Monday, January 13, 2014

1 Simple Tip to Pay Off Debt Faster

I recently overheard a woman discussing making a purchase. "It's only $50," she said, "I should just go ahead and buy it." I'm not sure what she was buying, but that phrase struck me: "It's only $50." I thought to myself, she must not know what saving an extra $50 can do!

Find out how this one simple tip can help you get out of debt YEARS faster. www.growingslower.com #debtfree #daveramsey

You see, I've lately learned the value of what once seemed like an inconsequential amount and what a big difference it could make in our family's financial life.

Just over three months ago, almost on a whim, my hubby and I decided to start putting a little extra on our student loans. It seemed like a small amount that would hardly make a dent in the huge sum we owed, until we really started looking at the numbers.

Saving just a little money can change your financially situation drastically. Even just putting a few extra dollars per month toward your loans can cut YEARS off the payback period. If you have debt, paying a little bit extra each month can make a huge difference.

So what does saving money, even just a little bit, really do to help your bigger financial outlook?

Let's say you're trying to pay off a car loan: $5,000 at 4% fixed interest. If you continue making the minimum payment every month, it will take you another 4 years to pay off the loan.

If you find a way to save just $50 per month to put towards the loan, you can pay it off one year and five months sooner! (You can use this free debt calculator or this free downloadable spreadsheet to find out the actual debt pay off for your particular situation.)

In addition, you'll save almost $200 in interest.

Plus, you'll have freed up an extra $150 (minimum payment plus $50 extra payment) per month to put towards paying off another loan, saving for emergencies, or to help you become a stay at home mom.

Of course, those extra dollars have to come from somewhere. Recently, I shared 97 Easy Ways to Save Money. In the article, I also estimated the savings per month for each of the money saving strategies. They ranged anywhere from $4 per month to several hundred.

Saving that extra $50 could be as easy as dining out one less meal per month. Or it could be one less trip to the salon.

Oftentimes, the only place that extra $40 or $50 can come from is to squeeze the grocery budget even tighter. If you're exhausted with the chore of meal planning, couponing, and shopping sales only to find you're still not saving money, you might want to check out Grocery Savings Made Simple. This is the simple system my family used to save $5,616 in the last year alone! (It's included in the Ultimate Healthy Living Bundle now through Monday, September 15.)
Even if you're already living on a very tight budget like we are, you may be able to find ways to cut your budget for necessities like groceries and utilities. You could also make lots of little money saving strategies add up to $50 per month.

So if you're like we were and resigned to the fact that you'd still be paying your student loans when your kids were in college, think again. 

Try to stop focusing on the total you owe or past decisions you've made. Just start somewhere! Even just a small additional payment each month can really add up. After all, it's only $50.

Are you starting to get out of debt? Have you gone debt free already? Share your experience in the comments.



Photo by Kurtis Garbutt via Flikr. Linked up with Frugal Thursday.

6 comments:

  1. Thankfully, we're currently debt free. I was blessed to have parents who helped us out as much as possible when we were in school and as a result, my brother, sister, and I don't have any school loans. Yes, it meant that we missed out on dorm life and commuted from home, which was hard at the time. But, now I'm glad I don't have loans because it means that I am able to stay home with out daughter, instead of working outside the home.

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  2. It's that "it's only" that had gotten us into trouble and breaking that habit was sooooo hard! "it's only" really is a good "excuse to buy what you want right now, instead of disciplining yourself to wait.

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  3. This is so true and it is amazing how quickly small amounts add up, especially when interest is involved. We put every extra penny toward paying off my student loans and with our new plan should have them paid off in 5 years! Then I get to finally be a full time artist (and mommy of course)!

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  4. We are in the midst of paying down our credit cards, but then student loans will be up next. Thanks for the great tip!

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  5. I just tried to check out the free debt calculator you linked to and the link didn't seem to be working. Do you know if it is no longer in use or if its just a bad link? I definitely want to start being more strategic w/ my debt repayment and I think that could help me out. Thanks.

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    1. I'm so sorry about that! I think that calculator isn't available anymore, but I just updated the link to go to the Dave Ramsey one, and I also added a link where you can download a free spreadsheet too. I hope that helps. Congratulations on working towards paying off your debt!

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