Here are five super basic steps to get your money in a swim suit and under an umbrella. Sweet and simple like apple pie. Be sure to think of all the amazing summer things you can do with the savings from these five steps. It’s easy to make these steps when you know how much more fun you’ll have or travel, or spoil family when you’ve saved it. And why not spend that money on something that will make you truly happy? It makes up tons of cents.
1. Automatic Savings – Transferring just $50 each week to a high interest savings account can add up to $2,600 plus interest in one year. ING has a rate of 1.3% as of today!
2. Keep your longer term savings like bonds and GICs in a Tax-Free Savings Account. It will help you save the most tax on income producing products like GICs or bonds. You’ll save the amount you would have paid in tax!
3. Change your payments to accelerated bi-weekly and save over $47,000 in interest and shave 4 years off your mortgage. Based on a $200,000 mortgage at 7% annual percentage rate on a fixed term over 25 years.
4. Make higher payments than the regular payment. Interest rates are low right now and the easiest 1% increase will add $126 a month on a $200,000 mortgage. If rates don’t rise that quickly you’ll be paying down your mortgage faster.
5. Be sure to only amortize your mortgage over 25 years. 30 and 35 year amortization are a newish feature that gets people buying houses they can’t afford. If you amortize the same $200,000 mortgage at 7% over 25 years compared to 30 years it’ll only cost you $84 per month more and also save you $53,000 in interest!
Have an awesome summer!