average is not a good thing...
Or so I hope...The happiest people might be the stupidest - yet it doesn't mean they are enjoying life either. It is weird.
They can also be very deceptive too. Like some dreams never come true no matter how hard you try. People live their life chasing it and wake up in 50, 60 realizing it was worst mistake. I feel dreams in moderation are good otherwise they are technically nightmare. Another thing is that if metaverse and virtual reality kicks in a lot of people can live in dream and have life they never had.
The brain likes to makes things grander and more beautiful than they truly are in terms of what we want or expect. So, most dreams are unobtainable. However, all dreams are unattainable if we don't do anything to realise them.
I think these bank loans put constant psychological pressure on a person. I have an apartment loan for 40 years (an apartment costs about $40k) but I only pay $9 a month. Therefore, I do not care about this topic.
That is incredibly low! :D
My mortgage is around 30% of my income, so it is significant.
It's goot to have targets but we should not be too much attached to them. I like doing my best to achieve them, planning every single detail but sometimes, things simply have to go in another way meaning that maybe it was not time for me to get some kind of achievement.
Still, there is plenty to learn for the next target :D
The attachment is where suffering lays. Having targets is good, but understanding that things change and targets might need to be redefined has to be considered.
"I wish I was a little bit taller, I wish I was a baller
I wish I had a girl who looked good, I would call her
I wish I had a rabbit in a hat with a bat
And a six-four Impala"
( Skee-Lo, I Wish )
Remember this song? ;>)
Hahaha now that's an epic tie in dude. Bravo
Cheers mate! I hope you're well ;<)
🦖
I remember! :)
today I saw an advertisement for a failed crypto project. do you know him ?
I lost enough money there 😅
Never heard.
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I never feel comfortable when I am in debt, so I pay it off immediately, it doesn't matter to whom. It bothers me to have it in my mind. I think you have to think, is it good for me to pay off this loan early or not? Because it might not be a good idea to push yourself too hard now to pay off the loan early, you have to think of the worst, a refrigerator breakdown, a car breakdown can cause extra costs. If you have a little bit of money on the side for that, it will make you feel more comfortable to pay off the loan early. It's kind of like a burden to me.
The more you pay today the less you pay tomorrow. If you can afford it then you have no choice as no one knows what tomorrow holds. If the recession is going to get worse then it has to be the only choice and will put you in a better position financially. Crazy to think everyone bitches but they have the means to make a difference and change their financial demands each month. I paid extra by working an extra job for a good 3 years whilst living in the UK and it made a significant difference each month over time.
I am still paying off my mortgage. A bit of an advantage for me is that it is not a total liability since I have it listed on airbnb and is self sustaining. Although i had a good start, i hope my booking remains strong the following months.
My plan is to save up enough to be able to pay out my loan in one go. However I am still unsure if this is what I would actually do. You see once I have all the money to pay off the loan, I would still be net positive if i place it in investments which yields 10%APR. which i can continue to compound the interest. Still quite a way from getting there. So no need for me to make up my mind right now.