If I Had to Pay Off My Home in 7-10 Years, I’d DO This

If I had to pay my mortgage off in the next seven to 10 years, no matter what the size, I would not be following the standard advice. Because most Aussies are playing the wrong game when it comes to paying off their home and it's costing them hundreds of thousands of dollars in interest and decades of freedom. In this video, I'm going to break down exactly what you need to be doing step by step process based on 23 years of helping Australians own their own home 200% faster. I've coached thousands of Australians on how to live debt free. I've got the privilege 28 days of being able to sit with a client and give them a debt free phone call and say, you paid your house off today, now you've got all your income back to do whatever you want, lifestyle wise, investment wise, that's true freedom. And if I had to do it again myself today, here's the step by step game plan which I would follow on how to get you from where you are now to debt free as fast as possible. Let's dive in. So you want to pay your house off in the next seven, 10 years. These are the things which you need to start doing that you're not already doing. First and foremost, your income. It is your most powerful asset. So many people insure their cars, their cars are liabilities, but you don't insure your income. And so this income is your most powerful wealth building tool. Once you start getting it working for you rather than for the banks, all of a sudden you start to see the benefits, you start to see the difference in your loan balance evaporating before your very eyes. And so the number one tool needs to be working as hard as possible for you. The way to do that is, is to get all your salary hitting your home loan account directly, direct from your employer. And so if you're earning $4,000 per month or per week, whatever that amount is, we need you. And if you have a partner to have your salary hitting the home loan account directly, why not an offset account? With the offset account it offsets interest, which is great. However, it doesn't reduce principal. And there's only one way I know to pay your house off and that is to reduce principal. And so over the last 23 years of doing this, I've never seen a CL pay off the house using their offset account. Not saying no one's done this, I just haven't seen it. And so from that perspective, getting your income directly off the principal and offsetting the interest is the fastest way to own Your home. What that does is it gets every single dollar reducing the principal balance. And now the banks are calculating interest daily. What does that mean? Every night they take a photo of your loan balance. They calculate the interest for the day. They put that off to the side. At the end of the month, they take that out. I want the bank taking a photo of your loan balance as possible. And so that there is reducing your principal and offsetting your interest. More importantly is the way that it's structured is that salary is out of sight and out of mind. And what that really means is we don't have direct access to it like in an offset account. You can see it, you can touch it, it's there with the home loan, it's available, but it's usually not as instantaneous as what an offset account would be in terms of ease of access. And so we as humans will always spend what we have direct access to. Our key is to save us from ourself. We are our own worst enemy. I'm the same as you. You put $2,000 in my account, I'm going to spend 2,000 for the week. And if I don't have access to the full 2,000, I'm not going to spend the full 2,000. So driving your income directly into your loan balance is pivotal. It is the number one thing that you need to switch or change to make sure that your income is working as hard as possible for you. Not just offsetting interest, but also reducing principle. And so that there is the first thing I would be doing to get your debt out of your life as quickly as possible. The second thing we need to start doing is separating income from living expenses. This is critical purely and simply because of what I just mentioned before. You're spending what you have access to. The average savings rate in Australia is 3%. What does that mean? Most Australians, if they're earning $1,000 per week, are saving $30 of the thousand. That's it. So our average client has a savings rate north of 20%. So that's six times the average Australian. And why is that? It's because we've got a structure in place to make sure that their income is not the same account that they're spending on their day to day living expenses. And so the average Australian will bank their money into an offset account and live out of that, or they'll bank their income into a savings account and live out of that. That's where everyone's going because we spend what we have access to. And so when we separate your income from your living expenses, instantly your psychology shifts one from a I've got this amount of money to spend, what do I want to. All of a sudden I'm consciously spending because I don't have access to the full $2,000 per week in income. I have access to what I need every single day for my food, groceries, fuel and fun, entertainment. And by doing that, our conscious spending shifts that psychology from spending everything we earn to spending what we need. And we're conscious of that as opposed to just, hey, I've got another $2,000 coming per week, I've got money in my account, I can afford it. So separating income from living expenses is critical. Gives yourself some structure, gives yourself some clarity, so you know exactly what is there for the week for food, fuel and fun. And the rest of it is out of sight, out of mind in your home loan account, working as hard as possible. Now the next thing I'd be doing if I was trying to get out of debt in the next seven to 10 years, more importantly is making sure that I've got some systems that track and measure my progress. Now if you're trying to lose weight, the first thing you're doing is jumping on a set of scales because you need to be able to measure yourself right? And you've heard the age old saying, what gets measured gets managed. And so I'm a huge believer in this. Like for example, you know those people with the Apple watches and they