The loan company is LYING to you!

If they are compounding interest daily that means if they are charging you say 10% interest on $100 that is $10 interest for the first day. Then they compound that interest into your principle balance so the second day they are then charging 10% interest on $110 and the interest is $11 the third day is figured on $121 and the interest is $12.10. etc. through the 309 day billing cycle so it can really build up. Of course if it’s 10% interest per year the amount of the daily interest would be much smaller, but it would still add up.
So yes the quicker you pay on the bill the lower your interest will be and the more you will save in the long run over all. The important thing is to remember to pay enough to cover your minimum in each statement period. I pay a minimum of once a week on our Best Buy bill and in the last four months saved around $87 in interest on their compounded daily interest rate as a result. I make big payments on each pay day and little ones as a bit of extra cash comes in. If it’s only $5, then $5 goes on, if it’s a sudden large windfall then the entire windfall goes on. That card is at 9.9% annual interest rate (see why I hate it) and six months ago the balance was roughly $5,000 and I’ve got it down to $2300 in four months by nickel and diming it to death.

First off I want to thank those of you

who’ve made it debt free and stayed in this blog. You are so valuable to the rest of us.

I need to pick everyone’s brain. We have $2800 in debt, it’s interest free for the life of the loan. Outside of our monthly bills, mortgage, and food it’s the only debt we have. Before we had the debt of $2800 we’ve been relatively debt free for the last couple of years. Currently, my husband has 9% taken out for a 401K plan at work. So my question is should he stop funding the 401K until we pay off the $2800?

We have about $1500-$1800 in an emergency fund. Where I live, things tend to be more expensive when emergencies come up. We found it really wipes out the $1000 fund quickly. So we upped what Dave’s says of $1000.

Ideas, suggestions?