Home » Posts tagged 'pay off'

Tag Archives: pay off

5 Easy Ways To Pay Off A Loan Fast

Last month I was able to pay off my auto loan, about a year and a half early. In addition to the positive effect it has on my credit score, and that I don’t like my hard earned cash going to someone else if I can prevent it, I wanted to pay off my auto loan before my maternity leave started in February.

Related PostMy 3 Habits For A High Credit Score

Related PostPay Off Auto Loan Or Roof Repair

I was able to pay it off by following five strategies for paying off debt fast.

Automatic Payments

Setting up automatic payments means that I won’t forget to write the check and mail it. My hubby once forgot to pay a credit card that he charged a couple of Little Caesar’s Pizza to, and the $15 in pizzas blossomed to $100 once late charges and interest were added in.

Related Post9 Reasons Why I Pay My Credit Card Every Week

Biweekly Payments

I had my auto loan set up for automatic biweekly payments, which means half the minimum payment is paid every two weeks. Besides that it lowers the interest portion of each payment than if I paid monthly, I actually make an extra payment on the loan, 13 monthly payments rather than 12 monthly payments.

Related PostSlaying My Student Loans With Automatic Biweekly Payments

Payments Larger Than Minimum Payments

While the minimum monthly payment was around $220, I actually made biweekly payments of $140, which means I paid $280 a month (plus the 13th payment of $280). Making the bare minimum payments drags out the loan, which is like pulling the band-aid off slowly.

Putting Extra Cash Towards Debt

Anytime I had extra cash, like a bonus or a tax refund, I applied a portion of it towards the auto loan. Anytime I noticed my cash balance was creeping higher, I also put a portion of that increase towards the auto loan.

Large final payment

Once I reach a point in the loan where the remaining balance can be paid off without causing a big disturbance in my cash balance, I make a large final payment. In January, I had $1800 left on my auto loan, so I bit the bullet and made an $1800 payment rather than the usual (automatic) $140 payment. And now, my car is paid off and I won’t have to make payments during my maternity leave. Yey!

These five strategies can actually be applied to any kind of debt, whether it be a credit card, auto loan, student loan, mortgage, etc. I tend to pay my credit card weekly, and I already paid off my student loan using these five strategies. I haven’t been using these strategies on my mortgage because I’m concentrating on eliminating the smaller debts first, and for some reason, the credit union won’t allow me to set up biweekly payments, or automatic payments larger than the minimum amount. I also have a personal loan for repairs on my roof, which I automatically pay biweekly an amount $50 more than the monthly minimum. I’ll start making extra payments once I return to work. That is, if daycare expenses don’t suck my cash flow dry.

Related PostDaycare Is Expensive. And Totally Worth It.

Now let’s see how fast I can pay off my personal loan.

Please follow and like us:

Pay Off Auto Loan Or Roof Repair

At the beginning of October, I made the decision to pay off my auto loan by the end of January 2018, a month before my expected due date of February 26, 2018. That way I wouldn’t have a car payment to make during my maternity leave and could free up $280 a month.

With about $5,000 left on the loan at that point in time, it would take four monthly payments of about $1,250 to pay off the loan in that time frame.

Related PostI Owe $116,781.21 In Debt

Related Post: I Owe $148,633.01 Of Debt

But then the contractors working on my roof on an insurance claim put my payoff plans on hold. When they started taking off the shingles to remove the plywood damaged by an ice jam, they discovered that the plywood that was used on my roof before I bought the house was not up to code, and was too thin.

That meant they would have to replace all the plywood on the roof whether or not it was damaged, to remain compliant with town code, which was not covered by my homeowners insurance.

On top of that, the contractors also looked at my concrete side porch that is starting to crumble at the outer corner. The contractor said it’s better to fix it now before winter comes so that it doesn’t further crumble and start moving the post connected to the roof.

The out of pocket cost of the roof repair is about $3,700 and the side porch is about $1,400. In addition to my $1,000 deductible for the original insurance claim, the total comes to $6,100. While I can pay it out of pocket, I’d rather have the cash during my maternity leave since my income for that time period may be negligible.

Related PostChallenges Of Pregnancy Over 35

Related PostI Was Pregnant Without Insurance

I called the credit union where my mortgage is, and they told me my two options are a home equity loan or a personal loan. The home equity loan would require another home appraisal, which also means closing costs, and would take a few weeks to process. Those requirements are not worth the relatively small loan of $6,100. The personal loan, on the other hand, would take a few days, and would have an interest rate around 6.75%.

