Why would you want to pay your debts every day?
Interest is accrued daily on your debt.
To put it another way, the bank, credit card, or loan company charges you interest every.single.day. that you have the debt with them.
They just don’t post it on your statement everyday.
Instead, they post it once a month.
For example, your credit card monthly statements.
For anyone who’s ever tried to pay off their credit cards in one go, it’s recommended to call the credit card company and ask them what’s the current updated debt amount so you can pay it off over the phone.
Otherwise, say your balance is $1000 and you pay it off because that’s what it says online or on your app, you’ll normally find a couple more dollars added to it in a couple of days when the statement comes.
If you can put money into paying your debt every day instead of once a month, you’re going to “cut the head off the interest snake” daily as opposed to monthly.
You’re going to prevent the interest accruing daily.
Money Math On Paying Daily
Let’s say your monthly credit card payment (or student loan payment/mortgage, etc.) is $600.
If you wait till your monthly statement to pay it, you’ve let 30 days worth of interest accrue in your debt.
This slows you down from eventually paying off the debt.
If you divide the $600 into 30 days of the month, that’s $20/day.
If you can pay $20/day into your debt, you’d be “cutting the head off the interest snake” daily.
This means less interest would be accruing daily.
You’d still be paying the same monthly amount, just with higher frequency.
But I understand not all of us are paid daily.
Some of us are paid monthly.
Some are paid biweekly.
Rarely are people paid weekly.
So you do the best you can with your situation and find a way to be paid more often.
That way, you can put money down more frequently toward your debt.
Time Math On Paying Daily
However, paying debt daily comes with a time-caveat.
If you automatically set your weekly or monthly payments to go to your debt, you can “set it and forget it.”
However, if you want to pay off your debt faster and you can afford to make daily payments, you’re going to devote more time physically being on your phone app or desktop setting payments.
Because as of December 2019, I don’t know of any bank or credit card company yet that will let you set a daily payment for their debt (probably because they know they will lose interest money if they have that feature).
If it takes you 10 seconds to log on to your bank website via your desktop, another 7 seconds to make the payment, and another 3 to log out and close the desktop, that’s a total of 20 seconds spent making daily payments.
20 seconds times 365 days a year = 7,300 seconds a year on your desktop just making payments.
That’s 7,300 seconds/60 seconds/minute = 121 minutes/year = 2 hours/year of your life spent making daily payments.
However, here’s what you have to look at
2 hours of your annual life spent making payments may seem like a lot.
But if you look at it from another perspective, let’s say you make $15 an hour.
That’s $30 worth of your time spent making daily payments.
(It’s kind of a moot argument because you’ll be making the payments in your spare time anyways, not when you’re at work or whatever, etc. but for the sake of the argument, let’s keep going).
Now, as I was saying.
If making the daily payments ACTUALLY helps you save more than $30 worth of interest by cutting the head off the interest snake faster, then it’ll be worth it, right?
To throw in some arbitrary math, let’s say you saved $50 worth of interest that year by paying toward your debt daily.
And it only took you $30 worth of your time to do so.
You essentially saved $20!
Which is like 1.50 hours of you working!
You can apply this to all facets of your financial life.
From mortgage debt, to student loans, to credit card loans, etc.
What are your thoughts?
Are you already doing this?
Where else can you apply this?
Share this article with your friends if you find it useful and you want them to get out of debt too!