In my last column, I asked you to keep track of your expenses to prepare a budget.
Now that you have one month’s worth of recorded expenses, add them up.
Subtract that figure from the total of your take-home pay and any other income you may have.
If the result is a positive number, you’re doing great and have not busted the budget.
You can still look for ways to cut back and save yourself some cash.
If the result is a negative number, now is the time to start cutting back. You want to get a zero or positive balance.
In these difficult economic times, most people are concerned with losing their homes to the bank or mortgage companies.
Let’s start with the mortgage and how can you save on it.
With mortgage rates falling almost weekly, it’s defiantly worth making an appointment at your bank or credit union.
If you have a locked or fixed mortgage rate, you may consider reopening your mortgage to take advantage of the lower rates. Discuss this with a mortgage specialist who will help you decide whether it is worth doing it.
A mortgage specialist will be able to give you the exact numbers on any penalties you may have to pay, as well as interest charges and other fees that come with changing your mortgage before it is up for renewal.
A specialist can compare what you might save by getting a lower rate now and locking it back in or even leaving it as a variable rate mortgage. A specialist will be able to provide for you the exact dollar amounts of such things as the interest you are paying over the life of your mortgage now and if you switched to a lower rate.
Remember the savings you get from a lower interest rate have to be reduced by the costs to switch mortgages. Investigate this completely with a mortgage specialist.
Do not just call up and make an appointment to switch because you heard from someone who knows someone who switched and saved a few bucks. You do not know what their circumstances were or if they exaggerated their savings.
The tip I have for you is this: if you are like 90 per cent of the people out there, myself included, you make your mortgage payment once a month. Change this to twice a month.
What does this do, you ask? Doing this lets you make an extra mortgage payment each year with no stress whatsoever.
Here is how it works. There are 52 weeks in a year.
If you pay every two weeks, you make 26 half payments a year. This equals 13 full monthly payments in one year, not the 12 payments you were making.
Depending on your interest rate, this will enable you to pay off your mortgage two to 10 years earlier.
This saves you thousands of dollars in interest over the course of a 25 year mortgage.
Depending on where your bank, you can often do this by Internet or phone. If not, make an appointment now. Make this small change and start saving today.
Sandra Nolan is a freelance writer from Rocky Mountain House. Her column will appear every other week in LIFE. Contact her at firstname.lastname@example.org.