Sunday, September 23, 2012

How to save between $30,000 and $300,000 without major changes to your lifestyle!

I have been playing around with Liquidity’s mortgage and financial calculators (free online – see 

As I have said before, as people earn more, they spend more.
This is corroborated by an Australian Securities and Investments Commission (ASIC) study that indicates that one in seven Australian families spend more than they earn and  only 54 per cent of Australian householders know exactly what their money is spent on.
ASIC estimates that Australians spend $69,000 per household annually - $1290 a week - on living costs. (based on an article by Mark Bouris in the SMH today)

Paying extra amounts towards our mortgage can save hundreds of thousands of dollars!!
An extra monthly repayment of just $50 a month on  a $400,000, 30-year mortgage paying the average variable rate of 6 per cent could take 1 year and 7 months and $30,000 off your mortgage!

Where can I find savings?
Costs during the working Week
  • ·         I generally spend $12 a day on a takeaway lunch and drink. By bringing  a packed lunch from home twice a week (from the previous nights dinner) , I save $24, or $96 a month -
  • ·         Cutting just one cup of takeaway coffee at $3.20 a day equates to $69 in savings a month.

Saving = $165 per month

  • ·         Taking the train ($130 per month) vs taking my car (garage $500, tolls $80, petrol and maintenance $200)

Saving  =  $650 per month (I would save more if I sold my car – but let’s not get carried away!!)
An extra $650 per month towards your mortgage will save you $210,950.73 abd 12 years and 1 month off your mortgage

Home Cost Savings
  • ·         phone costs and internet plan -  We have just signed up to the Telstra Bundle – Saving $150 per month
  • ·         Foxtel – we have 2 foxtel lines in 2 rooms, we only really need 1 – Saving $50 per month
  • ·         reduce the number of times we eat out from, say, twice to once a week and we could save $300 a month;
  • ·         time our petrol refills to the cheapest days,
  • ·         shop for groceries at lower-cost supermarket and look for specials

Saving – say  $500 per month
  •  Reviewing our insurance costs and funding our life insurance from our Superannuation saved $1,000 per month from our operating cash flow

Saving $1,000 per month
If I achieve this each month, we will go for an amazing meal for 2 at a cost of $165!
Cumulative Monthly Savings – say  $2130 per month.
Investing this in a $400,000  mortgage  will save  $334,210.66 in interest payments and 20 years off our mortgage!

A key to wealth creation is understanding what you are spending and preparing a budget and a financial plan. 
Its about cutting small costs that will probably not make a difference to our lifestyle  so we can save thousands of dollars off our mortgage.
Have a look at liquidity’s mortgage and financial calculators to show you how much you can save by paying extra off your mortgage!!

If you are interested in getting a quote on your mortgage - click here

No comments: