I recently got a home equity loan, into which I rolled my high-interest credit cards, and some cash for buying a new-to-me car. I need to make sure I don't run up the cc's again, so I am taking a solemn oath to not make any major purchases (other than the aforementioned car, which my mechanic assures me will be a necessity soon) until my principal is back down to what my outstanding mortgage was - 28,000 in round numbers. And I need to get it back down there ASAP.So I set up an amortization schedule in Excel, and started playing around with terms. This is a great motivator!My HEL is set up so that I begin payments of $475/mo on 9/5/02. Last payment is 8/5/12, and I pay a total of $16,977 in interest.If I prepay $500 now, then continue with $475/mo beginning 9/5/02, my last payment will be 6/5/12, and I will pay a total of $16,412 in interest.If I prepay $500 now, then continue with $500/mo beginning 9/5/02, my last payment will be 9/5/11, and I will pay a total of $15,128 in interest.If I prepay $500 now, then continue with $250 every two weeks, my last payment will be 8/5/11, and I will pay a total of $14,801 in interest. Under this scenario, I can get back down to $28,000 in just about 2 years!I can do this.I haven't figured out what paying $125 a week or $16.50 a day would do, but this is so entertaining, I might! (I could actually pay once a day, my credit union offers online transfers between accounts, including loan accounts.)Thanks to those on this board who mentioned bimonthly payments, and thanks to ggfan (I think) who mentioned paying her cc company online anytime she had an extra $20. Very smart.
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