Sometimes I take for granted that everyone knows basic tenets of finance. Like how the IRS will never ever call you, or how money depreciates due to inflation. Or even how Harriet Tubman should absolutely replace Andrew Jackson on the twenty dollar bill.
But every once in a while one of our darling readers (who are the salt of the Earth, but like, fancy Himalayan pink sea salt with grains of dried truffles mixed in) will remind me why we need to focus on basic financial literacy. It is, after all, our sacred mission, bestowed upon us by the goddess of internet memes!
Thanks to a conversation I recently had with some of our Gen Z readers on the sosh’ meeds’, today I’m going to focus on a frighteningly simple tactic for paying off debt. For once it’s understood, it could save you metric buttloads of money on interest, help you pay off your debt faster, and bring about world peace.
You’re heckin’ welcome, world.
Make multiple payments
You can make multiple payments on your debt every month.
Seriously. You don’t have to wait for the due date! You can throw money at your student loans or credit card bill two, three, four times a month! Instead of socking up one large payment to put toward your debt every billing cycle, you can make several small payments. All before the due date.
As long as you’re meeting the minimum amount every month or billing cycle… it doesn’t matter how many payments it takes!
Whether you’re mailing in a check or paying online, you can hurl more than one payment at your debt every fucking month. Am I sounding like a broken record yet? Good. Because you can make multiple payments on your debt every month.
And there are a number of reasons why that might be just the killing blow you need topay off your debt faster and, by effect, save more money on interest.
Why it helps: Financial aid
Many forms of financial aid (both the social safety net and need-based higher education tuition) are dependent on how much money you have in a savings account. Save too much, and you could get your benefits cut. This is but one of many absurd and cruel aspects to our national welfare system. And it’s one I can’t bear to delve into right now. So for the sake of my blood pressure, you can read more about it here.
If you’re simultaneously paying off student loans and relying on financial aid, for example, you’ll need to walk a tightrope between keeping your savings account below the threshold to qualify for financial aid and saving up an extra debt payment every month.
If you save up too much, even if you plan to put all the extra savings toward the debt on the due date… you could risk losing your financial aid.
The solution: Any time you save a little money and want to put it toward your student loans, just do it right away! Even if it’s only $5! Make extra payments on those loans as many times as you must! There’s no need to save up a fist full of dollars to make one large payment every month.
This goes for everyone in debt but relying on some form of financial aid that keeps track of your savings. Put your savings directly toward your debt. Skip the middle man of a savings account.
Why it helps: Credit card debt
If you’ve got credit card debt, the interest is calculated on the “average daily balance.” So it’s beneficial to lower that balance as quickly as possible. And you can only lower the balance by making a payment… or payments.
The sooner you send a dollar to that debt, the less interest you’ll end up paying! It’s that simple!
Even if you can only afford the minimum required payment every month, splitting it into two payments helps. That can drastically reduce the average daily balance, and thus, the interest you have to pay. So making half of your monthly payment on the 15th of the month and the other half on the 30th (don’t @ me, February) can effectively save you money on interest. This goes for credit card debt as well as home mortgages and car loans.
Here’s more on how interest is the true insult behind the injury of debt:
- Dafuq Is Interest and How Does It Work for the Forces of Darkness?
- Let’s End This Damaging Misconception About Credit Cards
- The Best Way To Pay off Credit Card Debt: From the Snowball To the Avalanche
- A Dungeonmaster’s Guide to Defeating Debt
- What We Talk About When We Talk About Student Loans
Why it helps: Motivation
I don’t know about you, but I’m wildly motivated by progress. Crossing something off of my daily to-do list—even if it’s just “make a to-do list”!—is like…
It’s motivating to watch the balance on your debt go down every day! You guys know we don’t hold with the Church of Ramsey, but even a broken clock is right twice a day! Little financial wins are wildly motivating. And when you’re knee-deep in debt and frantically shoveling, you need all the motivation you can get topay off your debt faster.
Use your debt as a savings account
So I’ve beat you near to death with the stick of making multiple debt payments. SORRY NOT SORRY. I’m confident it won’t kill you, my darlings, and I’m sure hoping it’ll make you stronger.
But let’s say you aren’t quite convinced by the money-saving aspect of making multiple debt payments per month. Allow me to appeal to your baser instincts.
Some people have a hard time holding onto money. No judgment! Pobody’s nerfect, and we all have our financial foibles. (Mine is that any monetary self-control goes flying out the nearest window whenever I’m in a quality beer brewing establishment in the presence of beautiful, talented lesbian brewmistresses. It’s truly a struggle. I’m considering seeking therapy.)
If your savings account is full of cobwebs and an inch of dust because you have an out-of-control spending problem… use your debt as your savings account.
If you struggle with emotional impulse spending and you know that any money you save is in danger of being spent on other things before you can put it toward your debt… make a debt payment as soon as you have any extra money! Like, right away!
It’ll make a difference and it’ll keep your money safe from your own financial foibles. Don’t let your savings sit around long enough to be wasted. Use it topay off your debt faster.
