Get out of Debt Faster – No More Excuses!

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photo credit to Amnemona

Get out of debt faster without noticeable change to your lifestyle.  Even if they are ever so slight, extra loan principal payments are easy to implement, will speed up your debt repayment, and save you money… all without cramping your style!

If you are not already using a debt snowball or similar debt repayment strategy, then implement the strategy in this article to get out of debt faster!

The majority of us know extra payments will help us get out of debt faster… but do we really understand the incredible power behind those extra payments?  Set up automatic extra principal payments and I guarantee you will not miss the extra dough.  It is so easy to do and we stand to save so much… so really, what excuses do we have left?

Look how powerful this is

It doesn’t matter if you pay $25 extra every month or $100 extra, just pay something extra!

Here are a few scenarios to show you the power of paying extra toward loan principal:

$100,000 mortgage – 30 year term with a fixed rate of 6%

  • Normal repayment
    • paid off in November of 2039
    • total interest paid is $115,838
  • $25 extra each month
    • paid off in November of 2036 – repaid 3 years early
    • total interest paid is $101,899 – saves you $13,939
  • $50 extra each month
    • paid off in June of 2034 – repaid 5 1/2 years early
    • total interest paid is $91,269 – saves you $24,569
  • $100 extra each month
    • paid off in November of 2030 – repaid 9 years early
    • total interest paid is $75,938 – saves you $39,900
While this concept is especially powerful when used on long-term debt repayment, it can also help you save money and get out of debt faster when used on short-term debts.

$20,000 auto loan – 5 year term with a fixed rate of 8%

  • Normal repayment
    • paid off in November of 2014
    • total interest paid is $4,332
  • $25 extra each month
    • paid off in July of 2014 – repaid 4 months early
    • total interest paid is $4,015 – saves you $317
  • $50 extra each month
    • paid off in April of 2014 – repaid 7 months early
    • total interest paid is $3,741 – saves you $591
  • $100 extra each month
    • paid off in October of 2013 – repaid 13 months early
    • total interest paid is $3,295 – saves you $1,037

As you can see… paying just a little extra is an incredibly powerful way for you to save money and get out of debt faster.  Better yet, this is something you can implement right away without changing in your lifestyle!

What will you do with the money you save? This is a great question to have to ask yourself!

Set it and forget it

With the advent of online banking, setting up automatic payments has never been easier.

Honestly, what excuse do we have to NOT pay a little extra each month?  It’s not like we have to buy a stamp, write a check, and walk 5 miles to the post office to mail it out (up hill both ways in the snow.)

I recommend setting all your automatic payments up through your bank, not through your debt accounts!  For example:  if you have a mortgage through Chase, do not log into your Chase online account and give them access to your checking account for automatic payments.  Instead, log into your bank and set up all automatic payments there.  (Hmmm… I should write a post about this.)

All you have to do is set it and forget it.  If you are unhappy with your bank – like I was – I recommend using Capital One 360 (up to this point… the only bank I have ever endorsed.) They have an awesome interface for automatic bill pay, not to mention automatic savings contributions!

You won’t miss it

I guarantee you will not miss the extra money. Don’t believe me?  Prove me wrong.

I am repaying my debt using the Hybrid Debt Snowball Fight Method but am still paying $25 extra toward my 2nd mortgage even though it is not currently the focus of my snowball (hence my hybrid solution.)

As I mentioned above, if you are already following a disciplined debt repayment plan, then continue on your current course.  However, if you are looking for a way to get out of debt faster and want something that is easy to implement… this is your answer.

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1 FreeMyInterest

A key part of this is to check on your bank to make sure they are applying the extra money correctly. I have found one of my accounts would just deduct it off the next payment. This was even though it clearly stated PRINCIPAL ONLY. I found that I could only send in extra payments in a 4 day window, after my regular payment but before the statement. Banks and loan companies will do anything to gain a little more interest. So double checking the interest on your statements monthly is key.

2 Matt Jabs


Yes, everyone should definitely make sure their extra payments are going 100% straight toward the principal.

3 Elle

I love the post! When we were paying off the VW car loan, we looked at our budget line by line and sought ways to cut bills and allocate the money for car payments. We were willing to cut down since we had a goal and we knew it was temporary.

Every dollar counts when you have a goal and automatic payments and transfer are a life saver. Thanks again for the posting the numbers.

4 Mr. Not the Jet Set

Amazing the difference that $25 per month can make. I get jazzed every time I see the progress bar on our sidebar for our 15yr mortgage. Nearly 3 years in, which is 20%!

I can’t wait to see it melt away once we are able to pay extra on it.

5 Matt Jabs

I know! Once you put your debt repayment plan on autopilot, it is so nice to just kick back and watch it work.

And actually, I get antsy… and want to effect further change, so I start cutting more expenses to make my debt melt away faster & faster. It’s addictive, but in such a good way!

6 Matt Jabs

Ha! My clothing budget doesn’t renew until December 1st… I’ll get my Carhartt off layaway after that. 🙂

I live in Michigan… houses are dirt cheap because nobody has a job to buy one! Seriously though… the $100,000 is more of starting off point to show the power of the calculation.

7 Lynn

Student loans are the biggest offender in the not paying extra toward principal. I had numerous fights with my husbands student loan company because I just didn’t understand the bills when I was paying extra on his loan. Turns out I had to write a letter stating to remove the “pay ahead” status on his account in order for it to be paid to principal. It was even shocking to me when I did that and 2 months later the extra money was not being applied to principal. When I called to question why the payment wasn’t applied to principal again they told me I had to write to permanently remove the “pay ahead” status. WHAT? What was the point of writing the letter in the first place – to have the extra money only applied to principal for 1 month? Needless to say I wrote a letter with all the words in 12 font except the word permanently which was in 50 font and in all capitals. Seriously ridiculous.

Now that my rant is over, I just wanted to say thanks for the reminder – I always tell myself that an extra $25 won’t make a difference but it really does!!!!

8 Lydia aka Ms. MoneyChat

amazing how a little goes a long way.

9 JerryB

Like Lynn above, I had to contact my Car Loan Company every *explitive deleted* month to get the extra applied to the principal. I finally took money out of my e-fund and paid the whole thing off. Fortunately I had built up a sizable e-fund that is still overweight.

10 Financial Samurai

Nice Matt! I like the conviction and intensity you have! You’re right, you’re not going to miss the extra $25, nor will you miss the mortgage payment when it’s done years early!

11 Kevin@OutOfYourRut

Matt–convincing graphic with the numbers. You can actually see what a differnce a little bit can make. Best benefit of all, no loans in less time. It has to feel great.

You’re getting edgier in your advancing age. You have the conviction of a convert! Keep it up!

12 Jason @ RedeemingRiches

Sometimes we need to see the simple things on paper to understand its power! It’s hard to believe that $50 or $100 a month will make that much difference – but you are talking thousands of dollars in savings that gets knocked off by just making some simple sacrifices.

Great stuff!


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