I am here to tell you that the power of loan prepayment is amazing! Jason and I have always tried to pay our loans off early to reduce the amount of interest we paid and it has worked out great so far.
For our auto loans instead of paying 1 monthly payment we would usually break that payment up and pay towards it weekly. This method hits the principal more frequently and speeds up your debt repayment a lot. We normally had auto loans at local banks/credit unions so weekly payments weren’t a problem or you could pay them online now weekly. When we could pay extra we did, but just by breaking the payment up you make a lot of progress.
We have also always tried to pay extra towards principal on our mortgages. We also make sure to get a mortgage that we can easily afford and pay extra when we can, but if things come up that use that extra money our normal mortgage payment is easily paid within our budget. As we made more money and paid other loans off, we would put even more towards our principal balance. Last year we were able to buy another house and use the equity we have achieved as a lump sum payment towards our current home mortgage. Yesterday I got my handy-dandy calculator out and realized that we are much closer to being debt free than I realized. This has motivated us both to make sure we stay on track with what we’re doing and maybe buckle down a tiny bit more.
It is just incredible to me just how much of a different paying extra can make to your loans. I’m sure our lifestyle isn’t for everyone, but I believe we live a pretty nice life. Neither of us really likes going on week-long vacation trips so we just naturally tend to have more “staycations” which of course saves more money. We are well clothed and fed and have entertainment that we enjoy. I just feel that our needs and wants just aren’t really that extravagant or expensive and this enables us to be able to save a lot without feeling deprived or bitter about the process. For example, starting this year we’ve started using only my salary for our living expenses and regular mortgage payment and using Jason’s salary for extra payments towards our mortgage and beefing up our savings/emergency account. It can be a little tight at times but it’s doable and makes me feel a whole lot better know that if something happened to one of our jobs that we would be able to make it.
I am not writing this to brag or show off, but hope to help someone out there that just doesn’t realize that there is a way off of the debt roller coaster. If fact, I bet a lot of people reading this make more money than we do, so it isn’t about big salaries either. It’s about what you do with what you have and using it to your best advantage. Why not keep more of your money to help yourself and be able to do things you want to do with it instead of sending it out into the world for other to enjoy?