Minimize Paying Interest on Loans
A. Use your Budget to determine any excess Money available. 1. Pay off all Loans as quickly as possible (in the following order) to SAVE the COST of Interest: a. Credit Cards – The highest interest b. Auto Loans – NOT Tax Deductible. c. Education Loans – Tax Deductible d. Mortgage – Tax Deductible B. You NEED to have a 30 year Fixed Rate BI-WEEKLY Mortgage. WHY? The 26 bi-weekly payments are equal to 13 monthly payments a year – so you are actually making 1 “extra monthly payment”. This 1 extra payment COMBINED with the more frequent application of Payments to the Loan Balance greatly increases the speed at which the loan pays off. The SECRET that the Bank does not want you to know IS that the Interest Charge is based on the Average Daily Balance. Therefore, you are paying MORE Principle and LESS Interest each time! This will SAVE you a significant amount of Interest and the Mortgage will be PAID OFF in less than 23 years! Eample: You will SAVE $56,794.00 in INTEREST with a Bi-Weekly Loan Payment of $440.00 on a $120,000.00 Mortgage @ 8% (as compared to a Monthly Payment of $880.00) AND be done 7 years earlier! The BUDGET TEACHER