The other day, at the local op shop, I picked up a $1 Pyrex dish:
New Pyrex isn’t cheap; even secondhand diarrhoea-coloured Pyrex can be pricy because they’re collectable; a $1 pink Pyrex dish should be a good buy. But is it really a bargain for a mustbethrifty mortgager?
In a previous post, I gave some advice about so-called $1 bargains, ‘every dollar spent represents hundreds sucked into the mortgage black hole’, but after writing it, I felt like the Girl Who Cried Antithrift because even I thought my claim was an overestimate.
So I crunched some numbers in yourmortgage.com.au’s Advanced Repayment Calculator to come up with something more concrete. If I were to borrow $285, 400* at 7.5% per annum, I would be paying $347, 325.26 total interest over a 25-year period.
With such a home loan, would an extra dollar make a difference? As a lump sum, not really:
However, if I put in an extra dollar on top of the minimum monthly repayment, I do shave off $577.97 from the total interest:
Therefore, that single dollar put towards a pink Pyrex dish instead of the mortgage won’t make much of a difference, but spendthrifting in micro amounts can turn into a costly habit. In other words, when it comes to discount shopping, buy only what is necessary. It ain’t a bargain if it don’t get used.
24 years and 7 months to go,
*The average loan for a first-home buyer as per the Australian Bureau of Statistics (via The Age).