Wizard's Top 5 Money Saving Tips

 

Tip 1: Convert Your Bond into an Access Bond

Something people often oversee is their home loan account. Most people actually see this account as a big investment but a long term debt considering your home loan takes 20 to 30 to pay back. The interest portion on your home loan is also an exorbatent amount which leads me to believe this is what throws people off! Also, with the recent "decline" in property prices and drop in property sales, people are alot more careful before buying properties. LET ME TELL YOU PEOPLE, THIS IS THE BEST INVESTMENT YOU'LL EVER MAKE!!

Hopefully what I'm about to show you will change the way you run your finances.

Step 1: First and foremost, make sure your home loan account is a access bond. Go into the bank, speak to your bank manager and tell them to convert your home loan account. In doing so your home loan account becomes a savings account and this enables you to put additional funds into your home loan account and at the same time withdraw funds should you require them. Some banks refer to this as a flexi reserve as well.

Step 2: Open a savings or cheque account with the bank that your home loan is with. This will allow you to link up your internet banking so that you have both the savings and home loan accounts at your desposal.

Step 3: Pay your salary into your bond account every month. REMEMBER: Interest on a home loan account is calculated daily, this means any money over and above the home loan installment every month is earning 15% interest.

Step 4: Move money in and out of that account. Move enough money into your savings account to ensure that all your debit orders go off and there are no bounced debit orders in your account.

EASY HUH!!!! Now I'll show you why!

Lets say you're earning R25 000 per month (GROSS). You're applying for a bond of R500 000. Your monthly repayments will be in the region of R6583 per month (THIS IS WORKED OUT @ 15% INTEREST).

Over a 20 year period your bond is actually going to cost you R 1,580,147.50. HOLY @$## YIP, that's right, with interest over 20 years a R500 000 bond will cost you R 1,580,147.50.

Now instead of just paying R6583 per month, pay an additional R1000 per month into your home loan account.

Your bond account will be paid off in 11.2 years. By chopping down your interest you will over a 11.2 year period save yourself R519,165.12 in interest. R500 000 savings over 11.2 years, you show me a better investment and I'll eat my hat!!

For more information contact Wizard Midrand.

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