ANALYSIS: Sean Cooper’s story has gone viral. At the age of 30, he paid off his $255,000 mortgage in 3 years and 2 months. I spoke with Sean a few years back and trust me he has always been …
ANALYSIS: Sean Cooper’s story has gone viral. At the age of 30, he paid off his $255,000 mortgage in 3 years and 2 months. I spoke with Sean a few years back and trust me he has always been financially savvy and very frugal. But it was more than that. He was driven by a deep desire to free himself from the stress and risk of carrying huge amounts of debt. Kraft Dinner became his meal of choice, he worked three jobs, there was literally no travelling, he brown bagged it for lunch and actually lived in his basement apartment while renting out the balance of the house. We are all in awe of him and yet there were sacrifices he made that many say they simply couldn’t or wouldn’t consider doing.
People are looking for a little more balance in their life, but can they afford that luxury? In a recent report from the Canadian Centre for Policy Alternatives, 1 in 10 homeowners younger than 40 would be under water on their mortgages if real estate prices crashed. It is estimated that 260,000 Canadians would see their net-worth wiped out if home prices dropped 20%. Canadians in debt in their 30s carry an average of four times their incomes, with those living in Toronto, Vancouver and Calgary the most vulnerable.
It doesn’t have to be all or nothing. There might be a balance to accelerating the mortgage burning party.
Here are a few tips to retire your mortgage faster –
1) Accelerate to bi-weekly payments – every 2 weeks for 26 payments per year. A $300,000 mortgage at 3% over 25 years will cost $125,920.44 in interest. Increase your payments to bi-weekly, and you will shave nearly 3 years off your amortization schedule and save just over $16,000.00 in interest.
2) Make a lump sum payment once a year. An annual lump sum payment of $250.00 on a $400,000 at 3.5% over 25 years combined with bi-weekly payments results in decreasing 3.5 years off your amortization.
3) Put “found” money, and that includes gifted money on the mortgage. Little amounts chip away and could save you years. Use RSP refunds to pay down principle.
4) Consider rounding up your mortgage payments – if you pay $457.00 a month, round it to $500.00 and combine it with bi-weekly payments. You won’t really notice the difference and the savings are huge.
The following few tips came from Sean himself:
5) Shorten your amortization period. By shortening your amortization from the standard 25 years to say 20 years, your mortgage payments will be slightly higher, but you’ll save a boatload of interest.
6) Pay your mortgage as if mortgage rates are higher. By upping your mortgage payments as if rates are 3 percent higher, you’ll be prepared if interest rates increase when your mortgage comes up for renewal.
7) Do shop with a mortgage broker. Your local bank branch may not give you the lowest mortgage rate. By shopping with a mortgage broker, you’re more likely to get the lowest rate. A mortgage broker is compensated directly by the lender, so you won’t pay anything out of pocket.
8) Do consider other factors besides just the interest rate. The lowest interest rate isn’t always the best mortgage. A slightly higher interest rate may offer you perks, like more generous prepayment privileges.
9) Do understand mortgage penalties. Chances are when you sign up for a mortgage you don’t intend to break it. But sometimes life happens – you get sick, lose your job or get divorced. If you decide to sell your home, you could face a hefty mortgage penalty. Ask about mortgage penalties before signing up for your mortgage. Find out whether your mortgage is portable.
10) Bottom line: if you picture yourself mortgage free, then arm yourself with the right tools and strategies, to transition to being debt free and enjoy the freedom Sean Cooper is experiencing that much sooner.
Becoming a millionaire takes time and discipline and even if you inherit it or earn thorough some great accomplishment likes sports or entertainment you need to have wisdom and knowledge to keep it!!!!
I believe that this article hits many key points that you will need if you REALLY want to be a millionaire!
Take a look and feel free to add your comments
10 Steps to Becoming a Self-Made Millionaire
You have to have a plan if you want to become wealthy
Building wealth for most people is a long process that requires discipline and sacrifice. There are many people who will waste their life away, wanting things to be different. Then there are those who are willing to change themselves to change where they are going. These are the people who have what it takes to become wealthy. These are the people who have a plan.
1. They don’t live like millionaires.
What we mean is, they don’t spend the way most people you would conceive as millionaires do. Those people who spend money like it’s going out of style generally end up broke. They must file for bankruptcy and get rid of their fancy house, cars, and materials to pay their debt. Self-made millionaires know the value in not spending all their money. They know waiting for what you want and saving for what you need is the only way to get there.
2. They are cheap.
More than not, when you meet millionaires, they are penny pinchers. They will be a little more stingy with their money. And that is OK! You don’t have to help every Tom, Dick, and Harry out there! They are wise with their money. Some of them are maybe a bit like Scrooge. You don’t have to be so extreme, but don’t spend every penny you have, just because you have it.
3. They give to charity.
Charitable donations not only help the conscience, they also help when tax season comes around. Those who give sizeable donations to charitable organizations, and have receipts for it, can take those contributions off their taxes. It is a win-win-win, right?
4. They invest.
Millionaires know that money sitting is just that — money sitting. It isn’t doing anything for you. Even if you don’t invest it, but you put it into a high interest account, it is more likely to accrue money for you later on than money in your pocket. When you get a paycheck, allocate what you need for bills and living, but put 10 percent into investments or savings
5. They earn a little more.
These are the people who are not afraid to go ask their bosses for a raise. They know how to work more hours at their job just to get that paycheck a little bit higher. They know how to do whatever it takes not to have to live paycheck to paycheck, because they put in the effort.
