Saving a little money on everyday expenses and adding it to your home loan repayments can certainly help in getting that home loan paid of a little faster. Even if you are saving for a deposit it pays to look at your everyday spending and see where there may be an extra dollar or two to put away.
In some cases, it may not mean sacrificing your standard of living, just spending wisely and managing what you have.
One of the first steps is to have a budget. Start with listing all your monthly income and all your monthly expenses including debt repayments or deposit savings. Also allow for saving some money each month for emergencies, fro example, doctor bills, car repairs and unknown expenses.
Subtract expenses and savings from your income and you’ll be left with a positive or negative figure, if it’s negative it’s time to get to work on reducing those expenses. The key here is to manage your money not have your money manage you. There are also a wealth of resources on the web to help with budgeting and understanding money.
The moneysmart.gov.au site provides a great number of impartial resources to help get you started including an easy to follow guide on budgeting along with a downloadable budget planner for excel which is also available in print form.
Tips for saving money for your home loan:
Take a look at your bank fees and credit card fees – credit cards can be expensive if not used wisely, look at reducing any expensive debt and make sure you have the right account for you. Some people may want to look at refinancing that debt, contact a professional advisor to see if there are smarter ways to manage your debt.
Personal habits – cigarette smoking is really a costly exercise and quitting will not only put money back into your budget but probably make you a little healthier too.
Where do you shop? – take a look at all your purchases each month and look for ways to reduce the cost of these items. Substantial savings can come from improving buying patterns like how, when and where these items are bought. Convenience stores are generally expensive, look to make planned purchases, try discount stores or outlet stores and look for special offers on items you need every month.
Saving money on the car – fuel is expensive, look at ways of reducing the fuel bill with dockets, car pooling and effective use. Keep your tyres at the recommended pressure, don’t carry extra baggage that adds to the weight of the car, remove roof racks when not in use, use the air-con only when you need to and keep it tuned and maintained all help to reduce fuel costs. Also checkout the new rage in America – Hypermiling – at CleanMPG.com
What do you need and what do you want – have a clear understanding of what are your necessities and priorities. Write down your priorities numbered one through to whatever. This can help to keep the goals clear and steer you away from miscellaneous spending.
Forget retail therapy! – there are plenty of free and almost cost free activities to enjoy that can keep you healthy and free from stress. Check out your local council website for a list of parks, amenities and current activities along with your local government health site which will have guides on keeping healthy and stress free.
Budgeting is an ongoing process and look to fine tune it every month and the extra money you save may be able to help reduce mortgage debt or help save for a deposit. Keeping records of when, where and how much you buy items for may seem laborious at first although after a while you may be excited at the money you save and start to enjoy your new habits. Everyone’s circumstances are different so be sure to seek professional advice.
Also see where you can save on your loan with these handy calculators:
- Loan Repayment Calculator
- Extra Payment Calculator
- Home Loan Refinance Calculator
- Bi-weekly Loan Repayment Calculator
- Interest Only Payment Calculator