Weekly $ tip #22.
This week’s money tip might be hard to do, but if you get nothing else from my awesome money tips let it be this.
PAY MORE THAN THE MINIMUM PAYMENT ON EVERYTHING
- credit cards
- car
- house
- department store cards
- everything you have borrowed money for
The ONLY case I would not advise paying more than the minimum is where you have a contract amount and cannot pay off the loan early. That’s it.
All of the above charge interest and…
Interest = Evilness
I know you know about interest so I won’t bore you with the semantics. I will say that paying more than the minimum not only gets your debt paid down faster, but your credit score will improve!
I can’t even begin to put into words the amount of money you will save and the length of time you will save yourself on paying down your debt. I use a free online tool to measure my debt and how much extra I will pay each month (Vertex42). I use it purely as a directional guide. I have a goal of having my credit card paid off in two years, this tool helps me do that.
If you have a goal of 5 years or 1 year, you can play with the numbers to figure out if it is an extra $20 or $200 that you need to pay EXTRA per month. It will likely be very eye opening. If you feel too overwhelmed right now to put a time limit on yourself then don’t, but you should still use this tool for sure to educate yourself on *your current financial situation*.
I pay extra on my mortgage every month. Right now I pay $100 extra per month on my mortgage. GET THIS! If I didn’t pay one extra penny on my mortgage payment I will have my house paid off in 27 years and will have paid more interest than I care to admit. By paying $100 extra per month I will have my loan paid off in 21 years!!! HOLY COW! I know that as time goes on and my credit card debt is gone that I will put even more toward my mortgage and that number of years will lessen even more. Not only that but I will save close to $100,000 by doing so.
This is a HUGE gift to yourself so get ‘er done.
I even go as far as too see how much time it would take if I put $150 vs. $100 to my mortgage. It makes me giddy. I can’t do more than what I am doing right now but once my credit card is gone I anticipate putting the full payment amount toward my mortgage.
If you are breathing into a paper bag right now stop it. If you commit to paying an extra $50 on your credit card; DO IT. In fact, take it out of your monthly budget so that you don’t even know it is there. It isn’t an option to touch. If something catastrophic happens and you absolutely need this extra $50 then by all means use it. I mean you don’t want to make the situation worse so don’t make it worse by putting yourself in a bind.
The other thing is being proactive which is super easy if you have a budget already prepared! When you have a budget you can easily plan for something that “comes up”. I have plenty of ways, simple, easy and everyday ways, to help you find that extra $50 so NO EXCUSES! Did I mention I’m a single mom with 3 kids? That pays extra on credit card, house AND car? Now what? Get it done.
What are your goals?
{ 2 comments… read them below or add one }
Great post, Jill. I need to find a way to target my car payment first, then my mortgage. Didn’t know about the free online tool. I’ll be checking that out later today as I work on the March budget.
Good point. You should look to putting more money toward the item with the higher interest rate, and sometimes that is a credit card, or a mortgage or…. a car.