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There is a very easy financial strategy to pay off your debt in half the time and still minimize the pain. It not only works for home mortgages and loans, but any debt!

     It is called double principal payment strategy. At least that is the name I gave it. By using this strategy starting almost 12 years ago I am close to paying off my home in about 15 years. So, here is my free financial advice.

     Take a mortgage of $100,000 at 6% interest amortized over 30 years I will give you a monthly payment of $599.55. GO ahead, type it into the payment calculator. Now for the cool part. You need to rethink how payments are being made from a monthly basis to how many payments need to be made. To make it simpler, instead of thinking 30 years, think of it as 360 payments, 30 years times 12 months. See if you come up with about $600.

Loan Payment Calculator with Amortization Schedule
This calculator will compute a loan's payment amount at various payment intervals -- based on the principal amount borrowed, the length of the loan and the annual interest rate. Then, once you have computed the payment, click on the "Create Amortization Schedule" button to create a report you can print out.

Purchase Price:
Down Payment: $ %
Amount to Finance:
Annual Interest Rate Percentage:
Loan Term:
Payment Type:
Interest Rate:
Payment Type:

To pay off the mortgage in half the time, we need to make 180 payments. This does NOT mean we need to make double payments. It means using the magic of compounding interest. Click the amortization button with our scenario of $100,000 at 6% interest amortized over 30 years.

Here is the trick. Look back at our financial calculator. See where it says the payment is $599.55? See that little button called, "Create Amortization Schedule?" Click it and be prepared to be shocked! Only $100.05 is going toward principle! But here is how you can use it in your favor.

When it is time to make our first payment or payment 1 of $599.55 we add only the principle from payment 2 of $99.55 because interest for payment number 2 has not been earned. This gives us a total payment of $699.60, which in turn eliminates 2 of our 360 payments. COOL!?!

Next month you will be making payment 3, because you paid payment 1 and principle from payment 2. So, we make payment 3 and the principle payment from 4. Follow this patter, and in 1 year you will have made a total of 24 payments for only an average of $105.75 per month.

A 30 year fixed home mortgage locks in inflation while, hopefully, your income continues to grow.

Now...... Try this!

Use the same calculator and enter in your credit card debt, interest rate and term length. Look at how cheap it can be to pay off your credit card in half the time.

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Pay Your Mortgage off in Half the Time

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