A mortgage is a huge financial obligation. It’s a major loan that you will have to pay off for a significant part of your life, and there are many people who even die without having to complete theirs. The enormity of the responsibility associated with getting a mortgage often scares many people away from getting them. The most pressing issue for many is the prospect of being unable to service the loan, and then having to lose their homes and livelihoods as a result. Most people also imagine that you have to be a finance guru in order to manage your finances when paying off a mortgage.
However, you will find that in many cases, nothing could be further from the truth. If you are apprehensive about your ability to sustain a mortgage, a critical study of the whole issue will reveal that there isn’t anything that you should be afraid about. In most cases, the principles of finance that you usually rely on to manage your money on a day to day basis are the very same ones that you can use to manage your mortgage. The only difference is that with a mortgage, you will need to commit to using such techniques for much longer. Some of these include:
Keeping track of how you spend your money
When you get a mortgage, you will often have to tighten the purse strings for you to be able to pay off the mortgage and still have money for the basics. This means that as much as possible, you should reduce the incidences of money wastage as much as possible. The best way to do this is by tracking how you spend your money either on a daily or weekly basis. For instance, you can write down all the ways in which you spend money for a particular week, and then analyze this list at the end of the week.
You would be surprised at how simple things can drain your money, and thus make life more difficult for you. For instance, you may find that buying an unnecessary snack every day sounds cheap, but that the total cost over the week is pretty high. You can then use this as a basis to cut out everything in your life that drains too much money.
These days, there are many ways for you to do this. If you are not interested in using the old pen and paper, you could decide to embrace technology and use some of the apps that allow you to do this. Most of them have excellent features that not only make it easier to track finances, but also make it fun as well.
Having a few months’ worth of your mortgage in your savings
The other trick you can use to make servicing a mortgage less scary is by having a few months’ worth of the monthly payments in a special savings account. For instance, if it turns out that you have to pay $500 a month towards the mortgage, you could opt to maintain an account that has $2000 or thereabouts. You can save this money slowly over a few months, and then not touch it once it gets to this level.
The goal of having such a sum in savings is that in case you end up having financial difficulties, you will still have a source of money that you can use to service the mortgage. It’s important that you only use this money when other options have failed. It’s also important to ensure that this money is set aside from your regular savings. It should only be dedicated for emergency use towards the mortgage payment.
Splitting the bills
If you live with a significant other, you can also make life easier on both of you by splitting the bills. For instance, the person responsible for paying the mortgage can do that, and the other would then be responsible for other minor bills such as the electricity and gas bill. This way, one party in the partnership will not be overwhelmed by the monthly bills. This also reduces the risk of having some of the bills unpaid.
Avoiding major financial obligations unless you are confident in your ability to take them on
Once you start paying off the mortgage, you should consider staying away from other financial obligations that might interfere with your ability to pay the mortgage. For instance, though it might be tempting to buy a new expensive car on loan, it might not be wise to do so.
If it is important for you to take on extra financial responsibility, it would be wise to first find out what impact this would have on your financial life before making the leap.
In summary, being a mortgage owner is not about having tons of experience in handling money, but simply paying attention to the common principles of finance. As long as you adhere to them, you will happily handle the mortgage with no problems at all.