It’s never too early to start thinking about your retirement. Hopefully you have already started saving money out of each paycheck in a tax-shielded retirement account, like a 401k or IRA so you can draw on that money to cover your expenses when you retire. Another strategy to use to manage your finances in retirement is to be debt free before you retire. When you work to pay off a loan before your retirement target date, then you can live on a lower income.
One of the best ways to pay off a loan early is to make extra payments on that loan. Any extra payments you make go toward the principal balance rather than interest, so you’re taking large chunks out of what you owe. However, it’s often tough to have discipline to make voluntary extra payments. That’s when a
biweekly payment schedule comes in handy to help you reach your retirement preparation goals.
Calculate Your Ideal Biweekly Payment Schedule
Making half payments every two weeks instead of full payments every month is the first step toward accelerating your debt repayment. You’ll make the equivalent of one extra payment each year, which will cut several months off the repayment schedule for smaller debts, like car loans, and several years for larger debts, like mortgages. However, to pay off a loan by a specific date, you may need to make more extra payments.
Here at Half a Payment, we make that easy with our PaymentPlus feature. You can add any amount to each half payment, and the consistency of having it deducted from your checking account on the biweekly payment schedule makes it easy to stick to the plan. Make your own plan by heading over to our extra payment mortgage calculator and entering basic information about your mortgage or other loan. Then find out when you’ll pay it off based on the biweekly payments.
If the loan won’t be paid off before you want to retire, then use the extra payment mortgage calculator to add an amount of your choice to each half payment. You can tweak this amount until the payoff date matches your retirement goal. As long as you stick to the plan, you’ll be able to be debt free before you retire. Lowering your expenses in this way will help you stretch your retirement income farther and maintain a higher standard of living during retirement.
Once you have a biweekly payment schedule that will help you meet your goals, it’s time to sign up and get started. Chip away at your debt every two weeks to be done paying it off years ahead of schedule!