A mortgage might seem like a life-long commitment, but it can be your key to financial freedom, and even early retirement.
Wouldn’t it be nice to retire at 50? Working hard to gain an education, establish a career, buy a home, raise a family and pay the bills can make it harder to feel like you’re making the most out of life. Some people are still paying off their mortgage well into their 60s.
If you work smarter (and harder) in paying down your mortgage, you could be the person who retires early, or at the very least stops working so much, before you get too old to enjoy the rewards of a lifetime of work.
Your home, and any investment properties you own, can be put to work now to buy you financial freedom, and most importantly financial choices. It’s never too late to start thinking about retirement (whatever age you want to stop working) and begin the groundwork for your golden years.
People ‘lock and load’ a large mortgage in over a 20 or 30 year term and quickly forget about it, paying it each fortnight or month without a second thought. The reality is it’s still debt, and while it’s necessary debt, a mortgage is no different to a car loan or credit card debt. It’s best to pay it off as fast as you can, because once it’s gone you can use the extra income to save or invest.
So, how can you create new income or a budget surplus to reduce the mortgage faster? It depends on what stage your life is at because it’s often easier for a couple with no kids to make financial sacrifices, than what it is for a family. Small steps can lead to big rewards so consider the following - can you:
- Rent out an extra room (think Air B’n’B)?
- Reduce how often you eat out, or buy takeaways?
- Stop making small, meaningless purchases?
- Reduce the amount of clothes you buy?
- Sell some stuff?
- Save for family holiday instead of using the credit card to fund trips?
Money you save can go towards additional repayments - but it’s important to have a balanced life, so be realistic about what you can give up. Life is for living - even if you’re trying to get rid of your mortgage.
Thinking of your mortgage as the key to financial success, and not a debt that will be around for years to come, could transform your life, and buy you that golden ticket to early retirement. Make sure you talk to us for advice on tackling your debt so you can live the good life earlier.