Have you just paid the last installment of your mortgage? Here’s How To Make Good Use Of EMI Money
New Delhi: After you’ve paid off your mortgage, you might gain a new sense of pride in your home. You really, really own it. You will likely have extra cash each month, and you will face a much lower risk of losing your home if you are going through hard times.
Now is the time to use your new monthly surplus to meet your life goals. So what should you do with this extra money each month?
Save money for taxes and insurance
Set aside your own money for taxes and insurance. Paying off your mortgage doesn’t free you from your property tax obligations, and it’s a good idea to keep your home insurance in place for financial protection. Remember, it doesn’t just protect the structure of your home; it also protects the content and your personal liability. If you have coverage for risks like flooding or earthquakes, you will probably want to keep it.
Corpus of retreats
Most of us haven’t saved enough; now is your chance to make more progress. If you are 50 or over, you can take advantage of catch-up contributions. In addition to contributing more to tax-efficient retirement accounts, you may also want to boost your emergency retirement fund.
For retirement, you may want to consider increasing your VPF (and / or PPF) contributions and your equity funds. For the future of children, you can opt for SIPs in equity and debt funds.
If you have other high interest debt (a personal loan or an outstanding credit card), start writing them off. Start with the debt with the highest interest rate, that is, overdue credit card balances. Once the credit card dues are fully repaid, move on to loans with the higher interest rate.
Life is not just about saving and investing. So if you want to splurge and spend a little, go ahead and do it for a few months. Go on a trip. Take care of yourself. But, after a while, get back to normal and be reasonable. Redirect your old EMI money to a solid, periodic investment framework.