So my options today are to 1) get a loan at $6,100 at 6.75% and pay off my auto loan, now at $4,700 and 1.99% interest; 2) keep the auto loan as it is and pay the $6,100 out of pocket; or 3) get a loan for $6,100 and keep the auto loan as it is.

According to the loan calculator at Bankrate.com, the monthly payment on 2 year, $6,100 loan at 6.75% is around $275, which is close to the $280 I currently pay on my auto loan. That means my monthly loan payments would be around $555, in addition to my other expenses and the mortgage.

At this point in time, I’m leaning towards a hybrid of 1 and 3, getting the $6,100 loan and making big payments on the car until my maternity leave.

I’ll then see where the auto loan is January 15, 2018, and decide on the next step then, making my regular payments of $280, continue making the big payments, or just pay off the remaining balance.

Related PostSlaying My Student Loans With Automatic Biweekly Payments

The end of my maternity leave will land around tax time, so I might be able to apply any tax refund (if I get one), towards the auto loan, which would help too.

 

Please follow and like us:

My Financial Bucket List For My 30’s

My twenties have come and gone, and my thirties are (almost) half way done. Now that I am a working wife, mom, homeowner, not getting any younger and continously getting called “Ma’am” rather than “Miss”, I have to prepare for the future. I have my bucket list of financial goals that I want to achieve, some of which are done, others I’ve just started.

1) Own A Home. I purchased my first home 2 years ago. I want my daughter to have the same wonderful childhood memories of running around the house and biking down the streets of suburbia that I have of my childhood.

Lilly unraveling my yarn around the 1st floor as I crocheted
Lilly unraveling my yarn around the 1st floor as I crocheted

 

Plus, I was tired of paying rent to someone else.

2) Get Life Insurance. Now that I have a dependent, and I’m not counting my dogs here, I want to make sure she is taken care of if anything happens to me. I purchased a 10 year, $250,000.00 term life insurance policy, which means if I don’t make it past 10 years, my beneficiary will receive up to $250,000.00, depending on the circumstances at that time. Since I plan on surpassing 10 years, my beneficiary shouldn’t receive anything at the end of the 10 year term. In simple terms, I am renting life insurance for 10 years, at $130 a year. I purchased it as an alumni of Binghamton University. I chose a $250,000.00 coverage amount to cover my mortgage, my auto loan, my student loan, and my daughter’s estimated future (public) college education loan.

How I calculated the death benefit of my life insurance policy
How I calculated the death benefit of my life insurance policy

 

3) Fix IRAs. I say fix, because I already had an IRA, but it has been sleeping since its inception, when I rolled over my itty bitty 401k from a previous employer. I made my first contribution to it since its inception back in April, to eliminate the few hundred dollars in taxes I owed.

4) Pay Off my Car and Student Loans. In February, I made it a goal to pay off my car by the end of summer, so that I can move on to my student loans and pay off my debt as soon as possible rather than dragging it out. Just because the bank gave me 5 years to pay off my car, doesn’t mean that I have to drag it out for the full 5 years. I am on track to make my final car payment this month.

5) Get Disability Insurance. A few weeks ago, I read the article The 11 Worst Money Mistakes To Make In Your 30s by Kathleen Elkins, which mentioned that a major financial mistake that many people make is not planning for a disability. They plan for a short term emergency (emergency fund), and for their absence (i.e. death), but not for a long term absence from the workforce, and watch themselves go broke. A quick quote from my life insurance provider (#2 above) is around $90 a year, which will provide about 50% of my income for up to 2 years, should I ever become unable to work for a period of time. I plan on applying for it next week.

My disability insurance quote
My disability insurance quote

6) Contribute To My 401K. This year, my employer started offering a 401K plan, to which I will contribute to once I take a look at the options available to me.

7) Get A Will. I will admit that I have been procrastinating with this one, mostly because I don’t know who to choose as my daughter’s legal guardian, should my will take effect before she reaches 18. I will take care of it sooner than later.

My financial bucket list will never be empty, because many of the items in it will be continuously updated as I get older, especially life insurance, IRAs, 401K, and my will. Plus, I know I will fill another bucket at some point, which will include a college savings plan, health insurance, and saving up to run the Antartica Half Marathon, probably many, many, MANY, years from now.

The Antarctica marathon
The Antarctica marathon

What’s in your bucket?

Please follow and like us:

Follow me on Twitter

Jobs from Indeed




Please spread the word!