Payments

[Anonymous]

I currently make my car payments bi weekly. Meaning I cut my payment in half and pay it every 2 weeks before the due date. I also pay an extra $20-10My question is should I be paying the regular payment or should I apply the extra to the principal? 

Example Toyota - $508 

pay 260 every 2 weeks before the 18 

I have noticed my monthly payment is going down for my statement 

[Brian_Earl_Spilner]

I always like to get ahead a payment or two before paying down the principal. That way, if something were to happen, like what's happening now, I can skip a payment or two.

Unfortunately, I never got around to that with this car. Luckily, Chase gave assistance, but if it wasn't for that and my savings, I would have been screwed. My last check before furlough was late, then shorted. Stimulus didnt come until weeks after being furloughed. Unemployment took over 3 weeks to get. You get the idea.

[ThetoriParadox]

I always apply everything extra to the principal! Like @Brian_Earl_Spilner said, you can get ahead and have some wiggle room if need be.

[Anonymous]

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@Anonymous wrote:

I currently make my car payments bi weekly. Meaning I cut my payment in half and pay it every 2 weeks before the due date. I also pay an extra $20-10My question is should I be paying the regular payment or should I apply the extra to the principal? 

Example Toyota - $508 

pay 260 every 2 weeks before the 18 

I have noticed my monthly payment is going down for my statement 

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In a normal life situation, what you are doing is fine.

In your "extra" payments, you are paying ahead.

All the extra ($12 month in this example case) is going towards next months payment and so forth.

In a normal life situation, you can continue to choose to do that until you want to pay towards the principle

Just remember that ANYTHING paid towards principle will not help in the time when you cannot make a payment.

So for a month you may become short on funds, anything paid towards principle cannot help.

Now in todays situation with deferrals etc, it is a bit different, but not normally the case.

To put into a different perspective from my POV, 

Over the last 8 years since I owned my home, I paid around $60k extra towards principle.$1k here, $5k there, etc.

Guess what, every month my normal payment is still due. I did not buy myself any leniency if I am short on a payment.

HOWEVER, I also went the current route that you are and made extra monthly payments, so my due date is out a bit.

AND I also have liquid savings and other savings so I can not be so called short anytime soon.

Do not ever get into the mindset of being ahead....strive and continue to be safe and save. Always.