#2
Make a Payment Every Three Weeks. Saves 2,551
days and $4,199
How it’s done:
Instead of making the regular monthly payments according to the
amortization schedule, you pay the monthly amount every 21 days.
It feels like a monthly payment, but you're speeding your payback
considerably.
What it costs:
You make 5-1/3 more payments ($541) in a year’s time than you would
paying the regular monthly amortization.
The Results:
Paying every three weeks, you pay your loan off seven years early and
you save $4,198.96.
Click to enlarge
#3
Double Up on Your Principal Payments
Saves 2,709 days and $4,087
How it’s done:
Print out an amortization schedule for your loan. Each time you make a
payment for the current month, include next month's principal amount in
the check as well. Then cross both months off the list. Each
time you do this, you save yourself a month over the amortization
schedule.
What it costs:
At first, your payments are only a bit higher than the regular
amortization, in the case given, the first month’s payment goes from
$101.50 to $127.95 whereas your last few payment before your early
pay-off are nearly twice what the original monthly payment was.
The Results:
Paying double principal payments, you pay your loan in half the time
(7-1/2 years) and you save $4,087.17.
Click to enlarge
It's important to
remember when making advance payments, that even if you're paid a year
ahead, you're still obligated to make the monthly payments.
