Money Matters
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Bi-Monthly or Weekly SL Payments?
Hi All,
Been lurking for a while, never posted before!
I am trying to pay off my student loans ASAP and I'm wondering how often I should be making payments. For the last 3 and a half years I've been making monthly payments on 4 different loans and I'm now down to my last one! I read on another blog that you will see the most benefits paying weekly, since interest accrues by the day. But when I do the math (not my strong suite!) I am seeing that I end up paying the same amount/year whether I make payments twice a month or every week.
What am I doing wrong and which is better?
Thanks for the help!!
Re: Bi-Monthly or Weekly SL Payments?
Ok, that definitely makes sense. I don't know why I was having so much trouble understanding that before!
Is there any formula to determine how much time you save paying off a loan by making payments this way? I figured out that I can pay this loan in 2 years by making monthly payments. I'm just not sure if it's worth it to change my routine if I'm only taking 1 month off the loan pay-off. But 2+ months would make it worthwhile!
Semi-monthly payments will probably only save you a tiny amount in interest (it looks to me like it'll be roughly $1 for every $1,000 you owe, depending on the interest rate), especially if you're already down to a couple years left on the loan. I would be surprised if it even took a month off of the length of your loan.
Biweekly payments are when you really start to save time and money paying off a loan - but unless you get paid biweekly, I don't see any reason to do these (and if you do, it's probably a better bet just to budget each month based on 2 paychecks and throw your 2 "extra" paychecks a year entirely at the loan).
Here's a calculator you can enter your information into to see if it's worth it: http://www.bankfcb.com/site/tools_calculators_loan.html.
"You know you're in love when you don't want to fall asleep because reality is finally better than your dreams." - Dr. SeussPersonally, when I pay extra on anything it is every Friday when we get paid. Between DH and I, our paychecks are alternating Fridays so we know exactly how much we will get and pay extra every Friday. That way it is out of our bank accounts quickly and you're paying down debt quickly. Good luck!!
Thanks for the calculator Apollo, that's really helpful!
It seems that the best thing to do is to pay the most amount of money possible once I have the money. So since I get paid bi-weekly, I will pay half of my monthly loan amount the day after I get my paycheck.
Thanks for the responses everyone!