Mortgage Payments
Many banks are now offering consumers a new way to pay off their debts. While a traditional mortgage payment is made monthly, you can make your mortgage payment every 14 days. While this is seemingly the same cost to you, paying your debt every 14 days can save money in the long run.
If you pay $1,000 a month on your mortgage,you will pay a total of $12,000 each year. In 30 years,you will have paid a total of $360,000 for a home worth approximately $150,000, depending on the local taxes and percentage rate. Now consider paying $500 toward your mortgage bi-weekly. There are 52 weeks in a year. This means that in a year, you will make 26 smaller payments and pay $13,000 toward your home loan. Not only will this knock years off your loan, you will also save thousands of dollars in interest charges. Paying off your loan 5 years early will save you nearly $50,000.
Car Loans
While most banks are only advertising a 14-ay payment schedule for home loans, consider your car loans as well. If you pay $300 a month toward your car loan, you will pay $3,600 a year or $21,600 in 6 years. If you decide, instead, to pay $150 every 14 days, you will pay $3,900 a year. This will knock 5 months off the length of your loan and save you about $750 in interest payments over the length of the loan.
Other Debts
This principle can be applied to student loans, credit cards, store cards, medical debt and any other type of debt that accrues interest over time. Making an additional payment toward your debt each year is a great way to painlessly save a little money in the long term. Consider talking with your bank and credit card companies to work out a new payment schedule. Paying all of your debts every 14 days will likely save you thousands of dollars and is well worth the one extra payment a year that you will make.
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