Beat the Amortization “Monster” To Earn Your Financial Freedom by Phil Strong

In a previous article I have explained how an Amortization schedule outlines the slow process that is typically followed to repay a mortgage. To me this makes it a “monster” as it steals time, money, and freedom from home owners. But I don’t write this article so you can take the SLOW WAY to pay off your mortgage – I don’t want you to have a mortgage for a long time, I want you to be able to pay it off much, much quicker than you think.



One of my goals is helping people to identify what financial freedom looks like and how to get there. For me one of the key priorities in financial freedom is releasing the shackles of debt; that is, breaking out of the mind-set of a “debt culture” and working towards building wealth. One of the quickest ways you can build wealth is to pay off debt.



Unfortunately for many home owners with debt, their mortgage is designed to work against them due to the standard mortgage being constrained by this “monster” called Amortization, hindering the progress they may like to make towards being mortgage free.



If this is you I would like to encourage you by sharing the key to progress, and that is to increase your understanding of how your mortgage works. It’s a simple concept, but when you know the rules of the game you can make sure you take advantage of every opportunity to succeed.



A typical mortgage follows an amortization schedule which is a pre-determined path of repayment over the duration of the loan. This schedule of payments forces a home owner to pay the maximum interest as they are also forced to make the minimum principal reductions to their mortgage debt.



Let me give you an example from some calculations I did for the purpose of writing this article.



A mortgage of $285,000 at an interest rate of 7.5% over a 30 year term has a monthly payment of $1,992.76. That’s $23,913.12 per year.



In the first year you pay $23,913.12, and here’s the split: $21,285.89 paid in interest and $2,627.23 goes towards reducing the principal balance.



In the second year you pay $23,913.12, and here’s the split: $21,081.95 paid in interest and $2,831.19 goes towards reducing the principal balance.



In the third year you pay $23,913.12, and here’s the split: $20,862.16 paid in interest and $3.050.98 goes towards reducing the principal balance.



So over the first three years you pay a total of $71,739.41 in mortgage payments and your loan balance only reduces by $8,246.34.



Does that sound like the slow way to pay off your mortgage? I think so.



In fact, when I first found this out I had smoke coming out of my ears – I was so mad – as I thought about all the money I had wasted in helping someone else get rich while my family made literally no progress towards paying off our mortgage.



The challenge you have is the same one I faced, getting to grips with how this works so that you can make sure they you do not suffer for longer than you need to! I worked my tail off to find and implement strategies to help us get rid of our mortgage. And 6 years later we were mortgage free. When you begin to understand how the Mortgage Amortization schedule is not designed for your benefit you will begin to seek out new solutions, like I did.



Here are three quick ideas for you to explore so that you can begin to beat the “monster” that is the amortization schedule for your mortgage:



See the immediate benefit from additional mortgage payments, interest savings will sky-rocket as the benefits compound over time.

Find additional ways to apply funds to your mortgage, permanently or temporarily, to reduce the amount of interest you pay.

Identify new ideas and strategies you can use to accelerate your debt repayment beyond the SLOW WAY of doing things.





These three ideas are just the start for you to achieve the goal we set out to achieve. If you begin to understand how the Amortization “monster” works – you can beat it!


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Do not let the "monster" control your financial future. You deserve more than that!



Phil Strong is a money expert who helps people to smash their debt much faster than they ever thought possible!



Get Your FREE DVD Today!



How To Make Sure You Don't End Up With A 50 Year Mortgage




http://www.howtosmashyourmortgage.com



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Article Source: Beat the Amortization “Monster” To Earn Your Financial Freedom