I just received an interesting email from a reader, Bob.

Bob asks, “NCN, I understand how the debt-snowball (and various similar methods) work while paying off debt, but I wonder if you could share HOW you actually paid off your credit cards early. Did you send one payment per month to each debt account? Did you send multiple checks? I am worried that if I send in extra money to one of my accounts, a creditor may not apply the money to my account, if I don’t use the right “process”. Any help would be appreciated! Thanks, Bob.”

I emailed Bob and asked if I could write a post, answering his question. He responded, “Sure!”.

Let’s assume Bob has a fixed monthly mortgage payment, a fixed monthly car payment, and a fluctuating credit card payment.

1. I use online bill pay, which reduces the number of physical checks I write and the number of stamps I have to buy.
2. When I receive a bill from a creditor, I send in a check for the “monthly minimum payment due”. In other words, if my car payment equaled $300, I would send a check to my automobile loan company for $300.
3. After making minimum payments (to all accounts), I then go about “attacking my debt” – by making extra payments, throughout the month, if possible, to a specific creditor.
4. By using online bill pay, I can schedule MULTIPLE extra debt payments each month. At one point in my debt reduction process, I was sending $5 a DAY to one of my creditors. Why? I loved the psychological boost that I received when I saw, not one, but thirty payments!
5. Please note, when making an extra payment, it is always a good idea to write the words “apply to principal” in the memo section of the check. Some companies will “hold” any additional checks they receive and cash them at the beginning of the next billing cycle. Needless to say, you want your creditors to cash your additional checks as soon as they receive the checks.

Here are a few things that I would NOT do:

1. I would not sign-up for a bi-weekly mortgage service. Why should I pay someone to set up a system that I can set up for myself, for free?
2. Use a credit counseling service. Again, why should I pay someone to set up a system that I can set up for myself, for free? I can call my creditors, I can create a debt repayment plan, I can make extra payments.
3. Obsess over interest rates. I did do one transfer from a high rate card to a zero rate card, but I didn’t spend my time moving balances from card to card. Instead, I really, really focused on paying off principal.

I hope that Bob enjoys this post – and I can’t wait until I receive an email from him, letting me know that he’s debt free! (As always, please remember that I am NOT a financial professional, and the information that you find at No Credit Needed is just “my way” of doing things. I’m debt free and here’s how I did it.)