You pay your mortgage every month. But have you ever wondered what would happen if you paid it every 2 weeks instead? Daren and Dano run the numbers on a $500k scenario (which may work in some states, but perhaps not in others *cough* CALIFORNIA) and show the shocking impact of making just one more mortgage payment a year on your long-term financial picture. Plus enjoy a few fun financial happenings out the door including McDonald's new value meal and watch Daren's eyes roll back at the idea of a 24/7 stock market!
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Frequently Asked Questions
A biweekly mortgage payment splits your normal monthly payment in half and pays that amount every two weeks instead of once a month. Because there are 26 two-week periods in a year, that schedule adds up to 13 full monthly payments annually instead of 12 — one extra payment that goes straight toward the loan.
On a $500,000, 30-year mortgage at a 7% interest rate, staying on the standard monthly schedule runs roughly $697,544 in total interest. Moving to a biweekly schedule shortens the term to about 23 years and 8 months and cuts total interest to roughly $522,732 — a savings of about $174,000.
Contact your loan servicer directly, since each one has its own process. Most servicers require you to send an extra payment in advance before they'll officially convert your billing cycle to biweekly, and borrowers should also check their loan documents for any prepayment penalties first.
Not always. It tends to make the most sense at today's higher mortgage rates, since paying down principal faster beats what most savers can earn elsewhere. But for anyone holding an older, lower-rate loan — say around 3% — money market and savings yields can outearn that rate, which changes the math and makes the decision more personal and emotional than purely financial.
Be cautious. Some third parties advertise biweekly payment setup services but aren't your actual loan servicer or agent, then collect fees without properly setting anything up. It's safest to set up biweekly payments directly through your own mortgage servicer.
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References:
Mortgage Numbers calculated with: https://www.mortgagecalculator.org/
Text Transcript (Auto-Generated). Text transcripts are part of the above video presentation, and not a separate presentation unto themselves. Sources for information presented are available within the video presentation and upon request to [email protected].
Welcome Back: Daren's Off-Hand Comment That Became Episode One
[0:00] DANO WEIR: You just flippantly said as we were talking about things we could talk on the show you're like well i mean you could pay your mortgage every two weeks and you save like a hundred thousand dollars and i was like i literally did that and so i said well there's episode one right there welcome to it's all money episode one which is the second episode. I named the first episode episode zero. I feel like everybody's going to keep getting confused as we move down the line, Daren.
[0:30] DAREN BLONSKI, CFP®: Especially because we're wearing the same clothes for episode one. But, you know, who's paying attention, right?
[0:36] DANO WEIR: I hope everyone's watching. It's all money. We are talking about tactical things that you can do to affect your bottom line, to affect your family's financial future. And Daren mentioned to me something which I had never even conceptualized, and yet it seems so simple. Simple. You just flippantly said, as we were talking about things we could talk on the show, you're like, well, I mean, you could pay your mortgage every two weeks and you save like $100,000. And I was like, I literally did that. And so I said, well, there's episode one right there. So how can paying your mortgage biweekly instead of monthly save you over time?
How Biweekly Mortgage Payments Actually Work
[1:16] DAREN BLONSKI, CFP®: It's a great question. It's actually not really all that secret or nor is it. It's not like a panacea. It's not a silver bullet. It's actually, and again, I'm a psychology major, so things go back to psychology. It's really just using psychology to your benefit. And all you're really doing, and I'll show you the math in a minute, all you're really doing by doing a biweekly payment versus a monthly payment on your mortgage is you're actually adding one more payment per year to your mortgage. So instead of paying 12 months of a mortgage, you're paying 13 months of mortgage. Some lenders will actually let that all go to principle. Some won't. It just really depends where you live and what your lender situation is. So if you think about it, being an employer of employees, I had to learn this, that there's actually 26 pay periods in a year, right? You would think there would be 24 because every two weeks and there's 12 months in a year multiplied by two, we have 24 pay periods. There's actually 26 pay periods, right? So if you're doing... Bi-weekly, it means every two weeks you're making a payment, we all get paid on a bi-weekly basis. So if you make half your mortgage payment on a bi-weekly basis, what happens is you end up making two extra bi-weekly payments or one full month payment per year. And that compounds and really helps you out over the long term. So it's just really adjusting your process to work in benefit with your psychology.
Running the Real Numbers on a $500K, 30-Year Mortgage
[2:49] DANO WEIR: So it's basically just It's basically just paying more on the principal, paying more on the house earlier. It's sort of like paying your house off earlier, but because it's part of a process of just like every two weeks, every two weeks, every two weeks. It's queuing into that regularity that your brain doesn't even think that this is something that you could or could not have paid. It's just on autopilot.
[3:10] DAREN BLONSKI, CFP®: It's on autopilot. And it makes sense too because it makes budgeting easier actually because if you think about it, if you get paid twice a month, but during one of those pay periods. You've got a mortgage payment due. You have to save some money for that mortgage payment, potentially. Well, bi-weekly payment, you're just dividing that payment equally. And then it comes out when you get paid every two weeks. So you can create a much cleaner budget that way. And budgeting is very hard to do. Most people completely fail at budgeting. So like, does it actually save you money by paying one more mortgage payment per year? Yeah. I think the math is pretty convincing. So if we take a loan amount of 500,000 on a 30-year term loan. With an interest rate of seven, because give or take they're in that ballpark as of May 29th, 2024. If you go to the next slide, you'll see that, let's break it down. So your payment on a monthly basis is $3,326.51 over a 30-year term period. You're going to pay, this is on a $500,000 loan.
