Joseph Del Sesto's Blog
Two thirds of American homeowners are somewhere in the process of paying off a mortgage. It may seem like common sense that everyone should try to pay off their mortgage sooner rather than later. However, there are circumstances when it benefits a homeowner more to hold onto their mortgage longer.
In this article, we’ll offer some tips on paying off your mortgage, when you should refinance, and offer some tools that will help you along the long road to debt-free homeownership. If you’re a homeowner and find yourself asking these questions, read on.
I can afford to pay more each month on my mortgage, but should I?
In many cases, paying off your home as quickly as possible saves you money in the long run. A shorter loan term means less interest applied to your loan which could save you thousands of dollars in accrued interest.
What many people don’t think about is whether that money could be better spent elsewhere. If your mortgage interest rate isn’t too high, you might be better off allocating that extra income toward investments or retirement funds where they could earn you more in the long run.
This technique is typically most beneficial for younger homeowners. In your 20s and 30s you stand the most to gain from long-term investments, especially tax-benefitted retirement funds. Ultimately you’ll have to do the math, which is tricky because circumstances change; markets vary, our income goes up and down, etc. However, a good starting place is to determine whether you could earn more in retirement and investments than you could by paying off your mortgage sooner and therefore saving on interest.
I’ve owned my home for a few years now, should I refinance?
One way this can be accomplished is by refinancing to a 15-year fixed-rate mortgage which often darry slightly lower interest rates. This option is designed for people who have improved their credit and increased their income since signing their first mortgage.
Math isn’t my strong suit. How can I figure out my finances?
Use this mortgage calculator for determining how much you would save by making extra payments.
This refinance calculator will help you understand the potential benefits of refinancing your mortgage.
To determine how much you could earn through investments (rather than paying more toward your mortgage) use this helpful tool.
You might be able to increase your savings by creating a better budget for yourself. This website will help you make a detailed budget and hold yourself accountable each month.
- Tool sheds are not an absolute necessity for most people, but they can be extremely helpful in protecting your yard equipment and keeping your property looking neat. If you own a riding mower, for example, there may not be space in your garage to store it. For those who own a backyard swimming pool, a shed can be very useful for storing pool chemicals, maintenance equipment, and pool toys. While a tool shed can set you back a few hundred dollars or more, getting one on your property will make your yard look nicer and keep your tools, chemicals, and machinery in a safer, more secure place.
- Many people are aware that a basement dehumidifier can remove excess moisture and help prevent the growth of mold. This is especially important if you're storing anything of value in your basement, such as old books, important documents, clothing, framed art, or collectables. Since basement humidifiers vary in price from a couple hundred dollars to well over $1,000, some homeowners postpone buying them. However, when you factor in the potential cost of mold remediation and having to throw away belongings that get damaged by moisture and mold, the cost is much more justifiable. If you're fortunate enough to have a dry basement with a humidity level of less than 50%, then a dehumidifier may be an unnecessary purchase. If you want to be sure, though, you can buy a cheap humidity gauge for $10 or $20 -- either online or at a local hardware store.
- A ceiling fan may seem like a frivolous expense for a screened in porch, but you'll be mighty glad you have one on hot, humid days! You might think that large window screens would provide ample circulation for an outdoor porch, but unless there's a breeze -- either natural or man made -- then that hot air will often just sit there and linger, much like a guest who has overstayed their welcome! A ceiling fan can pull that uncomfortable air away from you and stir up some much-needed circulation. Ceiling fans, which typically cost between $100 and $200 (plus installation) -- create both the look and feel of a cool, breezy environment. They also help reduce air conditioning costs inside your home.
It doesn't take much for household budgets to get thrown off track, especially if you find yourself spending more at the grocery store, every week, than you need to.
If you're looking for some money-saving strategies to cut your grocery spending, the first step is to identify the source of the problem. Here are five possibilities:
- Grocery shopping when you're hungry: Although we've all done this at one time or another, there are things you can do to reduce the frequency with which it happens. The obvious solution is to either schedule your shopping trips for after you've eaten or to have a healthy snack before heading to the store. By taking those simple steps, it will be easier to resist impulse purchases, stick to a healthier diet, and avoid buying extra things you don't really need.
- Shopping with one or more children in tow: Sometimes it's impossible to make child care arrangements when you need to go food shopping. However, when you have kids with you constantly pleading to buy this or that, you'll probably say "yes" for every two times you say "no"! (If you've had a rough day or your resolve is low, the odds might be stacked more in favor of the kids!) The bottom line is that food shopping with children often adds quite a few dollars to your grand total.
- Not comparing prices: Since we're all "creatures of habit" and tend to switch to "autopilot" when we're doing routine tasks like grocery shopping, most people gravitate toward buying well-advertised name brands or products with misleading buzz words, like "new", "improved", "reduced", "natural", "fortified", "free", or "special". Sometimes those words do mean that you're getting more value, but most of the time, they're just marketing ploys. So it pays to read labels, compare prices, and make informed choices at the grocery store. You'd be surprised at how much money you can save by shopping more mindfully.
- Having an aversion to coupons: A lot of people have convinced themselves that discount coupons are more trouble than they're worth and that they really don't save that much money. Others have adopted the attitude that it's "beneath them" to clip and use supermarket coupons. One way to reframe the situation is to ask yourself how you'd feel if the store overcharged you $10 every time you shopped. While that's just a hypothetical scenario that would probably never happen, many people are unintentionally boosting their own grocery bill (sometimes by that much) by not using coupons -- especially at stores that offer double coupon value.
- Not buying in volume: The old cliché that things are "cheaper by the dozen" is as true today as it was generations ago. While it's not practical or cost effective to buy larger quantities of products that are going to spoil, expire, get stale, or become obsolete, it does make sense to selectively take advantage of volume discounts and two-for-the-price-of-one (BOGO) deals.
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