by Matt on December 23, 2009
“Apply to principle” are the three most important words to help you payoff your debts quicker. Adding those three little words to your extra payments makes all of the difference in the world.
“Apply to principle” means just what it looks like. When you add those words to your extra debt payments, you are telling the company that is processing your extra payments that you want this payment to paydown principle, not next months payment.
What happens you don’t add “apply to principle” to your debt payments, is that the payment will typically be applied towards next months payment.
No “Apply to Principle” Example
- You owe $6,000 on your car with a payment of $500 per month.
- You send two checks. One for the $500 payment and one for $500 without “apply to principle” in the memo line.
The result of this example is that you won’t have to make a payment next month. What you want to happen is this:
“Apply to Principle” Example
- You owe $6,000 on your car with a payment of $500 per month.
- You send two checks. One for the $500 payment and one for $500 with “apply to principle” in the memo line.
The result of this example is that you will have reduced your principle balance by $500, which means that you will pay less interest in the long run.
You will need to check with your loan servicer to ensure that early payments are allowed and that you will not be penalized for paying early.
by Matt on December 17, 2009
In these tough times it’s vital that you have an emergency fund, but how big should your emergency fund be? The answer to that question depends on your current financial situation. [click to continue…]
by Matt on December 14, 2009
It’s been over 3 years now that we’ve been blogging about personal finance, though we did take a year and a half off and have switched domain names all together, yet we’re still learning. We’re still making mistakes. We’re still growing together financially as a couple and as individuals.
Personal finance isn’t something that you just get. It’s something that takes practice. The difference between then and now, is that when we make a mistake — we catch it more quickly and can more easily recover — instead of digging ourselves into a financial hole.
When we look back on the past year financially we can definitely see some mistakes, but we see more good than bad and that has changed dramatically since April of 2006 when we first decided to pull ourselves up and get going in the right direction.
Our financial process has changed dramatically. We’ve gone from no budget to a complicated budget. From that complicated budget to something much more simplistic. It’s an evolutionary process that will settle down at some point, but for now we’re still a little crazy.
by Matt on December 12, 2009
Do you have credit card balances with payment protectors? Here’s a tip for you to reduce your balance by taking advantage of your payment protection plan.
Some payment protection companies allow you to utilize an emergency payment once per calendar year. Depending on your credit card’s plan, it may just allow you to skip a monthly payment. Others will actually make your minimum payment for you. Capital One’s plan is like this.
Normally I recommend against payment protection plans, because it’s just over priced insurance. If you have balances, then the amount you end up paying for interest and the payment protector is basically double what you would pay in interest alone.
If, by chance you do have a payment protection plan and a balance on a credit card, then now is the time to use that emergency payment. Then you’ll also be able to use it in January. After that, cancel the plan all together.
When you invoke the plan, make sure to plan on making your regularly scheduled payment so that you can knock some more principal down.
by Matt on September 25, 2009
The most expensive thing in your budget isn’t always just one thing. Sometimes it’s the cumulative of all of the little things. Those are the little holes in your bucket that should be plugged up if possible. [click to continue…]
