I’m not the brightest when it comes to finances, business, and legal jibber jabber…but I’m about to educate myself big time!
Every month I pay my mortgage. It’s small, I don’t question it. I get online and put in those numbers in my online payment through my bank. I don’t open the bill when it comes and I don’t see how much it’s going down. Until the other night.
When we purchased this home the lender made a comment about “you don’t even want to see what you pay in interest over the years, it’s too depressing.” At the time I just wanted the keys to my newborn home and I ignored her comment. But now I get it.
When my little brain figured out that Principal is a fancy term for the mortgage I was shocked that out of $918.02 only $173.83 is actually going toward the mortgage and $499.44 is going to the bank for interest. No wonder the banks are thrilled with the rising prices in the housing market. They laugh heartily all the way to their banks.
How do they get all those sheep to buy homes for outrageous prices that they can never pay off? I’ll tell you how. They announce a housing shortage! That gets everyone freak out and willing to pay whatever the price to get some housing security.
Well, the joke is on us. I see people with huge homes that cost a pretty penny and they don’t even live in the homes. The homes are empty, cold, neglected, with chipping and peeling happening because there is no love or living happening in the home. The yards are barren and lifeless, maybe a dead plant. Where are the humans that live there? They are at work. All of them are out working 50 to 60 hour weeks and then commuting another 10 plus hours. The house is a huge shelter to sleep in and that is about it.
If I’m paying more than half my mortgage just in interest, insurance, and tax, what is someone paying on a 500K house? And we are now at pre-crash levels from 2008 housing market. The forecast is another 2 years of going strong on housing prices rising and plenty of fools to pay the price. Wow, foreclosure city here we come!!
So, what to do with all this new thought? First, stop being a fool. Stop playing this game that only gets the banks and realtors and brokers rich. You are a pawn.
Either wait for a crash…oh yes, it will come. It takes a couple years of the sheep paying the mortgage just barely for them to become frustrated and figure out they have been dupped. Then the meltdowns start happening and the bankruptcies and foreclosures.
Wait for it and swoop in when it’s all crashed and homes are cheap. Buy a foreclosure, HUD, or short sale. Buy a double-wide trailer. By a cheap modular. By an old fixer-upper in a decent neighborhood. Get it as cheap as humanly possible. Move to a dusty town that is still cheap. Be creative. It’s amazing what you can do with a run-down home with just a good scrub, paint and tons of planting green things. I know.
Then get that mortgage paid off fast. The faster the less that you waist making the bank fatter. Here is a breakdown and then some tips.
This is from Dave Ramsey’s site:
A 15 year nonadjustable vs a 30 year nonadjustable mortgage. This was the example used and shortened by me.
Say you have a $225,000 mortgage at 6% = $1349 monthly payment. At the end of the 30 years, you will pay $486,000.
If you do 15 years it would be a monthly payment of $1899, however, at the end of 15 years, you would pay $342,000.
You would save $144,000. Wowie zowie!
Tips for paying a 15 year even faster.
- Pay an extra $100 a month. Saves 10’s of thousands in the end.
- Pay a double payment quarterly and if you can’t do that try to pay an extra payment at the end of the year.
How to make extra money without all the commute full-timetime hardship:
- If you are a homemaker, see about some work from home, babysitting, starting a daycare, blogging, writing, and other little jobs to make the extra cash.
- Get a little part time job. Clean houses, walk dogs.
How to save like a pro:
- Learn to live super duper frugal and thrifty.
- Go on a no spend year but tailor it to your families needs.
- Cook from scratch, brown bag it, buy in bulk, coffee to-go from home.
- Thrift stores, the library, and free stuff on Craigslist or free swaps will be your default setting.
- Down size, declutter, learn to live simply and with much less.
- Grow your own food.
- Hang the clothes out.
- Drink your water with a Brita filter. No buying water.
- Learn to live the old fashioned way.
- Pay off that debt and you’ll have so much more money.
- Watch Dave Ramsey.
- Get The Complete Tightwad Gazette and my book The Homemade Housewife.
- Watch my YouTube Channel Dirt Poor and Lovin’ It! and many other frugal people. Learn from them.
I’m right there with you and I’m doing a no spend year. I’ve reduced our budget to $2,000 a month with an increased payment on the mortgage. I will be switching our mortgage to a 15 year and make that extra payment yearly. We are living hardcore frugal and it’s turning out very fun. We are being pushed to get smart and I feel more creative than ever. My husband and I are more productive than ever and our family time and work on the mini-city farm has increased in quality.