It’s a brand new year and of course what’s on the top of your mind? Saving money. This year you will certainly bring more bagged lunches, get less take-out, and cut coffee out of your daily spending. Anything to save a dollar – right?
Yes those things matter. But what you might not have considered is how much you could be saving by making bigger changes in the way you look at your money.
So…how much savings am I talking here? Well let’s use your mortgage as an example. By following these three steps you could be saving $65,541 on average based on a $300,000 mortgage value amortized over 25 years. (And no – that number is not a typo.)
Compare, Compare, Compare
Those that compare – save. It’s as simple as that. Users on RateSupermarket.ca that have compared mortgage rates save 72 basis points on average. So what does that mean for an average mortgage of $300,000? Over the course of a 25 year mortgage the result is $34,907 in savings ($1,396 saved in your first year).
Comparing isn’t just for mortgages – consumers that compare groceries save $1,150 a year on average, those that compare Internet providers save $612 on average, and those that compare cell phone plans save $492 on average.
Add that all up? You could be saving $3,650 a year just by shopping around to find a better deal.
Switch to Rapid Payments
When it comes to your mortgage payments, the type of payment you choose can result in massive savings. What’s the best choice? Rapid payments can not only save you $19,887 over the course of your mortgage on average, but it will also cut 2 years off your home loan.
So…how do rapid bi-weekly payments save you money? Since you pay half of your monthly payment every other week, the result is you end up making an extra payment each year in a way that you probably won’t notice. Which brings me to my last point…
Make A Lump Sum Payment
So now that you’ve cut out your daily latte, the question is – what’s the wise thing to do with that extra money? Three words: lump sum payment.
Annual lump sum payments of a mere $1,000 over 20 years will save you $10,747 on average. Now $1,000 might sound like a lot, so think of it as saving $83.50 each month, or passing on 17 lattes. Now that doesn’t sound so bad, now does it?
If you’re looking to save money this year, looking at your variable spending is a great place to start, but considering a change in bigger items can have a much bigger impact on your financial health in the long run.
If you’re interested in these stats, we’ve put together an infographic that goes through them in more detail: Save Money on Your Mortgage.