How using bi-weekly payments can save you a butt load

Do you currently have a debt that needs to be paid down?

This could be any kind of debt; student loans, car payments, mortgage payments or credit card debt.

Most of us have some form of payment that we need to make on a regular basis and if not, congratulations you're debt free and you don't need to read any further. I want to share with you how using bi-weekly payments and other similar tactics can end up saving you a lot of money by allowing you to pay off your debt faster.

By making bi-weekly payments you actually end up making two extra payments throughout the year which is an easy way to automate your debt reduction and pay off those loans faster. Interest is a beautiful thing when it's working in our favour and likewise it can be brutal when it’s working against us. For big ticket items like a car and especially a house, reducing the principal amount that we owe will shave a number of years off our payment plan and save us thousands of dollars in the long run.

There a couple different ways you can achieve this result of paying down your principal. Use a bi-weekly structure that automatically has you contribute to your loan every two weeks, make a lump sum payment once a year and specify that it goes towards paying down the principal, or figure out what an additional monthly payment would be throughout the year and add that portion to each months payments.


Bi-weekly 26 payments x $750 = $19,500

Monthly 12 payments x $1,500 = $18,000

Monthly payments with additional month added 12 x $(1,500+125) = $19,500

Monthly 12 payments x $1,500 = $18,000+ lump sum payment $1,500 = $19,500

See the graph below for a visual of how bi-weekly payments can save you money.

This example shows the loan being paid off six years earlier because of the accelerated payments. That’s an additional six years of mortgage payments that you could be putting towards other investments and having compound interest work for you.

Depending on how you get paid this can be a very simple plan to implement that will yield huge savings in the end. If you get paid bi-weekly then having your loan payments come out at the same time that you get paid is an easy adjustment that will go un-noticed after the first couple months. If you get paid monthly you might be more inclined towards a lump sum payment or adding smaller amounts to your monthly payment to achieve the same result.

However you go about accelerating your payments the saving results are undeniable; your future self will thank you.

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