count all the steps. There is data showing if you are counting your steps, you will do more steps because you know you're being measured around that. And so that's a very similar sort of strategy there for tracking and measuring your numbers, like you know your body weight. But if I asked you what your financial weight is, like what's your net worth, there's no chance that you know that. And so everyone knows their body weight, but they don't know their financial weight. And I think it's a critical number. So measuring your net worth. And so every single sort of month you can see whether your net worth's gone up or gone down and should be trending upwards over the course of the decade, as you can imagine, with asset prices increasing, your super increasing. When you are measuring your net worth, please don't include the value or equity in your home that is not an asset, it doesn't produce income. And so when you are looking at measuring your net worth, your assets, really any equity in investments, share portfolios, superannuation funds, that is what your net worth is comprised of. It's not the equity in your home. So tracking, measuring now we should be tracking your savings rate. What is this? It's something where we find it's not about how much you earn, it's about what you keep of what you earn that's important. And so everyone's sort of so focused on how much you're earning. 150 grand. 250,000. Irrelevant. How much of that do you keep? That is the magic number and that's called a savings rate. So if you earn $1,000 per week and you keep $30, save $30, you have a savings rate of 3%. That's the average in Australia. So what do we need to be doing there? Tracking that on a weekly or monthly basis so we know our savings rate. You also want to know your surplus cash flow position. That's going to allow you to determine what you can or can't gear into further investments. Because knowing your cash flow is king. That's like the oxygen for your financial world. And so if your cash flow position strong, your savings rate position is strong. Like a good savings rate. We've got some clients doing crazy things like 74% savings rate. Imagine saving 74 cents in every dollar you earn. Insane freaks, really. Those guys are freaks. But Chinese, their national savings rate is about 50%. So they just have a different mindset. They're obviously all the families living together, so they have the shared houses, share shared costs, et cetera, help. Huge amount. And so if you can just be increasing your savings rate by 1% every quarter, massive, massive achievement. 3% is the average in Australia. You want to get them to double digits, you need to be saving 10% minimum, working towards 20%. I said all of our clients are sort of north of that 20% there because of the structures and systems that we set up for them. But that's really something. What am I earning and how much of that am I keeping is what you should be measuring. So we've got savings rate measured. So surplus cash flow position measured, your debt free date, you should be measuring this. And so every single one of our clients knows exactly what day they'll pay the house off. It's a big number for us. We measure it all the time. We see that move in and move out as income expenses change. But if you're not measuring your debt free date, then how do you possibly know what your target is, what your goal is, where you aiming, you're floating, you're just drifting around. Okay, my debt free dates, like when I retire, so many people are retiring with A mortgage because they haven't had a debt free date, they haven't focused on what do I need to be aiming at? And they've just seen a 30 year mortgage as the norm. Like everyone's got a 30 mortgage, so of course I'm going to have a mortgage until retirement. Do you know what mortgage means? Until death, Mort. Until death. And so a mortgage shouldn't be until death. We want to get it done with within 7 to 10 years. And by measuring the debt free date, your savings rate, your surplus cash flow position and your net worth, all of a sudden you've got a dashboard of exactly your numbers in the control pit. And obviously we want to be increasing that savings rate, increasing your surplus cash flow, increasing your net worth and reducing your debt free date. And so that is the four key metrics which you need to be measuring, which I know you're not, because no one is. Of the six and a half thousand Australians we've sat with, I don't know anyone who's actually said I know all those numbers off the top of my head. And if you don't know those numbers, then I don't personally believe you are fully in control of your finances. I think you're drifting to some degree generally, like there's just not many Australians I've met who know all those numbers. So tracking and measuring critical then we need a plan. So number three is we need a plan. If you don't have a plan, that is where you want to be at any certain month or quarter or end of the year, ie, what your debt level should be, what your savings should be, how much you've got in emergency buffers, etc. If you don't have a plan, then you are drifting and as a result of that you're not going to get the best results. The people with the best results have a target in mind and they are shooting at that target. Not saying they hit it every time, but they got something to aim at. And we know if you've got something to aim at, you're going to perform better than someone who just doing the day to day. Like all of us are busy, we know that. And so you come home from work, you got the kids, you got family, you got so many other different things. Talking about money, worrying about money, planning for money, just never makes it absolutely urgent and important. Yeah, it is important, but it's not seen as urgent. And so your future self is going to help you. If you set up a plan now, say, do you know what, I'm 47 years of age. I'm 52 years of age, whatever that figure is. I want this mortgage done in the next 10 years or 12 years or 15 years. That takes me to the age of 57 or 67, whatever that may be, and work backwards, set that debt free date, work towards that debt free date and making sure that that is well before retirement. Because we know you cannot afford to retire with a mortgage. Unfortunately, more than