Is it easier to pay back small amounts?

I don’t mean money-wise, (of course it’s easier to pay back $5 than it is to pay back $5 million) I mean psychologically. For example, we currently owe approximately $104,900 on our mortgage. I was staring at that balance this morning, and it struck me that if it were only $4,900, I’d find a way to pay the whole thing off in a month or two. Essentially we’d be able to pay it off more than twice as fast. Somehow we would manage; even though that would mean we would have to more than double what we’re currently sending in. I’d be so excited about being entirely debt-free that the small sacrifices we might have to make to do so would be worth it. But because the balance owed is a much larger number, we stick with sending in just a little bit more each month than we did the previous month.

There’s also the “overwhelming” factor. Let’s face it, more than a hundred thousand dollars is a much bigger number than about five thousand. When have you seen a hundred thousand of anything? The only thing I can think of that comes even remotely close is a packed stadium of people. If it’s hard to even visualize the total amount, it’s less concrete, and therefore more overwhelming. I think this is a good argument for mini-goals that are easy to see. In fact I think I’m going to make up a new kind of chart: a drawing of a brick house. As we meet each mini-goal, I’ll color in a brick. This should increase motivation as more and more of the house gets filled in.

View Comments (4)
  • I agree.. for me, it was easier to scrimp and pay off $8000 in a couple of months than it currently is to clear $15,000 > $30,000… So I haven’t done your fab idea of colouring in a brick house (great visual idea!), but I have been saving aside money every month, and calculating if I saved all that money, how long would it take me to clear $15,000 outright? (They haven’t come to me asking for the interest payments yet.. *crosses fingers*)…. And it’s helping so far, by my scrutinizing my budget every morning (I find it helps to remind myself about why I’m being so frugal)

  • It’s easier to sacrifice things for short-term than for long-term. It’s easier to say, “We’re not going to eat out at all for the next two months, and we’ll be eating as cheaply as possible at home.” Two months is a reasonable time to make sacrifices. When it starts dragging on, it becomes mentally difficult. Also, two months is a reasonable time of not having a lot of unexpected expenses. For multiple years, there will be many unexpected expenses that the extra payments would become more difficult.

    I really like the drawing of a house. I think I’ll use that to have a “saving for a down payment” fund.

    (However, it might be fun to challenge yourself to send in double payments two months of every year.)

  • Yeah looking at a huge number like that can be discouraging. It probably seems like it will never get achieved. I think that’s a good idea to break it up into smaller amounts. You could break it down to how much you owe every quarter of the year. Then for those months pretend thats all you owe and try to pay as much as possible so that by the last month you’ll be ahead and only have to pay the minimum amount due.

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