Being able to enjoy a daily cup of coffee or a nice bottle of wine once a week are just a few of life’s small and, seemingly, inexpensive pleasures.
But what if you knew that something as simple as ditching your regular cup of joe – and putting the money into your mortgage – meant you were $71,891 better off over the lifetime of the loan (30 years).
According to RateCity.com.au, the agency responsible for crunching the numbers, people often aren’t aware of how extra loan repayments can make a significant difference over time.
‘We wanted to show that if you squirrel away a small amount each week, it can knock years off your loan,’ said Sally Tindall, a RateCity spokesperson
‘We wanted to show that if you squirrel away a small amount each week, it can knock years off your loan. It’s also something most of us can easily do with very little effort,’ said Sally Tindall, a RateCity spokesperson.
‘Buying an extra cup of coffee or a bottle of water is often just mindless spending. If you save that money you’ll be shocked by the results.’
The figures were based on a $300,000 mortgage over 30 years with an average rate of 4.31 per cent.
Ditching your regular cup of joe – and putting the money into your mortgage meant could mean you were $71,891 better off over the lifetime of the loan, or 30 years (stock image)
If you were to swap out bottled water which costs around $3 a pop for tap water, the savings could equate to $62,266 over 30 years (stock image)
The assumption is the money saved from buying the item is put toward paying off a mortgage so the saving isn’t just on the cost of the item, it’s also on the savings you would make from reducing the interest on your home loan every month.
As well as making savings on coffee, the report also revealed how much you could potentially save on your mortgage by slashing other small indulgences.
So, if you were to swap out bottled water, which costs around $3 a pop, for tap water the savings could equate to $62,266 over 30 years.
What you could save by swapping little luxuries for home loan repayments:
Savings over 10 years:
Cut out 3 coffees a week
Cut out daily coffee
Cut out one bottle of $20 wine per week
Public transport instead of Uber, once a week
Swap bottled water for tap water
Have breakfast at home, rather than out, once a week
Bring lunch to work three times a week
Cut out six-pack of beer, once a week
Cut out a case of beer, once a week
While cutting out water and coffee might not be too much of a stretch, if you were to take this a step further and quit drinking one bottle of $20 wine each week and put these savings toward your mortgage, you could save $59,482 on your loan.
Similarly cutting out beer on a regular basis can also contribute. Slashing your weekly spend on one six-pack a week can help you come out $59,482 on top.
And if you are still smoking and were looking for an extra reason as to why you should quit, saving a whopping $137,342 over the life of a home loan should give you all the motivation you need.
Cutting out one bottle of $20 wine per week could save you as much as $59,482 (stock image)
While much has been made of millennials spending their money on avocado on toast, deciding to ditch breakfast out – just once a week – means a saving of $59,482.
Ms Tindall said once you have worked out how much extra you can save each week, set up an automatic bank transfer – and then forget about it.
‘If you can save as little as $20 every week and roll that money into your home loan you could be ahead by $59,482 over 30 years.
‘Paying off a mortgage can seem like climbing a mountain, but there are always simple things you can do to help get ahead.’