Weekly Summary: MoneyMasterClass - Session 22
In the ongoing Money Master Class, financial expert Gail Vaz-Oxlade is encouraging participants to consider paying off their mortgages faster. A Twitter Archive is available to see all of Gail's #MoneyMasterClass tweets from the start, providing insights into her financial advice.
Gail has highlighted the significance of using extra money to pay off a mortgage sooner, offering several key benefits. These include saving on interest payments, potentially thousands of dollars, building home equity faster, freeing up monthly cash flow for other financial goals, eliminating mortgage payments, and reducing or eliminating Private Mortgage Insurance (PMI) if applicable.
By paying off the mortgage early, you can save significantly on interest costs as mortgage payments at the beginning of the loan term are mostly interest. Reducing the principal faster means you pay less interest overall. Increasing your equity means you own a larger portion of your home sooner, which can be financially advantageous if you plan to sell or refinance.
Once your mortgage is paid off, your monthly expenses decrease significantly, freeing up cash for other uses such as investment, savings, or spending on lifestyle needs. This can also provide peace of mind and reduce financial stress, as you no longer have the obligation to make mortgage payments.
Other benefits include potentially dropping PMI if your equity surpasses 20%, resulting in additional monthly savings. However, some trade-offs include losing mortgage interest tax deductions and possibly a slight dip in credit score due to reduced credit mix.
The Money Master Class offers resources, spreadsheets, and quizzes online to help participants implement these strategies. The conversation has shifted from mortgages to the topic of a gratitude journal, but the focus remains on establishing new financial habits.
One of the new habits mentioned is finding High-Interest Savings Accounts (HISA) with the best interest rates. Gail has been discussing various mathematical aspects related to mortgages, and the speaker has been learning about mortgage-related tips, which they were previously ignorant about.
For those starting the course or catching up, the Money Master Class Intro and Week One Recap are available. Gail Vaz Oxlade, the course's speaker, has written several books, including "Money Rules", "Debt Free Forever", "CEO of Everything", and "Money Smart Kids". A Mortgage Calculator is also available to assist with calculations.
Throughout the course, Gail shares personal stories to illustrate financial principles, such as the story about a couple named Chris and Toni. Participants have been changing and establishing new habits since the start of the Money Master Class, demonstrating the course's impact on their financial lives.
Investing extra money towards paying off your mortgage can yield substantial benefits, such as reduced interest payments, rapid home equity growth, and increased financial freedom. With a paid-off mortgage, you can divert the freed-up cash flow towards personal-finance goals like investing or savings, or even personal expenses, thus improving your overall financial well-being and reducing stress. Additionally, paying off your mortgage early may enable you to drop Private Mortgage Insurance (PMI) contingent upon meeting certain equity thresholds, resulting in lower monthly payments.
