My advice pay off your debts and overpay on your mortgage

My best advice

Pay off all bad debt as soon as possible.

This includes credit cards, overdrafts, mortgages, car loans. Pay off the ones with the highest interest rates first.

If you have credit card debt consider doing a balance transfer to another card. There is usually a fee of around 3% although you then get no interest charged until the end of the offer period which can be up to 24 months! Just make sure you always pay the minimum amount each month. The easiest way to do this is set up a direct debit to pay the minimum amount each month.

Mortgages.

Pay extra off or reduce the term. Especially in the early days of a mortgage very little capital is repaid. I always viewed the monthly payment as mainly interest and worked on regular overpayments to reduce the capital.

My tips to pay off your mortgage early
I have heard at least one person paying their mortgage off within 4 years. 25 years is the normal term for a mortgage but if you can reduce this to say 20 years or less you will pay much less interest in the long run and you might be surprised what little extra per month you have to pay.

Buy assets

As the author suggests in the book rich dad poor dad, buy assets not liabilities.

An asset is something that makes you money, a liability is something that costs you money.

Examples of assets include:

• Property that you let out
• Stocks and shares that pay you dividends

A liability is:

• A car
• Luxury items

Switch your service providers!

At the renewal date or end of a contract switch everything!

Obvious ones include:

• Car insurance
• Buildings insurance

• Contents insurance

• Mobile contract

But also:

• Gas and electric supplier

• Phone and broadband.

Use comparison sites such as confused.com to see which is the best deal for you and then see if you can get cashback on your switch using a cashback site such as Quidco or Topcashback .

Buy to let

This income is know as passive income in the book rich dad poor dad as you receive an income with very little time invested.


Pros

• A regular income, if things go well, without having to put much of your time in.
• Any increase in the value of the house you let out are also yours when you sell (although maybe subject to capital gains tax).

Cons

• You may get bad tenants who may not pay or may damage your property. To reduce this ensure you carry out careful checks on any prospective tenants (due diligence).

Basic principle

• Buy a house using a buy to let mortgage. Let it out through a letting agency or privately.

What to watch out for.

• Make sure the sums add up and you can make a profit once you have paid out interest on the mortgage, allowed for repairs, buildings insurance and any letting fees, including allowing for time the house is left empty.
• Pick a house in an area where there is a demand for a property.
• You will need to pay tax on any profits through self assessment.