Wednesday, June 9, 2010

No spend day

Today I can proudly say I have not parted with a single cent. Now that is a reason to celebrate and I am happy about it. Every day I manage to keep every penny of mine in my bank account makes me one stop closer to debt free.

This is one of the times when having an offset mortgage and a credit card which is paid in full every month works to the advantage of the mortgage holder. With the way my mortgage works I still pay a standard 25 year minimum payment but having money in savings means more of that payment goes towards principal than a standard loan.

Of course this only works if you are careful. With the way my package is structured I can redraw any extra payments I have made but not as simple as heading to the ATM or logging on to my banks website. This feature makes the BNZ Total Money package better than a normal revolving credit loan in my opinion. It means I can't splurge at the mall because I can use the redraw and I still have to budget for all my expenses. It's a great way to get ahead and it is working for me. Each month I am managing to pay an extra $85 in principal simply for doing nothing and showing some self restraint. All up in the almost 3 years I have had the loan I have managed to pay off about $3000 extra. And this is money I will never have to pay interest on ever again. In my opinion that's a great deal.

So if you want to save money and pay off your home loan faster just like I do then look into offset loans. They are not overly popular in NZ yet but if more people want to start using them more banks may offer them.

No comments:

Post a Comment