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# How to cut 2 years off your mortgage

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## Save over \$40,000 in interest on your home loan by putting the bottle down

Whether we like it or not, Australians are renowned for quenching their thirst with alcoholic drinks. Yet despite popular belief, research from the Australian Bureau of Statistics (ABS) shows that Australians are consuming the lowest amount of alcohol now, compared to what we have at any point in the last 50 years.

That is, we are currently drinking the same amount that we did in the early 1960s.

### How beer could cost you your dream home

According to the Foundation for Alcohol Research and Education (FARE), 77% of Australians consume alcohol on two days per week while 23% consume alcohol on three days per week.

The majority of Australians (55%) will consume 1-2 standard drinks in one sitting, 43% consume 3 or more drinks on one occasion and 15% of Australians consume more than six standard drinks on a typical occasion.

If we consider that the majority of Australians drink on two days each week, we can estimate the expense of alcohol consumption based on different alcohol volume tiers, as outlined below.

Standard drinks per weekAverage Cost(per week)Average cost (per month)
4
(1-2 drinks x 2)
\$24.36\$97.44
6
(3+ drinks x 2)
\$36.54\$146.16
12
(6+ drinks x 2)
\$73.08\$292.32

* The average cost per month was calculated by assuming that there are 4 weeks in each month

So if youâ€™re kicking back with 2 x 750ml bottles of Carlton Draught (\$6.09 each) from Dan Murphyâ€™s twice a week this will equate to \$24.36.

And before you know it, \$97.44 each month has vanished into thin air.

Note: For the wine drinkers out there, we also calculated the average cost of average wine consumption and the numbers werenâ€™t too different.

### How much less should you drink for your home loan?

By using the findings from FARE, we can calculate just how much you could pocket should you decide to go alcohol-free.

And from this, we can work out how many years you could shave off your loan by going dry July, dry 2015 or even beyond.

For instance, if you took out a mortgage and needed to borrow \$500 000 with 5.5% interest and make monthly repayments of \$2 838.95, it would take 30 years to pay off.

However, if we deduct the total alcohol expense over the life of the loan, we can work out how much savings you would have to put towards your extra repayments.

To demonstrate, if youâ€™re drinking 1-2 standard drinks twice a week, the total alcohol expense over a period of 30 years would be \$35 078.40. That is, \$35 078.40 more to put towards your repayments over the life of the loan.

This means youâ€™d have \$97.44 extra to put towards your monthly repayments.

If you started making your additional repayments in the first year, youâ€™d pay off your loan 2 years and 3 months sooner, which would in effect save you \$44,435.28 once interest was factored in.

Standard drinks per weekCost over 30 yearsPotential Time SavingsPotential interest savings
4
(1-2 drinks x 2)
\$35 078.402 years 3 months\$44,435.28
6
(3+ drinks x 2)
\$52 617.603 years 2 months\$63,494.17
12
(6+ drinks x 2)
\$105 235.205 years 8 months\$111,363.87

Find out how much you could save on your loan by using our home loan repayment calculator.

### Australians in good spirits: Exactly who is drinking less?

The National Drug and Alcohol Research Centre has found that there has been a steady decline in alcohol consumption over the past 7-8 years. And this trend has been located amongst young Australians (Generation Y) aged 30 years and under.

### Why are we drinking less?

Whether itâ€™s our new-found health-conscious mentality, successful anti-binge drinking campaigns or the influences of social media in shifting the way we socialise, weâ€™re no longer as boozy as we once were.

But for those who like to indulge in a beer or glass of red on a Friday night, eliminating alcohol might be easier said than done. However if you gradually reduce your alcohol consumption, you could find yourself in a stronger position to service your mortgage.

Itâ€™s a small compromise to make.

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