Video: Scott Pape's pay off your mortgage faster challenge

Video about paying off your mortgage quickly

Video transcript

Welcome to the Barefoot Investor's 60, 60, 6 challenges - Helping you get more money smart by the minute.

Most people don't realise that over a thirty-year mortgage you'll actually end up spending more in interest than what you paid for your home to begin with.

It's definitely in your interest to find out just how much you'll pay the bank over the life of your loan.

And there are some nifty little tools to help you do it. For example, on a 500-grand loan over 30 years, with rates at 6 per cent, you'll end up paying around 580,000 bucks just in interest over the life of your loan. So that half a million dollar home ends up costing you over a million bucks if you don't actively pay down your mortgage faster.

60 seconds challenge

So take just sixty seconds to calculate the total interest on your loan, and I guarantee it'll give you the kick up the pants you need to make those extra repayments, which could dramatically reduce the cost and life of your home loan.

So now you know how much that mortgage is really costing you, hopefully you've made a decision to pay it off as quick as you can.

Now the best way to do that is by zero-ing in on your spending habits, so you can make that extra payment every single month.

60 minute challenge

Now for your sixty-minute challenge, I want you to take out your wallet, check out how much cash you have actually in there right now, remove everything that shouldn't be there.

If you've got receipts put them somewhere safe, anything you don't need, bin it.

Now most of us have no idea how much money we spend each week, as we rely more on credit cards and internet banking.

Money has become increasingly invisible - now there's one way to change that.

For this challenge, I want you to head to the ATM and take out your week's spending money in cold hard cash - twenty dollar bills to be exact.

Actually seeing the money leave your hands will change the way you spend it.

Now you're set up to really start changing those bad spending habits.

6 day challenge

For the next six days, I want you to pay for everything in cash, well except your direct debits and your regular bills.

Now every time you make a payment, I want you to think about the money as it leaves your hand, say to yourself - is this purchase supporting me or sinking me?

To make this experience even more life-changing, download ASIC's MoneySmart TrackMySPEND app.

You'll be able to set spending limits and track your progress as you spend your hard-earned.

Now anything you have left over at the end of six days, I want you to use to make an extra repayment on your mortgage.

Even if it's only ten bucks - the effect of paying an extra ten dollars a week, compounded over the life of your loan could make tens of thousands of dollars difference to your mortgage.

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Last updated: 09 Aug 2016