Tip #4, How To Save $80,000

This is Tip #4 of the How To Save $80,000 series.

Pre-Paying Debt Early (savings $3547)

The title for this tip says it all. The idea is to save money on interest payments for your loans by paying a little extra each month.

Let’s say a small 2-doc practice took out a $50,000 loan as working capital or EMR purchase at 6.8% to repay in 5-years. By paying $500 more a month, the practice could reduce the loan terms by 2 years and save $3547

Loan: $50,000.00      
Interest Rate: 6.80%      
         
Pay Off in Years Monthly Payments Total Interest Paid: Cumulative Payments: Savings
5  $     985.00 $9,121 $59,121 0
4  $  1,200.00 $7,197 $57,197 $1,923
3  $  1,500.00 $5,573 $55,573 $3,547

People often think, but I don’t have an extra $500, how can I pay down the debt. And my answer to them is, use the savings  in tip 1 thru 3 and now one will have enough for tip number #4.

Is this a good tip? What do you think? Do you have a proven, shovel ready, money saving tip of your own? Let’s hear it!

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