Two Hundred Mornings of One Decision

Paying a little extra into a home loan works best as one decision made once, rather than a new decision every month.

Say a homeowner in Polokwane decides to pay a modest amount above the required instalment. If the choice has to be made fresh each month, it will lose most of the time. There is always a reason to skip it: school shoes, a car service, a month that simply felt tight. Each skip makes sense on its own, and a year later the extra payment has happened a handful of times. But if the extra amount goes into the debit order on the day the decision is made, the question never comes up again. The money leaves before anyone has a chance to argue with it.

Because bond interest is worked out on the balance still owing, every extra rand paid early reduces the interest charged on it for the rest of the term. Over the long life of a home loan that adds up to real money and a bond that finishes sooner. Getting there does not take fresh discipline every morning. It took discipline once, on the day the debit order changed, and every month since has simply carried the decision out.