“How can I pay off my debts quickly?” This is a question often asked by anyone burdened with debt and the chains that come with it. Over the course of a loan amortization you will spend hundreds, thousands, and maybe even hundreds of thousands in interest. By making a small additional monthly payment toward principal, you can greatly accelerate the term of the loan and, thereby, realize tremendous savings in interest payments. Use our extra payment calculator to determine how much more quickly you may be able to pay off your debt.
Making Extra Payments
Did you know that putting even an extra $100 a month toward your mortgage or student loan can help you save thousands of dollars? Since both are long-term loans, most of your monthly payment each month goes toward the interest, not the principal or the amount you owe. When you set aside extra money for your loans, you’re putting more money toward chipping away at the amount owed, meaning you get out of debt faster and pay less in interest overall.
If you’d like to see how much you can save, use our free mortgage amortization extra payment calculator to see the impact of early repayment. Or, check out the Money Help Center student loan payoff calculator — with extra payments, you can pay off your student debt faster. Our calculator shows you exactly how much you’ll be able to save.
Keep in mind the higher your principal — or the amount you owe — and the longer the term of the loan, the more you stand to gain by making extra payments. If you have a high interest debt, such as credit cards, making extra payments can also have a significant impact on how much you save and how quickly you become debt-free.
How to Find the Cash for Extra Payments
While you may like the idea of paying more on your loans and digging yourself out of debt, how can you find the extra cash to put more money toward your repayments? Money Help Center has a few ideas:
- Create a Budget: Use our free calculators to evaluate where your money goes and how you can allocate it best. Find out how you spend most of your cash, then ask yourself where you can trim spending.
- Give Up What You Don’t Need: Sell off whatever you don’t need and get rid of memberships and subscriptions you don’t use. You won’t miss these indulgences, and you’ll be able to immediately adjust your budget by putting the extra money toward your debts.
- Give Up One or Two Luxuries a Month: Trying to live life too lean is not sustainable and will make you miserable, but you can probably afford to give up one dinner out a month or one fancy coffee a week. Put that extra money toward debt.
- Focus on One Debt at a Time: You’ll see the biggest impact if you tackle one loan at a time, and that will keep you motivated to keep saving. We suggest focusing on the debt with the highest interest rate first.
- Make It Automatic: Once you have a budget and know how much extra money you can put toward debts, set up automatic payments. Not only will you not have to remember to make your debt payments every month, but you’ll also be less likely to spend your savings on other things.
Use our free and accurate extra payment calculator to determine how quickly you can officially be debt-free!