Before I begin, I’m going to ask a favor. I need you to stop thinking about today, and instead I need you to think about the next 30 years.
You see my friend Tracie, asked me to write this for you and I’m supposed to share with you my top saving money strategies.
The only problem is when I share these with you, they aren’t going to seem like much.
Because saying you saved $4 today isn’t going to give you that warm and fuzzy feeling.
To get that feeling you need to see that saving in the grand scheme of things.
So before you read this, you need to be in the right frame of mind.
That frame of mind is this: small changes add up.
And they add up very quickly.
So when I mention something small, like I do in #1 (don’t skip ahead, we’ll get there soon), you need to see it through my eyes and the lens of 30 years.
If you are having trouble with the whole thirty year thing, you can use the number 7500.
Because that’s how many weekdays you are going to have in the next 30 years.
So when you make a cut to something that happens everyday, you can multiply it by 7500.
That’s how I became mortgage free in 6 years (maybe I should have led with that? Oh well…).
It was by watching all the little things add up. These are some of the costs that I cut to save money so my family and I could pay off our mortgage years faster.
You’ll find that a lot of these are swaps than flat out cuts. Though our family did our fair share of cost cutting too.
1. Coffee Out
Straight for the jugular, now to be fair, I cut out coffee for one whole day, and the headaches made me realize that this wasn’t happening.
Instead I switched from my 2-3 coffees at work (which cost me $6 to $10 on any given day) and opted to bring the coffee from home in a thermos.
Daily savings: $10 (yes, I have a coffee problem)
30 year savings: $75,000
2. Lunch at work
My laziness knows no bounds when it came to not making my lunch.
All too quickly, that laziness became an $8 lunch every single day.
Which really isn’t bad for a lunch out, but coupled with those coffees, they sure added up.
Knocking off that $8 daily charge saved me good chunk of change. But the best part is that we get to blow it up with that 7500 factor over the next 30 years.
Daily savings: $8
30 year savings: $60,000
3. Driving an Old Car
True story, I was renewing my car insurance and ran in to one of my friends.
He looked outside and asked, “How’s the van holding up?”
“About as good as an old van should.”
He laughed. I laughed
Then I added… “But I’ll take a grand, or two, in repairs every few years over 20+ grand in car payments.”
The laughing stopped pretty quickly.
Does driving an older car drive me nuts? Yes (because who doesn’t want to drive a brand new car?).
Does it save a lot of money? Oh yeah baby. Tons.
Don’t get caught in the new car rut. It’s a money trap.
By driving my car until it dies, I save the cost of buying and trading two cars (I’m at year 15 and I’m pretty sure I can push this van to 20 years)
Buy a good reliable, low maintenance vehicle (I only buy Toyota and Honda) and drive them until they are done.
Here’s the facts; the average car is $36,000 and people replace them every 7 years. So if you can stretch out the life of your car to 14 years, you are effectively saving $36,000 in that last 7 years (because you didn’t buy a car at year 7).
Over 30 years that’s $72,000!
Let’s say you have $12,000 of repairs over that 30 years, You are still saving $60000, which we know from #2 that means an $8 savings a day.
Daily savings $8.00
Savings over 30 years: $60,000
4. Buying Used
Another way I save money a lot is by buying used. Clothes, toys, even my guitars, you name it, I look for it second hand first.
There’s a reason I buy used, it saves a bunch (we’re talking 50% or more below retail).
That’s what brings me to buying a car.
Did you know that your car loses over 20% of the value in the first year? Talk about an expensive ride.
But when you know this, you can also benefit from it.
Start buying your cars used.
Let someone else lose that 20%, and find a recently used car to buy so you can save more.
If the average cost of a car is $36,000 and you can find a reliable used one for half that price you are adding to the savings we just talked about.
Buying used can save you half of the car price, that’s $18,000. If you are already buying a car only every 14 years.
Then that’s another $18,000 every 14 years.
Daily savings: $4.80
30 year savings: $36,000
5. Your Mortgage Interest
I’m saving the best for last. Because it ties into everything we have been talking about.
Do you know the most expensive cost in your life?
It’s housing. More specifically, it’s mortgage interest.
Yet it’s ignored by virtually everyone.
I’m going to open your eyes right now, and when I’m done there will be no other way to look at things.
When you buy your home, you will pay a ton of mortgage interest over the life of a 30 year mortgage.
How much, you ask?
Depending on your interest rate, you will pay close to same amount in mortgage interest as you will the price you pay for your house.
Or put it another way…
When you buy your house, you are actually paying for a second house in the form of mortgage interest.
*Every time I write that I throw up in my mouth a little.*
Mortgage interest is like this hell fire that keeps burning up your money.
But we are so busy looking at all the items, like the ones I’ve been mentioning, that we never think about saving money on our mortgage interest.
Take a $200,000 house at 4% interest. That mortgage will cost you an additional $143,000 in mortgage interest.
That tops any savings we have been looking at today.
But we can do better.
Oh yes, we can do so much better.
What if we took all those smaller savings, and started to put them down on our mortgage? Very quickly those amounts added up to even bigger savings.
The good news about mortgage interest is the sooner you put money on your mortgage the more those savings add up.
With my 1 hour program the Mortgage Free Master Plan , you can take those savings and see what they will do to your mortgage over time.
Those first 4 savings came out to an extra $30 a day, or $900 a month.
If you were to put that extra money down on a mortgage of $200,000. You would see some mind blowing savings.
Here’s a chart that shows you the savings for that $200,000 mortgage:
The time you would take to pay off a 30 year mortgage would drop to less than 12 years , and the interest you would save would be over $95,000.
Think of what a difference that would make in your life!
All from making a few small tweaks in your daily routine, and some changes around the bigger things in life.
But Wait There’s More…
Best of all, when you see how much you can save by putting the extra down on your mortgage you will find your motivation surges!
The Mortgage Free Master Plan helps you do just that. It’s a one hour program that helps you create a plan to pay off your mortgage faster.
You can enter in your savings and you can see how your cost cutting works when they are applied to your mortgage.
People are finding that doing this they are cutting a decade or more off of their mortgage, it’s amazing.
That’s how we got better with money. We started with small savings and it lead to bigger savings by putting that money onto the mortgage. By taking your savings and applying them on your mortgage you save so much more!
Eventually you are mortgage free and you have saved tens of thousands. You did it nice and easy all by starting small and applying the savings to something bigger.
That’s the power of thinking longer term.
Let’s Put These All Together
So let’s just say that today you were moving into a house with a $200,000 mortgage and you decided to put all of these savings in place.
Then you decided to take all of these savings and apply them to your mortgage.
How much would you save in the end?
You would save over $320,000 over the next 30 years.
That’s years of work you are saving.
Think of all that you could do with that money? How much better could your life be?
That’s the power of thinking ahead, that’s the power of starting small and watching the savings turn into something big!
The next step is yours to take. Since you have made it this far you need to check out my 10 Step Money Kickstart Challenge , it’s absolutely free so you can get started on your own successful money journey.
Here’s to your success!
Andrew Daniels is a mortgage freedom expert who writes at Family Money Plan a site dedicated to helping busy parents, who are stressed out about money, find their way out of the mess, by providing them easy action steps so that they can create a life they love.