Cutting Cost Amidst the Economic Crunch

jump2top08 · **Cutting Cost Amidst the Economic Crunch**

There's really a global problem with food and finances. I've read plenty of good tips from the other threads. I just thought to open a new one which specifically talks about "mortgage". Well anyways, thats my biggest problem right now. Need to re-budget everything to fit a good plan to pay off my mortgage. If you have additional tips, just post them here.

ember15 · 04-17-2008, 08:22 PM

That's a tough one because a mortgage has both pros and cons. The Con of course is that its a large amount of debt and that its a huge part of most of our budgets. But unlike other debt there are pros. Your mortgage interest is a tax deduction and your interest rate is lower then some other forms of debt. Also when the Market is performing well investments could earn you more then your mortgage is costing you. The big plus to investing is that money is more Liquid.

So here is what I would do. Pay off all other consumer debt, Have a emergency fund of at least 6 months expences, Invest 10-15% of your income in your retirement. Only then would I consider paying off my mortgage

Anyway I goggled Calculators here is what extra payments can do to your mortgage. Even a small amount can payoff your motgage years later.

Loan Mortgage Calculator - How long to Pay Off your Mortgage?

For me $50 extra would take 4.5 years off my mortgage and save us 32K in interest. Still I think that $50 a month for 30 years into a retirment we would have 18k plus any interest. You add that my DH's employer matches 401K contribution so 36K plus any interest would be saved. Plus its tax exempt so the Investment option is leaving us with more in the long run.

Another option if your bank allows it is making splitting your payments. So you pay half your montly payment on the 1st and half on the 15th. This helps save you interest because your balence is lowered more frequenty

Kim · 04-18-2008, 05:56 AM

I think rising food/fuel costs are a good reason to work on building up extra cash reserve and savings as opposed to worry about paying down a mortgage. If you have a low fixed rate, you're better off putting your money elsewhere IMO. I don't classify mortgage debt in the same category as consumer debt at all.