I think we all have at least one annoying friend, who no matter how well things are going, will bring down the mood by pointing out that at any point, things can change, and they will. While everyone is partying and having a good time, they will bring up something serious or sad, killing the vibe.
That might be me.
But hey, people have to remember that reality bites.
Lucky this is crypto.
No reality here!
Unlike when paying bills, which I just spent the last hour or so doing.
Black Friday.
Though this month it is a "bonus month", so I decided to treat myself and over double the amount I am paying off the mortgage. As we have a collar for about another seven and a half years that keeps the repayment amount down, my goal is to pay as much as possible, without putting us in too much financial discomfort. This month, I was able to over double it, but I will be happy if every quarter I can pay another month's worth, which will mean that over the space of a year, I will have made 16 months worth of repayments, adding around 33% more. This cuts almost a decade off of our loan. However, that is hopefully the minimum, and instead I am hoping to find additional money to add onto the loan, at least while the collar is in place and ideally, have it paid off by the time the collar ends.
That is a very tall ask.
To do that, we would need to triple the loan repayments from now, or find a lump sum from somewhere. The collar ends in 2031, so there is eight years for crypto to do something significant, which should be around two cycles. At some point, I would love to actually benefit in the real world from this crypto fantasy, and having a debt free house would be significant.
It is a bit of a risk to pay things like I do, because it doesn't leave me with that much extra and unfortunately, I don't have a lot of savings. As dangerous as this is, perhaps it works out better for me, as I can have an "out of sight, out of mind" mentality, not having to worry about it burning a hole in my pocket. While my friends at work today were talking about how much they saved on various things they have bought, what I was thinking about was,
How much they spent.
Of course, it is great to save money on things that we were going to buy anyway, but while we might have to "spend money to make money", spending money to save money doesn't work. While not the best investment with the cash, putting into into the home loan now is "making money" in the sense that interest is being saved, but more importantly, finishing it up early means that the monthly repayment isn't there.
We don't often think about this, where for instance if it is a 200K loan over 30 years at 5% interest, the monthly payment is about 850 dollars, and the total interest is 104K. However, if the monthly repayment amount is doubled, the 30 year loan will be paid off in 12 years, and the total interest is 37K, a 67K saving.
But more importantly than the interest saving, is that there is also principle saving, meaning that rather than paying 850 a month for 30 years, it is 1700 for 12 years. This means that the habit of spending 1700 a month on the loan is there, but isn't necessary. Stuffing that money each month under the mattress for the next 18 years, will mean having 367K tucked away. Obviously, investing it instead at an easy 10% annually, will total,
930,000
So, if it was possible, after 12 years the 200K loan is paid off so there is an investment property owned outright, and after the end of the would-have-been loan, there is almost another million in capital.
What did you buy this Black Friday?
Of course, an impulse buy every now and then is not a bad thing at all, but there seems to always be another impulse buy to get our hands on, every month or two. There are an endless amount of "events" to spend for and while we might feel good at time of purchase, that feeling can fade fast. If however we are careful with what we buy so that it is something that will add some lasting value to our lives and forget the rest, we might be able to significantly change our financial outcomes.
It is hard though, because investing is to compete against our very nature. We are a species that despite our intelligence, still doesn't consider and prepare for our future experiences well. All of these sales trigger our lizard brain, make us fear missing out and, gives that dopamine kick at getting what we want. It is a compelling process that leverages our human weaknesses for profits, not wellbeing.
At least not financial wellbeing.
There is always something to spend our money on. For me tonight, I looked through some websites to see what was there and found some things that I would like, such as a soundbar for the TV, or perhaps a PS5 for the family, but I decided at least tonight, I won't buy into the FOMO. We don't watch that much TV, and I love that we play UNO as a family on well-worn cards, and Smallsteps and I play chess, or she draws pictures. What do we need them for and, would it make me any happier in a few months, or would I do what I did gaming over a decade ago, use it as a way to avoid reality?
Reality always bites.
Bears end, bulls end. Life goes on.
Taraz
[ Gen1: Hive ]