half Australians are retiring with a mortgage. Now what that means is you have to use your super to pay off your home loan, which cannibalizes your lifestyle in retirement because you now no longer have all this money to live off. And when you run out of super, you're on the pension. Now that's not a lot of money. My mum's on the pension. She's getting $600 per week to cover all her food, fuel fund, bills, travel, everything. So we don't want to be like that. We want to make sure we're putting in place now some strategies and systems and plans so we're not left on the pension after working 40 years to exist on $600 per week. Not what you want to be doing. That is the benefit of a plan. We know where we are, whether we're ahead of the curve, below the curve, what we need to tighten up. But more importantly, we've got an end date. So you've got a homeownership plan, you've got tracking and measuring. You've then separated your income from living expenses, you've got your income hitting your home loan account, you're starting to move forward now. Things are starting to look a lot more rosy. I know that the number one frustration for you is you're working so hard, but you're not really seeing any benefit financially, not seeing all this progress, which I'm sure if someone had told you 10 years ago, you, hey, you're going to be earning this amount of money and living week to week. They said, what? There's no way. If I was earning that amount of money, I'd be living week to week. You are, and that's because of lifestyle creep. So as your income goes up, your expenses go up and so as you're getting those pay rises, you just get a better quality bottle of wine or drive a nicer car, all these sort of things just start to increase and you don't have that surplus or trap that surplus. The next thing you need to be doing to make sure that you are out of debt in the next seven to 10 years is to be getting some accountability or coaching. And what I mean by that is you've had a personal trainer at the gym and if you haven't, you know someone who has, you've got to ask yourself the question, did they get better results? Did you get better results when you used a personal trainer at the gym? Yeah. Why is the question why did that person or why did you get better results at the gym when you were using a personal trainer? Probably because someone was there to keep you accountable. You're being weighed in, tracked and measured and also you're being educated on the best way to perform those lifts or exercises, whatever it may have been that you were training for. And so you got the expertise for from someone who does this all day, every day, that's their job, is to get people fitter. And so financial fitness, just the same as your own physical fitness, you need someone there to be keeping you accountable, tracking, measuring you, making sure that you're on track and coaching you on what you could be doing better. There's so much you don't know about your money on finances, because you're never taught this in school or high school or university. And so the reality is, is if your parents were pretty average money managers, there's a chance you might have picked up some of those habits. And then you've obviously probably got married and then your partner may have also picked up some bad habits. And so all that comes together and clashes. But what we do need is coaching and education to make sure that we've got that accountability and we know what we're doing right, we know what we're doing wrong, we know what we could be doing better. Amount of dead lazy equity sitting in your property, not working for you, that is, you have a million dollar house and you owe 400,000, you have $600,000 worth of debt equity sitting there, lazy, not working for you, not growing, you're not recycling it, you're not actually turning your home into tax deductible debt. It's just sitting there as bad debt. So just having that coaching and education, someone telling you who's got experience on what you could be doing to help your money, working harder for you, growing, recycling that equity, starting to leverage it, starting to grow your portfolio rather than sitting there waiting for you to be debt free and not using any of the equity to accelerate that process is a huge trap. So we've got that down pat. Coaching, education, accountability, learning from people who then can say, based on our experience over the last 23 years, you should be doing this and this and this debt Recycling or dollar cost averaging, or compounding, all the above. And these are the strategies on how to do it and where to do it and why to do it. And so if you don't know what you don't know, then you're just going to keep spinning the wheels and getting the same result. So that coaching, education and accountability from an external party, whether it be financial planner, whether it be from a mentor, whether it be from a group like Crown, it doesn't matter who you're getting it from, but just someone could be your best friend as your accountability buddy. So, hey, this is the amount I want to pay off my house over next six months or six weeks. Hold me accountable to that. Report into me every single month or every single quarter just to make sure I'm actually hitting those goals there. So those accountability, coaching and education tools just sort of putting icing on this cake that we've already baked here, where you are going to be certainly tracking a lot closer towards owning your home in the next seven to 10 years. But having that coaching, education and accountability over the top just makes a world of difference to what we've seen over the last 23 years of working with thousands of clients. The last part is the automation, the segmentation and optimization of all your money. So we all know that mortgages compound interest in reverse. What that means is the opposite to your super. As your super gets growing, you're getting interest on interest on interest. That snowball gathers momentum. Or your mortgage exactly the opposite. It's compound interest in reverse. So as your debt comes down, your interest comes down more money off the principal. As your debt comes down, interest comes down more money off the principle and that continues to grow and grow and grow. And so we need to automate all your