When I was completing my PhD one of my supervisors would say to me “How do you eat an elephant?” At which point all I would think was ‘I don’t want to eat an elephant’ and I would give her a bewildered look of I have no idea what you are talking about; to which she would answer her own question by saying “One bite at a time!”
Obviously, she didn’t mean this literally! But this was a message she constantly said during our meetings.
On the one hand she was right; to get through something, no matter how big it is, the only way to get through it is by taking one step at a time (or one bite at a time).
But still, every time she said it, I would think I still don’t want to eat an elephant!
I soon realised there was one fatal flaw to this analogy.
The thing is, you don’t have to eat an elephant; you could eat something smaller.
Take my PhD for example.
When you complete a PhD, you have 3 years to complete it. One of our colleagues finished theirs in 2½ years. That’s very impressive. I completed mine in 4½ years.
But here’s the thing, even if I wanted to finish in 3 years, it would not have been possible to do so.
I was collecting data at the end of my third year (when I should have been finishing), and yes as crazy as it was—this was planned!
There was no way I could have finished in three years even if I wanted to.
So what has this got to do with paying off your home loan?
The problem was during my PhD I was given an elephant—a massive project that I was expected to complete in three years when it wasn’t physically possible to do so (given that at the end of three years I was still collecting data).
When you get a home loan, you don’t have to get a big one. Get one that is manageable; one that is within your means to pay off within five years (or 7, or 8 or 10 years etc).
If it is your first home, buy a smaller property in an area outside of your ideal location so that you can pay it off faster and then you have a chunk of money to do something else with (e.g., you could buy a home in your ideal area later; which is what we did).
You can take out a smaller home loan.
The underlying principle of “How do you eat an elephant?—One bite at a time” is true; the only way to get through something so big is bit by bit, step by step.
This is because everything is cumulative.
The more often you pay your home loan and the more you put into it (even small amounts), the faster you will pay it off. Even an extra $20 per week can make a difference.
But remember, it doesn’t have to be an elephant.
You can choose a smaller loan that you can get through faster. Even if that means buying a home outside your favourite area. If you can, get a home loan you can pay off within 5 to 10 years.
The smaller the mortgage, the less overwhelming, the faster you will pay it off, and the more money you save.
Buy within your means to pay it off faster; that way you can. And how do you work out what is “within your means” you ask? Don’t worry, I’ll get to that soon. First up let’s talk about how much you want to borrow.