{"id":716,"date":"2019-06-12T14:47:03","date_gmt":"2019-06-12T14:47:03","guid":{"rendered":"http:\/\/lincon.com\/site\/?page_id=716"},"modified":"2019-06-12T14:55:42","modified_gmt":"2019-06-12T14:55:42","slug":"debt-payments","status":"publish","type":"page","link":"https:\/\/lincon.com\/site\/lincon-coms-guides\/simple-budgeting\/debt-payments\/","title":{"rendered":"Debt Payments"},"content":{"rendered":"<div id=\"linco-1522745256\" class=\"linco-before-content linco-entity-placement\"><script async src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js?client=ca-pub-7218081052625257\" crossorigin=\"anonymous\"><\/script><ins class=\"adsbygoogle\" style=\"display:block;\" data-ad-client=\"ca-pub-7218081052625257\" \ndata-ad-slot=\"2982622224\" \ndata-ad-format=\"auto\"><\/ins>\n<script> \n(adsbygoogle = window.adsbygoogle || []).push({}); \n<\/script>\n<\/div><br style=\"clear: both; display: block; float: none;\"\/>\n<p class=\"wp-block-paragraph\"><a href=\"http:\/\/lincon.com\/site\/lincon-coms-guides\/simple-budgeting\/creating-a-budget\/\">Creating a Budgeting<\/a> | <a href=\"http:\/\/lincon.com\/site\/lincon-coms-guides\/simple-budgeting\/household-expenses\/\">Household Expenses<\/a> | <a href=\"http:\/\/lincon.com\/site\/lincon-coms-guides\/simple-budgeting\/debt-payments\/\">Debt Payments<\/a> | <a href=\"http:\/\/lincon.com\/site\/lincon-coms-guides\/simple-budgeting\/travel-budgeting\/\">Travel Budgeting\ufeff<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For many, having debt such as a mortgage payment and car payment is unavoidable.\u00a0 Ideally we would pay cash for everything but the reality for most is that is not possible for one reason or another.\u00a0 There are, however, some simple things that we can do to make the process go smoother and save money in the long run.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">I think we all know that when you buy something on credit you are\npaying interest&nbsp;so when you finish making your payments your\n$10,000 car really costs about $20,000.&nbsp;\nYou can see for yourself how much you are paying for something by\nmultiplying your monthly payments by the number of months in the term of the\nloan.&nbsp; The interest accrues (or adds up)\ndaily so the sooner that we make payments the better.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When you sign a loan a lending company gives you terms.&nbsp; In the terms they will specify how much\ninterest&nbsp;they will\ncharge and how much you need to pay every month to stay current.&nbsp; Most people assume that they have to make one\npayment every month but you can actually make as many payments as you want a\nmonth.&nbsp; You may not be able to make the\nfull payment several times a month but nothing is preventing you from multiple\npayments that add up to your monthly payment.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It works like this: Let\u2019s say you\u2019re paid biweekly like most people.&nbsp; If your monthly payment is $250 you would\nsend them $125 each paycheck.&nbsp; You\u2019re still paying $250 every month but\nbecause you are dividing up the payment you are saving interest.&nbsp; Also, because there will be a couple of\nmonths a year where you will receive three paychecks in a month, you are\nactually making one or two additional payments a year.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The results can be dramatic and you wind up reducing the term of the\nloan by many months (or years) and you save thousands in interest.&nbsp; Let\u2019s look at an example:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"715\" height=\"577\" src=\"http:\/\/lincon.com\/site\/wp-content\/uploads\/debt-payment-calculator.jpg\" alt=\"\" class=\"wp-image-718\" srcset=\"https:\/\/lincon.com\/site\/wp-content\/uploads\/debt-payment-calculator.jpg 715w, https:\/\/lincon.com\/site\/wp-content\/uploads\/debt-payment-calculator-300x242.jpg 300w, https:\/\/lincon.com\/site\/wp-content\/uploads\/debt-payment-calculator-624x504.jpg 624w\" sizes=\"auto, (max-width: 715px) 100vw, 715px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">In this example, we\nhave a 100,000 mortgage and if we just made monthly payments we pay $182,404\nfor our house.&nbsp; However, if we pay the\nexact same amount but split in half and paid biweekly, we only pay $168,385 or\na savings&nbsp;of $14,018.&nbsp;\nAs a bonus, our loan is paid off 53 months (over 4 years) quicker and it\ncosts us nothing more to pay this way.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This can be applied to any type of debt that has a regular payment and\nyou\u2019ll wind up saving money in the long run.&nbsp;\nIf you have extra money to apply to your loan, it will have a greater\nimpact than if you just applied that amount on a monthly basis.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The other thing that I like about this payment method is that it\nlessens the impact of larger payments by taking a smaller portion of your\npaycheck&nbsp;to meet\nthe bill.&nbsp; This means that you can pay\nmore bills or have more money available to you each pay period.<br><\/p>\n\n\n\n<h1 class=\"wp-block-heading\">Credit cards\u00a0&amp; credit score<\/h1>\n\n\n\n<p class=\"wp-block-paragraph\">Another type of monthly bill is your credit card.&nbsp; Credit cards&nbsp;should never be used as a \u201csavings\u201d account or other type an\nextension of your real monthly income.&nbsp;\nThey should be used however because they improve your credit score&nbsp;and having a better credit score means lower\ninterest&nbsp;rates when\nyou do need to borrow.