An Interest-Saving Meal Plan

Save-a-Dinner-Mortgage-Plan47% of Canadians say eating out less would help them save more.¹

Sounds logical. Frequent diners can drop $100+ a pop at a decent restaurant.

But what if that same $100 was redeployed, once a month, as a mortgage prepayment?

The result is appetizing in its own right.

A standard $200,000 mortgage is paid down 13% quicker—in just 21.75 years instead of 25 years.

Of course, once you pay off the mortgage you can take your payment savings and eat out 10 times a month if you really want to…or not.

¹ Source: ING Direct Poll. ING’s survey also included a few other sobering statistics:

  • 36% of adults state that they don’t save any money on an annual basis.
  • 54% claim to live paycheque to paycheque.

If this is you, rent till the cows come home and save up a 4- to 6-month emergency cash stash (not to be used for a down payment!). Your dream home will wait for you.

Rob McLister, CMT

  1. Not eating out for 21 years to save 4 years of mortgage? That’s logic isn’t going to work on most people.

  2. Great post Rob. Working with Canadian families coast to coast to improve their finances and eliminate their debt, we have found that it’s the small changes to spending habits, such as eating out less often, that consistenly enables cashflow they can redirect for achievement of specific and realistic goals such as eliminating their personal debts and mortgage years sooner.
    There is a free resource at that we have been told by many folks helps open dialogue with their partner/spouse to take action around improving finances.

  3. my buddy who owns a restaurant is cringing over a posting like this….but it is true….been there, done that…..

  4. Hi Chris,
    We’re always looking for angles to illustrate the compounding benefits of prepayments. Like Shayne notes below, this piece doesn’t advocate a moratorium on eating out. :) Everyone has to live a little.
    The reality is that many folks with a ~$200k+ mortgage dine out multiple times a month. If you’ve ever watched Gail Vaz-Oxlade’s “Til Debt Do Us Part,” it’s remarkable how many people rack up $600-700+ a month in restaurant bills. For many, diverting $100 of that to principal reduction (on your mortgage or unsecured debt) can be a tolerable and profitable trade-off.

  5. Hi np,
    Well, we certainly didn’t intend on ruffling your buddy’s feathers. ;)
    How about we substitute eating out less with cutting back on fetishes for designer shoes, car accessories, fine wine, home wares, you name it?
    Fortunately, there are lots of ways to save a buck and keep restaurants in business!

  6. Unfortunately, there are no ways to cut back spending without negatively affecting the economy in some way. Cut back on restaurants and your buddy te chef loses his job. Cut back on fetishes and your friend the dominatrix loses hers. Such is the reality of an economy based on consumer spending.
    Debt growth is slowing down and we are starting to see the effects now

  7. Yeah, the point is pretty clear…to me anyway. How about diverting 80% of your pay to savings/investing for 5-10 years? It’s the fast track to extreme early retirement.

  8. Ya LS you are right. Everybody should spend as much as they can so chef and dominatrix stay employed. To hell with saving. Now you’re thinkin!!!

  9. Hi LS,
    Thanks for the comment. The economic impact of a $100 prepayment is certainly beyond the scope of this article. Nonetheless, for people who want to go down that path, it’s not as cut and dry as it might seem.
    Many argue that a dollar saved makes a more positive economic impact than a dollar spent (due to lower capital costs, the multiplier effect of capital and long-term consumption). If you’re interested, a good read covering this topic is Peter Schiff’s “How an Economy Grows and Why It Crashes.”

  10. In the past two years, I have saved and invested more than 90% of my after tax income. In no year has my savings rate ever been less than 50%. I have never owned a car. I rent and live in a tiny apartment way below my means. What is the return you say?
    My investments already pay me enough to live on. I work because I enjoy my job, not because I need it. Another few years like this and my return on my investments will be enough to send the kids to college as well. Another few years and it’ll cover grad school / law / med school as well. And that’s from interest/dividends, not principal.
    I like eating out, but financial independence is better.

  11. Nope, not at all. DH (below) can spell the goal out just fine right there. Your next step is to research “early retirement extreme.” It’s the real solution to wage slavery.
    It’s easy to save 80% of your income once you strengthen your saving muscle. We have a huge abundance of all the things we need.

  12. I would suggest that $100 prepayment is actually a net benefit to the economy. It reduces the amount of interest ultimately going to the bank, and when the mortgage is paid off earlier, those additional discretionary funds can be used to support your local economy, rather than padding the bank’s coffers.

  13. Hi Rob,
    Good post…to get people think about mortgages and their future. We should re-visit some similar ideas. What would you do with an extra $100-400 per month? Mortgage prepayment or other things like RRSPs TFSA etc. What has the biggest impact over the long term…(20-40 years from now).
    Drop me a line.

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