Need another reason to quit smoking? This Sydney Morning Herald article gives you one.
Quitting cigarettes can do more than lengthen your life. It can shorten the term of your mortgage.
Research from financial comparison website RateCity shows a pack-a-day smoker spends $4,000 a year, or $300 a month, on cigarettes.
Dropping that money onto the monthly repayments of a 25-year, $300,000 mortgage, could reduce the term of the loan to 19 years and knock $100,000 off interest repayments.
“Many households will be feeling the pinch of rising interest rates as we’ve seen mortgage repayments increase by about $340 per month for the typical $300,000 loan since September 2009,” RateCity CEO Damian Smith said.
“Borrowers who have also been slugged with the new cigarette tax will be feeling even greater pressure on their financial situation.
“This is why it’s a great time to re-assess your habits by quitting smoking and use that money to pay down your mortgage.
“Were not in the business of providing health advice, but for most smokers with mortgages, kicking the habit and redirecting their savings into their mortgage will likely have health and wealth benefits.”
Mr Smith said smokers who don’t have a mortgage should take advantage of high interest savings accounts on the market.
He said depositing $308 per month into a savings account with 6.25 per cent interest could earn $108 after one year or about $3,148 in five years time.
“The number one reason for quitting smoking obviously should be health-related, said Mr Smith.
“But the financial benefits of redirecting savings from an increasingly expensive habit cant be ignored and smokers need to assume that cigarette prices are only going one way up.