Last month I wrote of my 'duh' revelation that any lump sums I make on my consolidated loan should be made at the beginning of the month, right after my monthly loan comes out, in order to maximize the interest saved.
I put down $250 extra last month and have waited anxiously all month to see how much extra came off. Of late, $525 of my principal actually came off of my $580 payment. I anxiously waitied this morning for the long banking weekend to be over and peek. The results were interesting, but not earth shattering. In all, $542 came off this month.
A change? yes. Hugely wow? eh not really, but it is an extra $18 of interest that came off simply by puttng money down at a dif time of the month.
Or I could be totally wrong and it is just that as you near the bottom half of your loan, more principal comes off LOL
I really am clueless.
The good news is that my loan is now under $5000. In the $4650.62 to be exact! I'm so excited as I can feel the 'home stretch' coming on.
After I figure out what is left to pay on my MC to wipe out all Christmas purchases, then I will have some to put down, hopefully as lump sum this month.
Happy Tuesday everyone!
Not Much Working Out Monday
2 hours ago
2 comments:
I wouldn't worry about when the payment is made esspecially with a loan that has such a small balance. The interest charges while they do rack up if you don't take care of the loan, don't matter when you are talking about a small amount of principle left to pay off. If your $5000 loan had a rate of 5% then your interest for the month would be $20.83. This is $5000 X 0.05/12. This will give you the monthly interest in Dollars and cents. Now if you pay off $250 at the beginning of that month you would save a grand total of $1.04 that month by paying it at the beginning of the month as opposed to the end of the month. Again this is $250 X 0.05/12
Future savings in months going forward are the same for both paying extra at the beginning of the month and the end of the month.
This math assumes monthly compounded interest.
Regards,
Jason
Holy wow Jason! You know your math. I will have to read that and play with the numbers. I wish I were finance smart :-)
I will focus then on making as many lump sums as possible and get that bad boy loan gone.
Then on to my vehicle loan.
Thans for your help Jason.
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