How I paid off my house fast

FIVE TIPS: COMMON AND NOT SO COMMON SENSE

Putting extra into bond monthly makes a massive difference.

1. Track every cent that enters/ leaves your bank accounts every month. Categorise this into buckets like food, transport, discretionary, etc. Within a few months, you’ll have a clear understanding of how you spend/waste money. 2. Interrogate every debit order and see how many you can get rid of. Remove unnecessary things like clothing accounts and mobile phone contracts (if you can), etc. 3. Look at recurring monthly payments like rates/electricity or car repayments, and see if there is wiggle room there. 4. Draw up an accurate budget

that you can stick to.

As you’re refining your budget, focus on aggressively paying off short-term debt, like a personal loan or credit card. Then deal with the next largest: your car. Stop buying a new car every few years. Buy a reliable car, 20%-25% below what you think you can afford, and pay it off as fast as you can.

Figure out how much extra you can put into your bond monthly as your minimum target. Set an aggressive one too. I diverted every extra cent I had into my bond.

My once-off extra payments made an outsized difference, alongside me, on average, paying more than twice what I should’ve each month.

At the start of a 20-year bond, your monthly payment is almost entirely towards interest. Once you start making a dent in the capital, you’re paying off more of it (and less towards interest) each month. I also cleared “extra” cash out of my current account after bills were paid each month.

Put any unexpected windfalls (like bonuses) into your bond and try not to adjust into your annual increase. Try to keep your spending at the same level as the prior year (or cut it) and put that extra money into your bond.

You may also have some extra money lying around in the form of extra appliances or cellphones no one uses. Sell them. Shop the sales and cancel the luxuries until you reach your goal. Once your house is paid off, forgo the temptation to “upgrade”. Use the next five to 10 years to build wealth.

Hilton Tarrant works at immedia.