Welcome back to the All Things Home podcast. I am Tina Beliveau and today I am here to remind you about some wealth-building strategies that are very simple that you've maybe thought about and have forgotten about or haven't gotten around to implementing and or maybe some things that you just haven't done before. I'm going to give you five easy tips for increasing your wealth.
Two of them are real estate-oriented, two of them are banking-oriented, and then one is a simple maintenance habit. I'm going to start with the real estate-oriented tips. The first tip is both of these are targeted to basically increasing your equity in your home in a painless or almost painless way and just building equity and therefore your net worth faster.
The first one is simple but if you have your mortgage payment on autopay, perhaps you would consider rounding up your mortgage payment to just be a bit higher every month, maybe a nice round number, maybe you add $50 or $100 extra to the payment, if not more. You would be amazed at how much overall interest and time that could shave off your loan. If you are just paying kind of an odd number, go into whatever your autopay setting is and just increase it. You could even put a reminder on your calendar to gradually increase what you're doing. That is a simple, pretty painless way to grow your net worth and your wealth.
The second tip is related and this one is a little bit more of a commitment. This is something I learned very early in my career and it's something that I hadn't thought about in a little while, which is if you get paid every two weeks as opposed to the 15th and the 30th of the month, if you're a W-2 employee, you could set up your mortgage payment to be taken out of your bank account every two weeks. What happens when you do that is you end up making two extra payments per year, half-month payments, which is the equivalent of 13 full mortgage payments per year instead of 12 payments.
What that means is you shave off approximately seven years from a 30-year mortgage by making one extra payment per year. This is certainly more of a commitment and it may or may not sync with the cash flow of how you're paid. But if you are paid every two weeks, this is a discipline that you could get into that will have an amazing payoff of a 23-year mortgage versus 30 years.
It's kind of the benefit of a 15 or 20-year mortgage without worrying about refinancing or anything like that. Those are two very simple things that you could do to manipulate your mortgage payment and grow your wealth in that regard. The next tip that I want to give you is more of a question, which is, are you sleeping on the high-yield savings account opportunity? I am amazed by how many people I speak with who say, oh yeah, there are those bank accounts that pay a way better interest rate than typical banks. I just need to get around to setting one up. Or maybe you just haven't come across this yet, but there are a number of banks. Many of them are online-only banks that pay way bigger interest rates than traditional banks for your savings account.
A while ago I set up a high-yield savings account with SoFi. I'm going to put some information about this in the show notes for anyone who wants to look into this. The interest rate that these banks pay out changes because interest rates are always fluctuating. I'm sitting here with SoFi's website right now. They pay 4% interest on your savings compared to the national average, which as of this moment is 0.43%. They are paying eight times more interest, more than eight times more interest than the national average. If you have money just sitting in a savings account at Bank of America or Chase right now, those accounts are paying 0.01% interest.
That's not 1%, it's 0.01% versus these high-yield savings account companies that are right now in the 4% range. SoFi is a great option. Capital One, Ally Bank, there are definitely a number of them.
Again, there's a link to NerdWallet that I'm going to put with the show notes here. If you basically have some of your cash sitting in one of those big national banks earning, it's not actually, not only is it not earning anything, it's actually deflating because the money is not keeping up with inflation. The reason these high-yield savings accounts are even more of a hot topic than they ever were previously is because rates are higher overall in our country for mortgages and other things.
That also means that in theory, you should be earning more interest on the money that you have in the bank. However, these big bank brands aren't doing that. They're paying, really just, they're just making money on your money is the bottom line.
My understanding is that these online banks that don't even have brick and mortar probably have a lot lower overhead, which is why they can pay out better interest rates to consumers. The SoFi one, to get that great rate, you have to receive some sort of direct deposit for your paycheck in there. That's what triggers you earning that higher percentage.
That's what I did. I teach a spin class one day a week at a local gym, and I just put my direct deposit for that in there. That was enough to qualify me. There's not a high bar and it's such a great tool. It's insane.
If you look at the difference of how your money could grow without that. I put in this scenario here where the initial deposit in a SoFi account being $10,000 and then adding $500 a month over three years. If you let that money sit in Bank of America, that money would only earn $5.63 in overall interest at those rates.
Whereas if the rate at SoFi stays the same, it's $2,300 in interest. That's basically $23 versus $2,300 versus $6. I cannot emphasize enough how important it is to leverage high-yield savings. Even if it feels like a very small increment to you, what's the point, just get it going. That was tip three. It actually leads directly into tip four, which, I am not a total wealth and money guru, but one of the things that I've focused a lot on as a business person is having systems and rhythms and financial habits where I just slowly make things happen, slowly add onto those habits and have that snowball effect.
You may or may not have automated any of your savings, but I'm saying this podcast might be a little reminder for you to zoom out and say, hey, do I have any automatic savings right now going from my checking into some savings account? Is this a moment where I could up that by 5 or 10% of what I'm doing currently? Is this a time to move that transfer from my regular bank to a high-yield account or any other investment or into your mortgage? How I started off this episode, because I think we can set things up and that whole set-it-and-forget-it thing isn't always a great thing to do with our money. Just a little ping to you. If you haven't revisited the amounts that you're saving automatically right now, perhaps this is, you could pause this right now and just go make an update or go see what you're doing.
If it's not fresh in your mind, check and see if you've got five to nine savings going, if you're saving for kids' education, things like that. Just a reminder to attend to these things because it's easy for them to be out of sight, out of mind. I'm going to end with a fifth really simple tip, which is another out-of-sight, out-of-mind thing, which is subscriptions through our phones.
If you haven't audited and pruned what you're paying for subscription-wise I recommend you go into your phone and check your settings and see if you're paying for any apps on a monthly or annual basis that you no longer need. I'm an iPhone person. The iPhone tip, it's really simple.
You just need to go to that settings gear, tap your photo at the very top, and then go to subscriptions. Right from there, you can cancel anything that you no longer want or need. For Android, I'm sure you Android people know what to do.
That's just a little money-saving tip for you. If you haven't done that in a while, it's something that I try and do every so often and because I can't help myself, I'm going to throw a bonus tip onto this episode. I learned this at a seminar years ago, a very successful real estate agent gave a really simple strategy for managing your ongoing subscriptions and expenses.
This is most relevant if you're using a credit or debit card to pay for those things. Although if it's running through your bank account, you could do the same thing. What he does and what I now do is every month, he prints out his credit card and bank statements and gets out three highlighters.
A red or pink highlighter is what I now use for anything that I need to cancel or deal with or renegotiate or make a change with. If I notice that I'm paying for just any subscription or anything that I'm no longer using, then that gets marked red. Then I set that aside and make sure I go and take action.
Anything that I highlight green is something that I want to keep going with. In the realm of business, it's a return on my investment, all systems go. Then yellow is my yellow light of, this is something I want to keep an eye on.
This is something I need to spend some time and look more deeply. This is something that I don't recognize. Did someone steal my credit card number? All of that.
That is a simple process for me. I still have my credit card statements just mailed to me instead of being emailed. That way it just comes in the mail. I put it on my desk.
When I have time every month, I sit and do that red-light-green-light exercise. It helps me cut the fat in some of my spending both professionally and personally. Those are some Tina's tips for you on wealth-building and finance.
If you have any reactions or thoughts or suggestions, things that should have been mentioned in this episode, we'd love to hear from you. You can reach out to me or anyone on the team at [email protected]. If you have episode topic requests and suggestions, reach out to us. If you are thinking of making a move this year, or you know someone who might need our services, please keep the Beliveau Group in mind. We look forward to dropping into your earbuds again soon.
