Boost Your Savings By Continuing Your Monthly Payment After You Pay Your Loan Off

by Hank Coleman

My wife and I just paid off our car. This is the first car that I have ever owned completely. The bank just mailed us the title earlier this month, and it is the first car that we have kept after paying it off instead of rolling it over into a new loan. That is why having the title is such a wild thing. I have never had the title to a car. Usually the bank is the only one to see it.

My wife and I paid off our car loan six months early!

Keys and cashSo, how did we accomplish this miraculous feat? We continued to make a payment for a monthly bill long after it was completely paid for. We just continued to make the monthly payment to ourselves month in and month out like we were paying the company. My wife and I used to live in Germany right after college as part of my work. And, in Germany, you have to pay for your electric bill every month through bank draft. After my wife and I moved back to the United States, we continued to pay ourselves in our ING Direct savings account the same amount every month like we were still paying our electric bill.  After a year or two, we had a nice little sum saved up in our savings account. We used those savings to pay off our car loan early.

Now that we do not have a car payment, we are still making a car payment to ourselves using this same method. The savings are really starting to rack up too!

You can use this strategy to save money every month even when you think that you cannot squeeze out another dollar. We are using this money to boost up our emergency fund.

Are there other savings secrets that you use? Leave a comment below…

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Ken December 28, 2009 at 11:03 am

Save your raise. Just have the amount extra on your check added to your current savings amount. You’ll never miss it and you won’t buy (finance) something with it.

Daniel December 29, 2009 at 11:21 am

I love the idea of paying yourself first. If you never see that money, it prevents lifestyle inflation and you end up reaching your goals faster. If the money never reaches your eyesight, you’re much less likely to withdraw it and make unnecessary purchases.

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