Do you feel daunted when thinking about how to achieve financial freedom?
I admit I don’t know exactly what that looks like, but I’ve had some success with easing my financial burdens thanks to a couple of habits I’ve implemented over the years.
Paying Your Mortgage Twice a Month
One habit is paying my mortgage twice a month. If your first thought is, “holy cats I can’t do that,” I understand, but it may not be as difficult as you assume. I’m not suggesting that you pay double, I’m suggesting that you pay ½ a month ahead.
Instead of paying $2,000 on the 15th, you would pay $1,000 on the 1st and $1,000 on the 15th and then repeat the next month. Why is this a good idea? Because mortgages are calculated over a long span of time and a large portion is comprised of interest. By paying twice a month, a larger percentage goes to the principal.
Habit Development to Reach Financial Freedom
So how do you get into this habit?
It’s pretty easy if you are beginning a new loan because you have about a 45-60 day grace period after closing before the first payment is due. You can make your first ½ payment 15 days before the due date.
If you have an existing mortgage and like most of us don’t have the money on hand to make an additional ½ payment, then you can start by saving toward the ½ payment until you have enough to make it for the first time, which then reduces your next monthly payment. That may take you a few months.
This same idea can be applied to your car payment. For both your mortgage and your car, make sure your loans don’t carry a penalty for early payoff.
Financial freedom is one step closer.
What steps do you take to better manage your finances? We’d love to hear from you in the comments!