Paying down debt with regular, automatic payments is great. Paying down debt faster with extra payments is better, especially if it’s painless. As you guys know, I currently have three kinds of debt: federal student loans, a private student loan, and credit card debt. Based off this, my debt repayment plan is to pay off my the consumer debt first, private student loan second, and then tackle the federal loans last (i.e. going for highest interest rate first).

My Plan for Paying It Off Faster

With all of my payments automated, my current credit card debt payoff date is May 2018; however, I’ve decided to set a personal goal for paying it off by my birthday next year (July 2017) instead. Since this will be 10 months early, I’m aiming to make 10 extra payments between now and then. I’m setting this goal for a few reasons: a) I’m super tired of having credit card debt, b) I ought to be able to do it, and c) having an aggressive goal will keep me more excited and frugal than if I just let the automatic payments pay it off in 2 years – not to mention I’ll save around $650 in interest by doing so.

My current debt is $11,500, and my monthly payments are $530.51. For the 10 extra payments, I’m going to save up the full payment amount before sending it to the bank, that way I can keep track of the extra payments more easily.

So, how am I going to make 10 extra payments? Easy!

5 Places to Look for Painless, Extra Credit Card Payments:

1. Sell things on Craigslist – Extra payment #1 is made possible by selling some old things on Craigslist. I’ve already sold around $375, and I have a couple more things I’m planning to sell. This extra payment is a bonus too – since I’m making money while also de-cluttering. If you’ve never sold things on Craigslist, it’s pretty easy and straightforward. Just make sure you go to all possible sales with a buddy or meet in a nice, public space (I usually do Starbucks for my meet-ups). You can sell anything on Craigslist, including used cycling shoes and old curtains.
2. Money currently going to savings each month – If you’re currently saving money into a savings account each month, you can definitely reroute that payment to your credit card for a little extra boost. I’ve been saving $216/month towards my emergency fund, and it’ll be completely funded by December of this year. This means I’ll have 7 months where I can put  my old savings payment towards my consumer debt instead. $216 x 7 months = $1,512…or almost 3 extra payments! Make sure you save an emergency fund before doing this, but if you’ve already got that funded, then put that money to good use by paying off your debt faster. You’ll save more money in interest by paying off the debt faster than you would putting that money in a savings account.
3. Put any raises or bonuses towards your debt – I’m a state employee, so I don’t get bonuses. However, we do get salary raises every now and then. This year, all state employees are getting a 3% increase, which for me, tends to work out to around an extra $125/month. This raise doesn’t  kick in until November this year, but that does mean I’ll have 9 months of my new salary (and an extra $125 each time) that I can put towards my debt. $125 x 9 months = $1,125…or 2 extra payments! Generally speaking, continuing to live off your current salary and stashing away any bonuses or raises is good money management. You already know you can live off your current salary, so why not put that extra cash towards your money goals instead?
4. Use your tax refund as an extra payment – this is an oldie but a goodie. Using your tax refund as an extra payment is great way to use that refund! If you’ve worked out a budget and saved an emergency fund, then what do you have to lose by putting your refund towards your debt? It’s the financially responsible way to use that refund (as much as I’d love to use it for a vacation instead). My refund should be around 2 extra payments next year, so I’m planning to use the refund towards my consumer debt too.
5. Make mo’ money (just a little) – I did say this would be painless, right? If you have a specific debt payoff date in mind, then find out how much extra money you would need to make each month to make one or two extra payments. For me, two payments is $1,061.02, and I have 15 months to make that much money in order to meet my goal. $1,061.02 / 15 months = $70.74…that’s it. I need to find a way to make around $71 each month. By “making” money, I also mean that I could just save that out of my budget, which is what I’m planning to do most of the time. If you have free time though, you could try babysitting once a month, walking some dogs, or even getting a part-time job. For me, having a second job just isn’t feasible; however, I have thought of some creative ways to make my $70, like signing up to be an LSAT and MPRE test proctor  on the weekend test dates (not every month, but still) and participating in a health research study at the medical school in my area (you get $75 for each of the 3 benchmark exams). Even if you just cut out one dinner out per month, you’d probably still save atleast one extra payment over the course of your debt repayment. I’ll probably do a combination of making extra money and cutting some “extras” out of my budget each month to make this happen.

 

There you have it! Five painless ways to make extra debt payments (or extra retirement contributions if you’re already a debt-free rockstar). In my case, I should definitely be able to stick to my July 2017 payoff date since using the above strategies should net me at least 10 extra credit card payments. After the credit card is gone, it’ll be time to start tackling that private student loan (my only one!). I’m so looking forward to banishing the credit card by my 27th birthday!

-ECD

What are your ways for finding more money in your already-tight budget? Do you make extra payments towards any of your debts (here’s to looking at you guys who are crushing your mortgages!)?