Can You Spare 50 Cents a Day?

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Remember the guy who was literally throwing his pennies away each day because he thought they were worthless?  I proved why anyone should save those pennies.  Here’s another scenario of saving pennies.
What would you do with an extra 50 cents a day?  Would you spend the money on snacks or drinks from the vending machine at work?  Or save it for an extra fast food meal or maybe a movie rental?  While for me every once in a while those things would be a nice little perk, most of the time I would -and do- put the extra change on our mortgage or van loan.  I know many of you are laughing because you’re thinking how little a difference 50 cents can make on such a huge amount. The difference is a McDonald’s happy meal now or dinner at the steakhouse later.

An extra $15.25 on each payment of a 30 year mortgage at 5% interest would save you over 12 thousand dollars on your loan.  To be exact – $12,483.88 saved from around $5,100 in extra payments.  On a $100,000 loan this would cut nearly 2 YEARS off your loan, from just pocket change!  Over half the total saved would be from interest charges alone.  Another case where a little goes a long way, especially when it comes to the impact of compounding interest. 

While I’m on the subject, did you know that if you never made any extra payments on a 30 year loan at 5% you’d be paying almost double your original loan amount?  That’s 48% of your money going towards interest.

If you’d like to see what impact extra payments would have on a mortgage, even an existing one, try the mortgageX calculator. It will give you an amortization schedule so that you can see your principal balance shrink.  Just scroll to the bottom to see the final summary of your savings from the extra payments.

A word of caution- before you do make extra payments check to see if your loan has penalties for prepayment.  If yours does, you’ll want to see if the savings will outweigh the penalties before making those payments.


  1. Kari@CashAndkari says:

    Visiting from money saving mom. All those pennies really do add up. I think it’s easy to be appeased paying the minimums and forgot how much interest we end up paying in the long run. We’re saving for a downpayment now and fortunately both of us are really aggressive “payers”. Glad to have found your blog!

  2. This is a post after my heart! We’ve been making extra principal payments on our house since we bought it. Now, looking at new houses, I hate to give up the security of “Either one of us could support this mortgage…” to actually needing both incomes or getting serious (I chuckle) about being on a budget.

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