Ways to have your net worth add up on its’ own
Bank interest is compounded on a daily, monthly, or annual basis. Daily is best. As time moves forward, your interest is gaining interest. Keep adding to the account and it will add up faster.
Make additional payments to your mortgage. Be sure you make them as ‘Principal Only’ payments. Make them in any amount and as often as you can. They will not only reduce the length of the loan, but they will save interest charges as well….if you do this often enough, you can save thousands of dollars over the length of the loan.
Most who have a mortgage have it for 30 years. From the second payment on, you can pay it off in 27 1/2 years….saving 2 1/2 years, and thousands in interest. Tell the lender that instead of paying your mortgage monthly, you want to pay it bi-weekly, (1/2 the mortgage amount 2 x a month plus 2 more half payments a year, as the calendar falls,…which totals 26 payments). It’s just a phone call and they can switch it over. With a regular 30 year loan, it’s 12 payments per year. Bi-weekly payments are made every 14 days (52 weeks divided by 2 = 26 payments a year. The 25th and 26th equals an additional full payment…credited totally towards the principal only. It’s just a matter of setting it up, and it saves thousands in interest costs. Twice a year, usually May and October, but as the calendar falls, there is the extra 1/2 payment needed, so make sure it’s in your account to cover it. You should make a habit of checking on available totals.
If you are disciplined with your credit card (paying in full and on time), this, of course, will save rollover interest fees and late fees. But should you need to make a purchase which is necessary yet a little more costly than usual, check your closing date, and make the purchase a day or two later than that. In that way, you’ll have the entire billing cycle, plus the two or so weeks after that but before that purchase is due to be paid. It gives you a few weeks extra to put money aside to pay in full when the bill does comes in.
If you pay your car insurance in full when the bill comes due, you can usually save 5% on your comprehensive coverage — a savings of about $40.-50. annually. With a good driving record, there is a discount, as well as others…. check with your insurance agent to make sure you’re getting all the discounts you deserve.