Banks will generally lend you plenty of money, often more than is desirable. Then comes the challenge of paying it off. Paying off debt can be like getting rid of those extra post-Christmas kilos. You put in a lot of effort, yet it seems to take ages before you see any benefit. In both cases, many people give up as the effort doesn’t seem to reflect in the bank balance (or on the scales).

Like a diet, paying off debt requires a plan and discipline. The plan needs to be realistic. There is no point in living like a monk to pay the mortgage off in 5 years, because that is not sustainable. Pick a realistic target. If you have a $300,000 mortgage and you think that you can pay an extra $10,000 over 2 years, then focus just on the $10,000. It is a much more manageable number. Get the bank to split that amount out into a separate loan and set up the extra repayment on that amount. After you’ve paid that off, maybe next time you could do $15,000. People overestimate what they can achieve in a short period and underestimate what they can do over a longer one.

Beware of relapses and what causes them. Just like the dieter who makes sure there is no chocolate in the house, if you’re serious about getting rid of debt, cut up your credit card and put a no-circulars sign on your mailbox to avoid those pesky, tempting adverts.

Beware those companies offering help to pay off your mortgage. They charge too much and you can do it yourself. If you really need help, talk to a friend who is in a similar situation and act as buddies for each other.

Mark Lynch is a Registered Financial Adviser. His Disclosure Statement is available free upon request. Any comments in this article are the opinion of the writer and should not be construed as financial advice.

The Mortgage Diet