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Budget 2018 - Your $10 budget bonus can actually save you thousands!

Girl using laptop

After the 2018 Budget, the general consensus seems to be that a $10 a week budget cut, for low and middle income earners (under $90,000) isn't much and might be best spent on an extra coffee!

Thinking about home loans however, if you were to add that $43 a month to your loan, it could take a year off your loan thanks to compounding interest!!! See here for my article on compounding interest.

Assuming a loan of $400,000 at 3.99% pa over 30 years & paying principal and interest means that paying $43 extra each month over the life of the loan means you could pay your loan off one year early potentially saving you $10000 in interest.

So, when you think that you could make that much difference without changing your budget (as this freebie was given out by the government), what would happen if you found your own $10 a week and added that in as well?

You could save 2 years and 4 months on your home loan term and could save over $20,000 in interest!!!

Please note that all circumstances are different and the calculations above assume that you were paying the extra for the whole term of the loan, which may or may not be the case for you, however I want you to know that paying extra into your home loan will always save you interest repayments; it’s just a question of how much?

When it comes to paying off your loans...every little bit helps :)