Avoiding temptation is hard by definition. If temptation weren’t so damn tempting, it would be easy as eating pancakes to just… not be tempted. But if you feed your extra money to your debt immediately, before you have a chance to think about all the tempting ways you could otherwise use it, you won’t miss what you don’t have.
Some limitations apply
Ok, so remember above, where I told you you can make as many debt payments as you want every billing cycle? Well, there are exceptions.
Some credit card companies, wise to the tactic of Death by a Thousand Cuts, limit the number of payments you can make per month. So make sure to read the fine print or—heaven forfend!—call your credit card company on the actual telephone before making use of this tactic.
I personally never ran into this problem when paying off my student loans. And I sometimes make multiple credit card payments every month. But limitations do exist, and you should be aware of them before launching any attack on your debt.
Also, most savings accounts limit the number of withdrawals you can make in a month or year. After all, the whole point of a savings account is to save money, not spend it. And the banks hoarding your cash for you have a vested interest in you not using it so they can use it.
So if you’re planning to pay off your debt using a savings account, be aware of the withdrawal cap. This just provides more incentive to treat your debt as your savings account.
Also also… your credit report and credit score rely on your utilization of credit, among other factors. Which means that if you pay off a purchase on your credit card as soon as you make it, it’ll look like you never even used credit.
This does not mean you should always carry a balance on your credit card (because you absolutely fucking should not and I’ve made it my life’s mission to dispel this myth). But it does mean that the Death by a Thousand Cuts method of multiple debt payments isn’t for everyone. It should be reserved for people who carry a high balance on their cards, not those of us who tend to keep a balance of zero.
Lastly my doves, if you need a little extra help and motivation topay off your debt faster, we’ve got you covered. WITH THE BITCHES GET RICHES DEBT PAY-OFF COLORING BOOK! That’s right, bitchlings. For the low-low price of $5, you can get our printable worksheet and color your way to financial freedom.
Babies, if you know of other so-simple-I-can’t-believe-I-didn’t-think-of-it-before methods for paying down debt, share them in the comments! Whether they’re student loans, car payments, or credit cards, debts are the enemy of the people. They must be destroyed. VIVA LA REVOLUCIÓN!
11 thoughts to “Kill Your Debt Faster With the Death by a Thousand Cuts Technique”
I have no debt wisdom (I grew up in a country with free healthcare and free university, and mortgage is a song of the future), but I wanted to say that I, too, would be completely defeated by a lesbian brewmistress. Your struggle has been heard.
Thank you for acknowledging my hardship. I feel seen and validated.
your wisdom, as always, a brave and sexual entry into my personal tome of financial guidance – while often lost to the dust of ADD, but may just as well spring forth as Athena from the head of Zeus in my direst hour of need. blessings on your house, on your skin, your descendants, and may the flirtatious gaze of a lesbian brewmistress find you well when we find ourselves in safer times.
Thank you, dearest! Fortunately the lesbian brewmistress is selling crowlers of the good stuff for pickup, so I’m still getting my fix.
A small caveat – Make sure you’re paying in ways that don’t cost!
A few of my debt servicers (all student loans) charge a “convenience fee” for making one-time online payments. It’s usually $1-$3.
The one that comes to mind first is the Perkins Loan – which I now many people have. So make sure to check!
Also I love the blog! Keep doing the Lord’s Work 🙂
And that is some buulllshiiit. A convenience fee for paying your loans is straight up extortion.
The main thing that has helped me (and is apparently not necessarily obvious) is to set up my automatic payment to be the amount I Want to/Can pay. Right now my $156/mo car payment is the thing we’re focused on because it’s the highest interest rate loan we have and it’s pulling out $850 every month. I was telling my friend about it, and she was like “I can’t believe your car is $850/mo?!” and I was like … it’s not. I’m just paying that much to pay it down faster. She knew she could make extra payments, but modifying the automatic payment was just not something she’d ever considered.
See? SEE? I’m constantly flummoxed by the really simple things people don’t know about finance. And it’s not necessarily their fault! Your friend would definitely not get this information from her lender, as they’re invested in making sure you only pay the minimum every month.
This seems so obvious in hindsight, but it truly never occurred to me! I definitely fall into the “can’t hold onto money” category, so I’m absolutely going to start using this method. Thank you so much!
Small note on credit cards! You’re right about the average daily balance. However, another way to work this is to pay as soon as possible after the billing cycle ends. For example, my card payments are due on the 5th and 14th, and the new billing cycles start around the 8th and 17th, respectively. If you can work it to make the payments as soon as possible after the new billing cycle, it reduces your average daily balance for the entire cycle!
Credit card companies rely on their customers setting up auto pay on their due dates (for some, it’s the only date it lets you set up auto pay unless you call them, ugh), which means they’re milking all the extra interest they can get out of you. I do have auto pay set up as a “just in case” measure, but I typically end up cancelling the payment and setting a one-time payment through the app (both my cards are with Capital One) when it comes closer to time, so it applies the way I want it to.
I love your site. It has made me laugh until I literally cry on more than one occasion!
It took me a long time to figure out this death by a thousand cuts technique! By making multiple debt payments each month, I literally wasn’t able to spend my extra money in other places. I love how you describe using it as a savings account.