Lesson 4 of 5

Finding extra money to put toward principal

The fastest way to move a debt-free date up isn't usually a big one-time payment; it's a smaller amount added every single month, because it compounds against the interest the same way the debt's interest compounds against you. Start with the obvious sources: a subscription you don't use, a spending category you identified as a "want" during budgeting that you're willing to trim, or a raise you haven't already assigned elsewhere. Next, look at true windfalls when they happen -- tax refunds, work bonuses, the extra paycheck that shows up twice a year if you're paid biweekly -- and commit in advance to sending a fixed percentage of each toward debt before it becomes part of your regular spending. Avoid the trap of waiting for a large windfall before starting. $75 a month starting now, applied consistently to your avalanche or snowball target, will beat a single $900 payment made a year from now on nearly every debt-free-date calculation, because it's had far more time working against the interest.