&nbsp; As we\u2019ve talked\nabout, we know how to shorten the term of our loans and reduce the amount of\ninterest that we pay but the lower the interest rate, the less we will have to\npay and our goal is to reduce what we have to pay so we have more money for\nother things.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Use all your cards<\/li><li>Leave a balance under 10% of your total\navailable credit on one card<\/li><li>Make on-time payments<\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">I think we all know that making payments on-time is good for our credit\nbut that alone will not give you a high credit score.&nbsp; Many people think that they have excellent\ncredit because they have tons of credit cards or that they pay their bill off\never month but they may be surprised to know that their score can be better.&nbsp; Credit scores rise when you use your credit\nand pay it on-time.&nbsp; If you pay your bill\noff each month you have no utilization and if you only use one card, you only\nshow one on-time payment each month.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The most widely used scoring system\nis called your FICO&nbsp;score.&nbsp;\nYou can get an approximation of your score from services like Credit\nKarma&nbsp;(CreditKarma.com) but while close, those are\nsometimes called FAKO scores.&nbsp; No one\nreally knows what the real formula is for your FICO score but we can guess\nbased on real world experience.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">We know that we get points for utilization (how much we use our credit)\nand we know that the optimal range is less than 30% of your total available\ncredit.&nbsp; This isn\u2019t each card, but your\noverall available credit.&nbsp; For example,\nif you have four credit cards, each with a $5000 credit limit, you have $20,000\nin credit available to you.&nbsp; Ideally,\nyou\u2019ll get the most points for having $2000 or 10% utilization on your cards.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You also get points for having on-time payments so if you don\u2019t use all\nyour cards, you only get points for making one on-time payment.&nbsp; So, if you use all four of your cards and\nmake on-time payments on all four cards, you will get four times the points as\nif you just made one.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It\u2019s also good practice to rotate through your credit cards as to which\none you leave a balance on.&nbsp; So use your\ncards and pick a different card each month to leave a balance of less than 10%\nof your total available credit.&nbsp; This\nwill give you an ideal credit utilization rate and your score will rise towards\n800!<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The best ratio of cards that I have read is four major credit cards and one store card (like Target or Sears).\u00a0 So if you don\u2019t have that mix of cards, it\u2019s a good idea to apply, even if you don\u2019t need them because it can be good for your credit score\u00a0in the long run.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"http:\/\/lincon.com\/site\/lincon-coms-guides\/simple-budgeting\/creating-a-budget\/\">Creating a Budgeting<\/a> | <a href=\"http:\/\/lincon.com\/site\/lincon-coms-guides\/simple-budgeting\/household-expenses\/\">Household Expenses<\/a> | <a href=\"http:\/\/lincon.com\/site\/lincon-coms-guides\/simple-budgeting\/debt-payments\/\">Debt Payments<\/a> | <a href=\"http:\/\/lincon.com\/site\/lincon-coms-guides\/simple-budgeting\/travel-budgeting\/\">Travel Budgeting\ufeff<\/a><\/p>\n<div id=\"linco-290008610\" class=\"linco-bottom linco-entity-placement\"><script async src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js?client=ca-pub-7218081052625257\" crossorigin=\"anonymous\"><\/script><ins class=\"adsbygoogle\" style=\"display:block;\" data-ad-client=\"ca-pub-7218081052625257\" \ndata-ad-slot=\"2982622224\" \ndata-ad-format=\"auto\"><\/ins>\n<script> \n(adsbygoogle = window.adsbygoogle || []).push({}); \n<\/script>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>Creating a Budgeting | Household Expenses | Debt Payments | Travel Budgeting\ufeff For many, having debt such as a mortgage payment and car payment is unavoidable.\u00a0 Ideally we would pay cash for everything but the reality for most is that is not possible for one reason or another.\u00a0 There are,&#8230; <a href=\"https:\/\/lincon.com\/site\/lincon-coms-guides\/simple-budgeting\/debt-payments\/\">Read more &raquo;<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"parent":699,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"ngg_post_thumbnail":0,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[],"tags":[],"class_list":["post-716","page","type-page","status-publish","hentry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Debt Payments - LincOn.com<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/lincon.com\/site\/lincon-coms-guides\/simple-budgeting\/debt-payments\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Debt Payments - LincOn.com\" \/>\n<meta property=\"og:description\" content=\"Creating a Budgeting | Household Expenses | Debt Payments | Travel Budgeting\ufeff For many, having debt such as a mortgage payment and car payment is unavoidable.\u00a0 Ideally we would pay cash for everything but the reality for most is that is not possible for one reason or another.\u00a0 There are,... 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