The Oldest Trick in the Book

In December, I read Suze Orman’s The 9 Steps to Financial Freedom to learn about my finances and what I could do to stop being so worried about money.  It was a good book — good for a beginner like me, anyway.  Within a few weeks, I opened my first retirement account, created a debt snowball, and changed the way I pay my student loans.

One of the tricks Suze Orman suggested (that I can’t believe I never thought of before) was to pay half your mortgage two times per month.  So if you have a $2000 mortgage payment every month, you pay $1000 on the 1st of the month, and $1000 on the 15th.  In doing so, you reduce how much interest you pay on the mortgage.  Do you see why?   The interest you pay in the second half of the month doesn’t collect on the interest you paid off in the first half of the month…supposedly.

There’s a lot of fine print in mortgages and their repayment schedules, and seeing as I don’t have a mortgage, I can’t speak to a lot of the problems that stem from playing with your mortgage payments.  I do have student loans, however, and they don’t care how often I pay.  So I switched to twice-a-month payments last month.

I’m not seeing a difference yet in the amount applied to my principal.  I’ve been on the twice-a-month plan for two months (this being my second), so I think I’ll start seeing results when I make my second payment this month.  The difference is likely to be so miniscule that only I will notice it — and that’s all right.  It gives me a psychological boost to make payments this way.  I feel like I’m tricking the system, and that makes me happy — gleeful, even.  How many people are happy to pay their loans?

I know I’m creating more work for myself in paying twice a month, but it’s more important for me to feel in control of my money than it is to worry that I won’t have enough per loan payment, or feel like a slave to the whims of the loan company.  And isn’t that really the oldest trick in the book — feeling good about your money?

What mind tricks do you use to give yourself a boost with your finances?

©2009 at Simple Savvy, the simple living blog where I pretend I’m a ninja when I pay my bills.  Image courtesy of Student Loans.

This Could be me

Image source

I Stumbled on this article today, about a woman named Carol Sue Snowden who died last June and left all her money to the local library and schools.  Why is she so amazing to me?  Perhaps because she devoted her entire life to reading, and lived frugally — and she was worth more than $1 million when she died.

“The daughter of parents who survived the Depression, Snowden — who never married or had children — was the picture of frugalness.

That’s why 50 friends and library colleagues who gathered late last month for her memorial were so stunned to learn that she was a millionaire.”

That’s an impressive figure, especially for someone like me.  I have quite a bit of edebt because I wasn’t smart about going to college — I didn’t apply for enough scholarships, and didn’t manage my expenses well.  Before I can even think about acquiring $1 million, I have to pay off my debt.  Thank goodness this week is National Thrift Week.  Now all I have to do is throw a Keep a Budget Day party.

Bonus!  Enter the National Thrift Day contest to win a $100 National Savings Bond.

Enjoy your thrift this week!