Monthly Payments vs. Weekly Payments

While paying down my debts, I’ve noticed that there is one thing that stands out more than anything else as being responsible for my success.

I’ve been doing some calculations recently on how I’ve managed to pay down my debts as rapidly as I have.

What I’ve found is that the pace seems to exceed my income — I mean, I can’t believe that I made $4615 in payments to credit card companies during my January 2008 billing period, but I actually did.

The secret?

Weekly payments. More specifically, automatic weekly payments.

Some will say that the difference it makes in finance charges alone is reason enough to go the weekly route (or the often mentioned twice-monthly mortgage payment), but for me, it’s just easier to part with, say $100 each Wednesday than it is to part with a big number like $400-$500 once a month.

That’s a big noticeable drop in the checking account for people like me who generally only have between $1000 and $2000 in there at any given time. $100 is like a new outfit or something — I dunno, it’s totally a mental thing, but it really doesn’t hurt the wallet as much as a huge one time payment.

The $4615 “payment” in January is admittedly very high for me and I’m not usually able to make payment even close to that.

It’s also a little deceptive because of the way my credit card due dates overlap — January isn’t just 4 weeks, it’s more like a time period of 6-7 weeks depending on when each billing period begins and ends.

Besides the down payment on my house, and a couple of the high priced renovations, I have *never* written a check for even close to $4615 dollars. I don’t have the funds available to write checks that large.

But let’s divide that $4615 by 7…

$4615 / 7 weeks = $659.29 per week

Still a high number, and not an amount I’d like to part with, but it’s an amount that I’m at least capable of parting with.

Yeah, it’ll bring my checking account balance down by over 30% with each payment, but on a short-term basis it won’t wipe me out before the next pay day comes around.

It’s this process that allowed my debts to fall so quickly.

I’m certain that I wouldn’t have been mailing in $1000 each month to the credit card companies (that’s a hefty sum), but $250 per week? Well, that’s not so bad.

So that’s what I did.

And you know what?

It worked.