Putting towards the principal

Have you ever heard of "the curse of knowledge?" The curse of knowledge is when you know so much about something that you forget others don't know as much as you do. This happens all the time in people's businesses. They assume that because they know the name of everything in your engine (mechanics) or every disease known to man (doctors) that you do too. They start talking without explaining, and almost immediately, you're lost. Sometimes, I'm guilty of this.

The other day a woman who has grandchildren my age asked me, "How do you pay extra on your mortgage?" Not asking how I have money at the end of the month or how I budget, but asking what steps I take to physically apply the extra money towards our mortgage. 

I pay my mortgage online. When I get on to pay, I can just make a normal payment, or I can "modify my payment amount." I hit "add addition principal" and put everything I can in that box. My mortgage company makes it pretty easy.

Proverbs 3:27-28 says, "Withhold not good from them to whom it is due, when it is in the power of thine hand to do it. Say not unto thy neighbor, "Go, and come again, and tomorrow I will give," when thou hast it by thee."

If you owe someone money, and you have money... you owe it to them. Biblically, you shouldn't spend it on other things, so we're putting everything we have left after we buy food and pay our bills against the principal every month. 

One note of warning: If your mortgage company doesn't make extra principal payments obvious, and you want to pay more towards your mortgage principal, you have to specify. Whether you're writing them a check or paying your mortgage online, you have to get in touch with them/write them a letter and say, "I'm sending you $**** extra dollars, and I want it applied to the principal of the mortgage loan." If you don't, they'll just apply the extra money you send to your next month's mortgage payment (most of which goes to interest every month), and you'll be "paid ahead" on your loan (like, "Yay, you don't have a mortgage payment due again until October!"), but that's not what you want! That's not helping you pay off your loan any faster! You want the money to go towards the principal of the loan so the actual loan balance goes down, and then you're closer to owing nothing!

I'm using my mortgage as an example, since it's our only debt, but this is true for all loans. You don't want to just add money to your payment. You want to be sure that extra money is going towards the principal of your loan. 

Another note: You are welcome to put extra money towards your mortgage every week or bi-weekly (whenever you get paid), if you're worried that you'll spend it if you don't put it towards your debt right away, but keep in mind that your mortgage interest amount is only re-calculated monthly, so your own self-control is the only benefit to paying it more than monthly. We just save it all up and pay the mortgage (and the extra towards the mortgage) once at the end of the month.

If you have questions, ask them! That's how you learn, and I want to help if I can!