6. Get an education.
Although you will see some who do not get an education, the majority of millionaires see the value of an education, in getting a better job and compensated more for their work. School is expensive, but so is getting to millionaire status.
7. They work side jobs.
Many millionaires work one to three jobs, and their spouses do the same thing. They work as much as they can to bring home as much as they can.
8. They marry well.
Not that they marry rich. They marry someone with the same goals and value of money as their own. Their spouses may be as frugal, or even more so. That is the measure of good millionaires. They know how to become millionaires together.
9. They are organized.
They know where every penny goes. They know what each of their assets are doing. They do their own money managing. Do you think they would let someone who may potentially mess it all up take care of their money?
10. They teach their children.
Millionaires teach their children how to work hard and be millionaires. Their children know how to save for and earn what they want.
Everyone once in a while we need to know why we do what we do. This article is a short and sweet reminder help you stay focused on savings
3 Tips to stay in the Money-Saving Mindset
If saving money isn’t your strong suit, don’t worry. Changing your money habits will have its challenges, but with a little effort, you can stop making so many unnecessary purchases and start building a sizable savings. The first step is to think about your goals and priorities. Why do you want tosave money? You might be looking for the security of an emergency fund, hoping to spend less time working, or preparing to buy a new car. Recognizing what’s important to you will help you get to a place where saving money seems only natural.
1. Remember why saving is important to you
Here’s where your savings goals come in. Think about why you want to save money and take every opportunity to remind yourself. Talk about it out loud. Write it down. Even if your goal is as simple as saving for a single vacation, keep it in the back of your mind as you go shopping or seek out money-saving opportunities in your daily life. If your goal is to be a great saver in the long term, think about the financial freedom you will be gaining. It can be easy to concentrate on what you have to give up in order to save money, but if you shift your attitude to focus what you’ll get in return, it’s much easier to make the daily decisions needed to get there.
2. Hold yourself accountable
Budgets, spreadsheets, and shopping lists are enough to put the average consumer to sleep, but don’t be afraid to give this strategy a try. People who are already in the habit of jotting down notes or lists will likely be very successful making strict shopping lists and sticking to them. It doesn’t take much time, and it might save you the effort of trying to remember what you actually need when you get to a store. Once you make a reasonable budget for yourself, don’t stray from it.
3. When you get a raise, don’t increase your spending
It might seem natural to start spending a little more after a promotion. Maybe you start eyeing a larger apartment or some high-end gadgets. http://www.cheatsheet.com/money-career/3-tips-to-stay-in-the-money-saving-mindset.html/?a=viewall#ixzz3jEOhua00
Our society does a great job of labeling people that are different. Take a look at this great article from Yahoo that discusses the importance of FRUGALITY.
6 Reasons Not to Be Ashamed of Your Frugal Ways
A lot of people cry broke and whine about never having enough cash to get by, yet they’re not always willing to do what it takes to free up cash and save money. Being a frugal person is hard work. And if frugality doesn’t come naturally for you, resisting impulse buys can be a daily struggle, and you may go back-and-forth with whether to spend money on an item.
At the end of the day, a frugal mindset benefits your bottom line. So, while others may make you the butt of their money jokes, here’s why you’ll eventually have the last laugh.
1. This is who you are
We all have different money personalities. Some people are big spenders, whereas others hold onto a dime as if they won’t earn another. To each his own.
Just know that there’s a difference between frugal and cheap. Cheapness can affect the quality of your life, but frugality lets you enjoy the same qualify of life for less. Those who like to spend money might pressure you to loosen the purse strings. But if you’re not bothered by your spending habits, you don’t have to change your ways.
2. You don’t care about keeping up
If you’re committed to being frugal, chances are you don’t feel pressure to keep up with the Joneses or anyone else for that matter. We live in the age of financial peer pressure. This is a big problem in some social circles. If one friend buys a house, then the others are ready to upgrade. If someone wears designer clothes or buys expensive gadgets, then the others have to follow suit. It’s an exhausting cycle that not only reveals an impressionable mind, it keeps people broke.
3. It’s a financial necessity
Others might pressure you to spend money or make comments about your frugal ways. But if you’re frugal out of necessity, there’s no reason to be embarrassed or ashamed, especially since you’re willing to sacrifice more than a lot of people.
When dealing with money problems, some people want to save face, so they don’t make adjustments to their lifestyle. They continue with old habits, even if it further complicates their situation. A frugal person, on the other hand, does whatever it takes to save money so they can keep a roof over their head, food on the table and clothes on their back.
4. You might have a bigger bank account
This isn’t a guarantee, but if you choose not to spend your extra income, you’ll probably have a bigger bank account than those who poke fun at you. So, the next time you feel ashamed or pressure to adjust your frugal mindset, look at your savings account and consider how most Americans don’t have enough in their savings to handle a small emergency.
5. You can reach your goals sooner
You might have a long list of financial goals, but without a lot of extra money, it can take years to fulfill these goals. Being frugal speeds up your progress. If you reduce spending and free up cash in your budget, you’ll have income to pay off debt, save for vacation or prepare for retirement.
6. You’re teaching your kids good money habits
Kids often mimic the money habits of their parents. Remember this the next time you start feeling embarrassed about your frugality. If you’re an irresponsible spender, your children could imitate this behavior in adulthood with long-term financial consequences.