In fact, if you make one extra payment a year, either at once or in equal monthly shares over the course of a year, you can cut a 30-year loan down to 21 years. Just don’t short your investment plans to do it.
7. To refinance. Interest rates are still relatively low, and now may be a good time to consider consolidating all your debt under the lowest possible fixed rate if you can resist taking on more debt in the future. In 2006, Fannie Mae and Freddie Mac, the nation’s two federally chartered stockholder-owned mortgage finance companies, raised their national conforming loan limit to $417,000, which means more homeowners will qualify for a lower-rate conventional mortgage than a higher-rate jumbo loan.
8. To redefine the way you shop. If you’re an impulse shopper, break the habit in ’07. As a suggestion, get a legal pad and make that your centralized shopping list—separate it for groceries, stock-up goods (it’s wise to start buying essentials in bulk), essential clothing, or big expenditures you’ll need to make at specific times. Taking that pad with you wherever you spend money is a good way to keep a grip on your wallet—as long as you don’t stray from what’s written down.
9. To cook more. Even if you can’t boil water, eating out is one of the biggest drains on the American household budget. The National Restaurant Association reported that in 2004, the average household spent $2,434 in restaurants, equal to $974 per person. Start small—resolve to cook at least one or two meals a week you like that will be cheaper at home.
10. To attack that miscellaneous column. Do you really need deluxe cable? How much are you paying for your Internet service? Can you wear a sweater around the house and lower the thermostat? In every budget, there are items that can be cut—or at least cut back on. Take a hard look at all your “essentials” to see how essential they really are. Aim for a target of at least 10 percent and start setting that money aside on a regular basis.
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