Three Ways To Save On Mortgage Interest

There are three easy ways to shave off some interest from your mortgage.

Because mortgages typically have a long amortization period, the interest really adds up. In the end, depending on the length of your mortgage and the interest rates, you may end up paying as much, if not more, in interest than the original mortgage amount.

Here are three simple things you can do to significantly reduce the amount of interest you will pay:

1) Principal only payments. Every financial institution has rules about how these can be applied (for example, there are minimum and maximum amounts, as well as yearly frequencies). A friend of mine recently put $3,500 towards her mortgage principal, and saved considerably more than that in interest.

2) Shorten your amortization period. Use this calculator to see what I mean.

3) Pay more frequently. If you are paying monthly, consider bi-weekly or even weekly. The sooner you can reduce the principal, the sooner the amount that the interest is calculated on is lowered.

Remember that interest is how banks make money - whatever you can do to reduce the interest you pay puts some of that money back in your pocket.
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Tackling Credit Card Debt

Here's a tried and true method for dealing with credit card debt that many have had success with. I thought I'd review it here for anyone who hasn't heard of this method or tried it themselves yet:

1) Pay the minimum on all your cards except for the one with the highest interest; on that one pay as much as you can.

2) Once that highest interest card is paid off, take that money that you were paying on it and apply it to your card with the next highest rate.

3) Continue on down until all the cards are paid.

This is assuming, of course, that you're not charging more on the cards than you're paying... if you're not, then it's an organized, sure fire way of definitely paying them all off.
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The Danger Signs by Suze Orman

I'm watching The Suze Orman show and she just finished covering 6 warning signs of impending financial ruin, i.e. "the point of no return". I flipped open my laptop and started madly typing as she spoke. Here's what she said:

You are approaching the point of no return if the following is true:

1) You owe money on a credit card(s) with balances increasing every month, and you are only able to pay the minimum.

2) You need to take a loan from a retirement plan or mortgage to pay your credit card or living expenses.

3) You purchase necessities (food, for example) using credit cards.

4) You are living on cash advances.

5) You are falling behind on bills.

6) You can no longer afford life or health insurance.

(Phew... I don't feel so bad ;-)