As you may have seen in a previous post, I'm currently working through a money challenge to help pay off my first debt sooner rather than later. It takes a few paid off debts before you start really gaining momentum in your debt snowball, so the first debt is always the most challenging to complete. In 30 weeks (now only 10 or less), I should be making the final payment to Nelnet and saying goodbye to 1 out of my 4 loans forever, but should I wait that long before making any other payments aside from the minimum $50/mo payment I make monthly? Absolutely. I started the money challenge with $250, automatically skipping me to week 8 to move things along a bit faster; I received some extra money pet sitting and figured it would be the best usage for it. In just a few weeks, I already had over $500 sitting in the savings account I opened solely for this challenge. I expected it to remain there, watching as it grew to the $3,000+ goal I had set for myself by week 30. Instead, I discovered I should actively be using it.
So I used the money and made a $500 payment to Nelnet, bringing the total amount down to $2,3000. In doing so, I saved myself a good chunk of money that would have otherwise been interest. Remember, interest accrues daily, so by making a large payment to make the amount still owed a lot less, you'll save yourself money in the long run. As you can see, when my monthly minimum payment of $50 went through, the interest went from $13 to just $3.
In terms of the money challenge account, I went on to paying into it as normal every week, keeping track of how much I have actually saved (despite the lower amount it was now showing) through an app in my phone called Numbers. This little spreadsheet keeps track of the money challenge, as well as every time I make a deposit into the savings account, which I highlight in green once the deposit is made. So far I have saved a total of $952, but have just $121 in the account since the last large payment.
While it's tempting to continue to save and watch your money grow to make one, large final payment, it is pretty beneficial to make payments in the process. For me, I try and do payments of $500 or close to that at a time, but more or less is better than no payments at all.