money because you're so busy that you just forget to start looking at it, worrying about it and all of a sudden putting things in place. And so by automating everything about your financial life instantly takes a huge weight off your shoulders. Wheels in motion. And so it doesn't matter if you do remember it this week or don't remember this week, you could be investing with dollar cost averaging, you could be doing debt recycling, you could be doing roundups, you could be doing salary sacrifice, super contributions, all these sort of things that are put in place, but they're automatic. That's why your super is growing so much, because your employees automatically putting it in for every single pay. If it was up to you, I promise you, your super wouldn't be as big, because you would have forgotten to do it some weeks or months, you probably would have taken some out of it for that emergency. But that's why your super is compounded, because you haven't touched it and it's been automatic. And so you've got to apply that same strategy to your home loan is we need to not touch the debt that you're paying off. I go back into debt for cars, couches, stuff. And we also need to make sure that we're in a position where if we aren't touching adequately, but we're automating the strategies to continue growing adequately. And so automatic payments of all your bills, smart, like having to juggle bills, is a huge time waster. Automatic tracking of your spending, your savings rate, your surplus cash flow, your net worth, automatic investing, automatic dollar cost averaging, automatic compounding. So these are some of the strategies which we've found very, very, very beneficial for a lot of clients. You've got all these options where you don't have to do any of the heavy lifting. You set up once and it's set for life. That's the key in automation, is do the sort of work once, but then for the rest of your life you're benefiting. You don't have to use any more bandwidth, mental capacity to sort of have on your calendars or ever growing to do lists that you need to be doing this, need to be doing that. And so that's one of the really big factors that we're massive on here at Crown Money is automation, making sure that everything around your money financially is automatic. And if you're doing that we set up once and then you're set, you're good to go. And just like your super starts to grow and compound, your mortgage does exact opposite and it starts to reverse, compound and reduce or evaporate there. So those are the key, key things that you should be doing that no doubt there are a few there that you may not be doing that's going to help you get out of debt in seven to 10 years. One of the key mistakes that you have been making over the past, if you're just like every other Australian, is refinancing for a cheaper rate on average every three years. And so now Australians move house every seven years on average, but they're refinancing just over every three years. And a big driver of that is them thinking, if I get a cheaper rate, I'm getting a cheaper mortgage. That's not true. You think it's lower repayment, lower rate equals cheap mortgage. Wrong. It's more expensive because the term is longer, you've refinanced back to the start of another 30 year mortgage. If you're trying to finish a 30 kilometer marathon and every 3 kilometers you go back to the start line, I don't believe you're going to finish the marathon. And that's where so many Australians are going wrong. They're being told by their bank or their broker, refinance, get a cheaper rate. It doesn't move the needle, otherwise you'd be debt free already. Remember with COVID you had rates of like 2%. Did you pay house off at 2%? No. So why do you think getting a 0.25, 0.5% cheaper rate is going to move the needle? It's not, it hasn't, it won't. This is the game. Everyone wants you in debt. The longer you're in debt, the more money everybody makes except for you. And so the smartest way to get people to stay in debt is to keep putting them back to the start line of a 30 year loan, every three years, cheaper rate. That's smart. You're getting a lower rate, lower repayment. That's going to be saving you money. It's not. It doesn't. And as a result of that, you keep going back to 30 years. Now you've gone from having a 27 year loan term, then you refinance with Johnny the broker back to 30 years. It's now you've got 33 years. You already had 27, now you've just gone back to 30. You've got literally a 33 year loan. It's crazy. The shortest term is the cheapest loan. Don't anyone let you tell any different because they want you in debt. The person who's telling you different wants you in debt. They are financially incentivized to keep you in debt for as long as possible. The longer in debt, the more money they are making, the more money you're losing, you're losing your freedom. And time is your most precious currency. You want to get out of this mortgage as fast as you possibly can. It's the biggest hurdle to your financial future being blossoming ahead in terms of lifestyle and quality time with family and friends. So the shortest term is the cheapest loan. And what you can be doing is implementing all those things I just went through, and you're going to find yourself with a much shorter loan term if all this makes sense. But you don't have the time and you're busy or you don't have the structure, the education on how to do it all for yourself. That's exactly why I created the home ownership plan. It's the same system we've used for over 20 years to help Australians pay off their house 200% faster. Now every 28 days, a client of ours pays their house off in full. I get to call them, they get a three, four thousand or a month pay rise because they paid their home loan off. They no longer have a mortgage repayment anymore. And so that system is exactly what we implement for you. It's the exact same system we used over the last 20 years to help Australians just like you pay the house off 200% faster without living on these restrictive budgets or diets, making sure that your money, you're back in control of it. And more importantly, everything's automated for you. If you want us to help you with this personally, do everything for you. Book a call with the team. The link is in the description.