Finance should be simple. It should also be automatic as that way you can just focus on having a fun, exciting life and always know in the back of your mind that you’re doing the best thing for your financial future.
Also it’s not hard to realise that mortgages are pretty damn boring. Going through all the different plans banks have, the legal documents, the interest rates… it’s tedious and boring and even I don’t like dealing with it. I’d much prefer to be out partying.
This is why I’m such a huge proponent of Automation. It allows you to not only avoid the super boring crap in life that everyone must deal with at one stage or another, but it also allows you get far, far better results than everyone else out there!
So when it comes to boring – but super important to manage correctly – crap in life that everyone must deal with, mortgages are right up there at the top. So let’s get automating!
Calculating Your Extra Repayment
Step 1 is to figure out how much extra you should be putting towards your mortgage. While this might sound initially like a hard to figure out number, I have built a special Spreadsheet that literally does everything for you already.
Click on this The Mortgage Planning Spreadsheet link and follow the steps outlined to get a free copy of it all setup. Keep in mind that when filling out the expenses tab you don’t have to really be that accurate. Even if you’re a bit off it’s something you can further refine later on, the important thing is to start.
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Once you’ve got your number all calculated for you then you can get on with the second and final step to vastly improving your life. If you’re new and nervous about doing this, use about 25% less than the figure that’s calculated.
So how do you do it? How do you setup your account to automatically pay off your mortgage for you? It sounds complex… but it’s not!
In fact it’s very quick and simple to setup plus it seamlessly fits in with your life from day one. For once, dealing with your mortgage/bank isn’t a problem mainly because for most banks, you don’t have to speak with anyone to set this up, it’s all done through the online banking interface!
This is going to look different for different banks but they should all look relatively similar as most banks do the same things the same ways. Below is a screen shot of how to setup automatic payments in NAB’s online banking website. First login and then click the “Funds Transfer” and then “New Funds Transfer” links. Then follow these steps:
Obviously the “To Account” should be your mortgage, for us the “From Account” was our joint or offset account.
For the repayment amount I would recommend aiming high. Use The Mortgage Planning Spreadsheet to help figure out what your extra repayment can be and then keep focusing on pushing this figure up and up.
Fortnightly and weekly repayments are virtually the same with weekly saving you a few dollars each year in interest so I recommend aligning this with whatever your work pay cycle is for simplicity.
Below is an example of another bank, ING and how you would do it using their system. First Login, then click on the “Transfer & pay” menu on the left, then choose “Transfer Funds”.
Once you’ve set this automatic repayment up you can go about your life and know in the back of your mind that every pay you’re jumping ahead of everyone else out there.
Minimal Effort. Maximum Results
Going through all this can legitimately take 30 minutes to an hour and you’re done. You could do this in a work lunch break. You could do this at home one weekend. It takes very little time but the results you’ll get are huge.
You’ll know that in a definitive – likely sub 10 years – time frame your house will be yours and you can move on to bigger and better things. You will be decades ahead of the vast majority of other people out there and more importantly, you’ll have created a safer, more prosperous and happier future for you and your family.
Then let me know in the comments below how many years you shaved off your mortgage by upping your repayment and automating your life.
The benefits include: 1) How to pay off your mortgage faster than 99% of people with one hour a month of work 2) How to get rid of your debt and have the freedom to spend money on the things you love, guilt free 3) Clear outline of how to setup your expenses, mortgage and general finance 4) How offset accounts work and how to get the same result without being gouged by the big banks 5) How to cut through the crap and focus on the things that truly matter when taking down a mortgage 6) How to adjust the strategy so it works for you, even if you have kids, even if you only have one income 7) How to do all of these things and maintain a normal social life (and never be cheap).