You view one account and know how much money you have to pay back. Firstly, you can see exactly how much you owe on everything. Having all your money in one place can be extremely beneficial. Good luck and happy principle investing from the Kiwi guy in lil ol New Zealand. Better for you to have the money to do the things you want to do. All which means more money out of your pocket and into theirs. Means more insurance, taxes, upkeep, heating, cooling, decorating, financing. Oh, and don’t buy into the bigger house syndrome either. Your life down the track will thank you handsomely. Credit Card companies and banks know this only too well.
This snowballing effect just magnifies over time (relatively short periods of time I might add) Albert Einstein said (allegedly) that the most amazing thing in the universe is compound interest. So for the third month you will be paying interest on $99,600 and so on. If you then add $200 to the principle payment for the next month you will be paying interest on $99,800 and adding another $200 to the monthly principle reduction payment.
So next months principle payment is now $99,800. But let’s just forget the fractional for our calculations. Next months payment will be $100,000 minus $200 minus that fractional payment. You make your normal payment of $x plus add $200 to the principle payment. Say your mortgage is currently exactly $100,000. But wait, there’s more (thanks infomercials LOL) not only is your yearly balance $2400 less (actually slightly more coz your table mortgage principle goes down fractionally (very fractionally) each month, but you are paying less interest as well on the outstanding balance. That is miles faster than just leaving visit their website it as it is… and blowing the money of cappuchinos or whatever. Will $50 or $200 a month even make a dent? Are you kidding? If you add an extra $200 per month to the principle then over the course of a year you have lowered the principle amount by $2400. Your young age is also on your side ? Get a printout of the amortization schedule for your specific loan, from your lender You’ll be fine as long as you have the income to do it. You’re young and I bet you’ll have that house paid off by the time you’re 45. First, you’ll be able to see how little principal the early payments subtract, and thus, how additional payments in the early years of the loan have the greatest impact I am currently debt free except for the house. Make sure you track how much additional money is being paid against the note, just to keep your lender honest
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