3.5 Ways to save money

1. Start saving
2. Power of Compounding Interest
3. Reduce the amount of high interest debts

Web Link
	: http://www.sorted.org.nz

• Consider refinancing your home loan. For every $10,000 of your mortgage loan, 0.5 % difference in the interest rate saves you over $40/year or $3.40/month in interest expense. A $100,000 loan at 9.5% refinanced at 7.5% saves $142/month or $1,704/year, for a total of $50,991 over the life of a 30 year mortgage. Potential Savings: $1,700/yr.
• For even more dramatic long-term savings, consider a 15-year mortgage rather than a 30-year mortgage. A $100,000 loan at 9.5% over 15 years saves $114,747 over the life of the loan compared to a 30-year mortgage at the same interest rate. At 7.5%, the savings between a 30-year and 15-year mortgage of $100,000 would be $84,854. A 9% loan of $100,000, refinanced for 15 years at 7.5% would add $86/month to your payment but would save you a whopping $135,845 over the life of the loan. Potential Savings: $84,000-136,000
• You can achieve similar results by paying an extra principal payment on your 30-year loan each month. (In the early years of a loan, the principal portion of your payment is very small. On a 30-year $100,000 loan at 7.5%, the monthly principal payment in the first several years is approximately $75 to $85/month). This option has the added attraction of not committing you to the higher payment, so if you are short on cash in a particular month you can skip the extra principal payment. To find out how much of your payment each month goes towards reducing the principal on your loan, contact your lender and request an amortization schedule. You can also calculate these figures with a business calculator or financial computer software package. Potential Savings: $85,000-136,000
• Still another way to achieve these results is to pay one half of your monthly home loan every two weeks. Potential Savings: $85,000-136,000