Welcome to another series here on the wildly popular I Was Broke. Now I’m Not. website. We’re passionate about helping YOU win with your money. In this series, we are going to be talking about a practical, step-by-step plan that you can use to take your finances to the stratosphere!
How To Win With Money
7. Pay off house (and business debt)
This is a level that marks a “major milestone” for most people. It is the goal of most people to retire with zero debt including their home. It provides a sense of security and accomplishment like little else will.
Utilize extra income and “found money” to eliminate the mortgage. There are several simple steps you can employ that can have a major impact on the velocity of your pay-off.
- Make a half-payment every two weeks Because there are 52 weeks in a year, this will result in 13 full payments each year. This can eliminate around 5 to 7 years on the average mortgage.
- Each year, use tax refund to make one extra payment toward principal This will accomplish very close to the same as option #1
- Pay extra money toward principal each month Use our early pay-off calculator to help you figure out how many months you can shave off your mortgage!
When you eliminate your final debts, your monthly cost of living has usually been reduced by 50% or more. This accomplishes two things:
- It provides more financial security
- It makes your investments last twice as long because you now require only half of your previous need.
By the way, I paid off my house by age 38, and I promise you this is an incredible feeling.
You can do this!
Read the entire series (available after 4/20/2013)