Wednesday, September 24, 2008

Decreasing your mortgage payment...sort of!

Before I made my move to working part time, I was looking for all sorts of ways to cut expenses. One of the ideas I came up with has saved us about $90.00 per month on our mortgage in a round about way. Here is what I did:

  • Our monthly mortgage payment is $1,159.

  • I took our monthly mortgage payment and multiplied it by 12 (the number of times we have to make the payment each year) or $13,908.

  • My husband gets paid every other week, so there are two months during the year that we receives three paychecks instead of two for a total of 26 paychecks per year.

  • I took the total yearly payments and divided them by 26 or $535.00.

  • Each time my husband gets paid, we have set up with our credit union to transfer $535.00 to our savings account automatically.

  • We pay our mortgage payment each month out of this savings account.

  • Therefore on a normal month we transfer only $1070.00 to savings for our mortgage payment - or an $89.00 savings each month.

Important notes:

  • In order to start this plan, you must start on a three paycheck month. The excess funds will remain in your savings account to pay for your subsequent mortgage payments.
  • This is also a separate savings account from our other savings so that it is not intermixed with other funds so we don't get confused and we don't spend it.
  • Obviously this isn't the way to get my mortgage paid off faster, but this is helping us at this season of our lives.

So that's what works for me - check out Rocks in my Dryer for other great Works for Me scenarios!

2 comments:

Veggiemomof2 said...

Great job! We use to do something similar to this too.

Mrs. Querido said...

Great idea...and good job sticking with it! Can't wait until our finances get to the point where we can pay extra :)

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