The other night I spent a few hours crunching some numbers through a loan calculator to see what impact paying more on the mortgage each month would have on the length of the loan. The post itself got a range of comments, with some being generally positive and some questioning if it is possible. After all, life pressures get in the way with things like car repairs and worse, kid repairs that impact on resources.
Are they excuses?
Yes and no. Yes, they are because despite all of these random things that come up, most people who have some average kind of life (making them part of the "most"), should be able to find some way to put a bit extra onto their loan each month. If they can't they should probably look at the way they are managing their finances. However, being consistent with this might take some time, so rather than putting it in straight away (unless you can draw on it again), it might be better for the sense of security to build up a little buffer for emergencies first, and then start consistently putting away.
I was talking with a colleague today about our bonuses and how I am unlikely to get my full bonus this month, because of various disruptions. And, it isn't just the lack of bonus that is the issue, I just don't like missing deadlines. But, I also mentioned that I was playing with this calculator and have decided that I am going to try and put all I can onto the loan now, so the thought of missing the bonus this quarter, seems worse than it normally would.
We continued the discussion as we were walking from one coffee machine to another, and then a couple other colleagues jumped into the conversation too. After getting them up to speed, they had said they had "looked into it" but had never actually paid off more. This makes me question whether they actually had looked into it, because it is largely a no-brainer. But, they all had some level of excuse to go along with why they hadn't.
There is always something, isn't it?
And for reference, the people I was talking with undoubtedly earn more than I do, and their bonuses are far meatier. So, why wouldn't they want to reduce the loan?
Perhaps it is because many people have got so accustomed to low interest rates, that they thought they would never go up again. Or maybe like most people, they think that one in the hand is worth two in the bush, even though that is a false analogy in this case, as they know what they are getting, unless they really didn't look into it.
Which is likely.
Because it is human nature. We tend to avoid what we don't really want to do. And let's face it, as much as we might want the result of paying off our mortgage earlier, the end is likely still a long way down the road, but spending that money comes out of the bank account now. The tunnel is too long, the light is not strong enough to guide us.
Financial health is in the head.
If the mindset isn't right, it isn't likely that it is going to happen, and we are living in a consumer world that encourages the polar opposite behavior than what is required. We are no longer patient. We are no longer able to be uncomfortable. We are no longer willing to sacrifice our gratification now, for something in the future. At least most of us.
Most of us. The average.
Are you average?
In many ways that matter, I am average or below and my "natural mind" is not suited to do what I am doing. It would far rather sit back and do nothing of substance, winging it through life, subsisting, surviving, and always wanting and wishing.
I am a dreamer.
Dreams can visualize a future that does not exist, but if we want to get there, we are going to have to make dreams a reality. We are going to have to act. At the moment, I want to reduce my mortgage significantly over the next eight years in the hope that I will be able to knock it out completely a decade before I retire. I want to be able to spend that time living a good life with my wife, traveling a little, without having to worry about how much I am working, or have to count every penny.
But, the future is an unknown and things can change drastically for the better or worse, but with the direction we are going, it looks like it is going to get increasingly bad for those with too much debt, and that is most of us. I don't mind being average, but I don't want to financially suffer like the average person because I chose not to put a little bit extra into a loan when I had the chance. I don't want to look back at today and say,
I wish I had...
I have collected too many of those already.
Taraz
[ Gen1: Hive ]