I've been absorbed in this house/loan/what-to-do issue and, after discovering free financial spreadsheets to personalize, I have math whiz powers. No, really.
It was superfun. The 2010 spreadsheet is currently a complicated series of categories that explain how we spend and on what. It sprang to life over days and days of pulling information from who-knows-where and adjusting it so it reflects what we do. And for a second I sat back with a satisfied smile and lorded over all the subcategories with vertical and horizontal totals and interconnected worksheets.
And then life settled back into the impossible bleakness of maintainance. How many web designers make something beautiful and comprehensive only to realize it is too complicated to maintain. Who will pour over all the details to keep things current... me? Well not every month, anyway. Maybe it can be more of a seasonal chore like spring cleaning.
The point is, it's more important than ever to use money effectively. And we didn't have much of an idea how we were spending our money until now. And now that we do, we can think about redistributing it to maximize results. To use an exercise metaphor, let our money muscles work harder.
One tool that was helpful was a loan amortization schedule. You can play around with it and see what a difference a modest extra amount on the principal does to the years and interest due. For instance, paying an additional amount on our mortgage will shave off half the years and save nearly $300,000 in interest. That got our attention. So there is an alternative to expensive refinancing and we can accomplish the same goal ourselves.
That is really empowering! We can guide ourselves toward becoming debt free, because now we know how to start a strategy based on what we know about our spending habits and being reminded how amortization works. And it is never too late to start. Hot Dog.
http://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx
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