[4:09] DANO WEIR: I had to check this when I was pulling these numbers. I had to, I went, no. I did not believe this number. And I triple checked it on a different calculator just to make sure. Please say how much interest you're paying for a $500,000.
[4:24] DAREN BLONSKI, CFP®: $97,544.49 over a 30-year period. So you're paying more than the actual house is worth the time of buying it.
[4:32] DANO WEIR: So at the current interest rate, 7%, things could change in the future. But if that were to stay the same, to get $500,000 to buy a house right now, it costs $697,000.
[4:46] DAREN BLONSKI, CFP®: That's right it's so crazy okay pretty wild when you think about it I don't want it to really but I had to double check that number but there's also a little kind of misnomer and I think we have to mention that six hundred ninety seven thousand thousand dollars feels like a lot right now, but you also have to keep in mind that inflation is also going to inflate that away. Especially right now, we're going through a high inflationary period, right? So it feels like $697,000 now, but every 14 years, that's going to get cut in half from a real dollar standpoint.
Why Future Dollars Are Worth Less: The Inflation Tangent
[5:16] DANO WEIR: So depending on what- Because everything costs more years?
[5:18] DAREN BLONSKI, CFP®: Yeah, because everything's going to go up, right?
[5:20] DANO WEIR: So if you paid $697,000 now, that doesn't really have the same impact in 14 years.
[5:26] DAREN BLONSKI, CFP®: Right. So 15 of those years, it's half of that. In real dollar terms.
[5:30] DANO WEIR: Because milk is $6 now when it used to be $3.
[5:32] DAREN BLONSKI, CFP®: That's right. And it's going to be $12 eventually. That's crazy. Not to mention the $40 McDonald's bill. So your total payments are $1,197,544.49 for that $500,000 home. So the benefit is if I can pay that off sooner, then I'm actually going to pay less in interest. Still going to be the same principle, but interest. This didn't used to matter when we were getting too... 3% rates. People didn't care as much because you weren't paying that much in interest. But for those newcomers to the housing world, it matters. You really do need to pay that down because paying 7% interest over time and weighing that with what you're getting in the market doesn't equate, right? So now it's making a lot more sense to pay off those houses like Dave Ramsey would say. Back in the day when we had... 3% rates. It didn't make as much sense to pay those loans off from a mathematical standpoint. That's changed now all in two years, right? So by making that one extra payment per year or that those 26 payments rather than 12 payments, so you cut it in half those 26 pay periods, you end up saving about $174,000.
Biweekly vs. Monthly: Comparing the Actual Payment Breakdown
[6:43] DANO WEIR: Now- So if you're listening to the podcast running through, we ran through the monthly payment.
[6:47] DAREN BLONSKI, CFP®: Let me run through the biweekly. You're going to run through that.
[6:49] DANO WEIR: If you're going through biweekly, your payment biweekly is $1,663.26. Your term, you're shaving six years and four months off the term. So it's only a 23-year, eight-month loan. The total interest is only $522,731.58. And as you just said, you end up saving yourself, in this scenario, $174,000 and change in interest.
[7:14] DAREN BLONSKI, CFP®: Just by forcing yourself to pay one extra payment or by moving to bi-weekly to force you to just pay those payments twice a month. It's just a little trick changes things for you.
Does This Still Make Sense With Today's Lower-Rate Loans?
[7:26] DANO WEIR: Interesting. And so for someone who has one of those 3% loans right now, can they do this as well?
[7:32] DAREN BLONSKI, CFP®: You can do that, but the math of paying off your home makes a little less sense. And that's just because of inflation and the way inflation works. That money is really cheap money in theory. Right now you have money markets and this is not advice, but you have money markets paying 5% and you have a 3% interest rate on your home. You're actually making 2% on that money if you're putting in a money market off the home because you're treating yourself as the bank, right? Money's made on spreads by banks, right? And so if you have a 7% loan, that gets a little bit different. If you have a 3% loan, the math is different. That's why we always say that paying off a house is both an emotional and financial decision. There's an emotional component and a financial component.
[8:19] DANO WEIR: That was going to be what I said next. Now what you're talking about, we're getting to almost a philosophical, what is it you want to do? This is where financial planning comes in because it's like maybe you really do emotionally want to pay off that house. So when someone says, should I pay off my house? Well, who are you? Because to someone, maybe who... Grew up with home housing insecurity, right? Having the house paid for might mean more to them than making that 2%, right? But you need to be able to acknowledge that and have a discussion about that. That's why there's never a blanket answer to, should I pay it off? Should I not pay it off?
[8:57] DAREN BLONSKI, CFP®: You know, what's so interesting, there's always this intersection of emotion and finance. Did you know your house has actually never technically paid off because you couldn't live there for free? You just reduce your payment because you always have taxes and insurance. Yeah. So you're always making a payment to live there. Yeah. Right? And so it's actually just a mental gymnastics that you're actually paid off your house. It's not suggesting you should or shouldn't do it. I don't know. It depends on your financial situation. Right. Your emotional comfort. But you're never really paid off your house. So that sense of security is a falsity. Because. Let's see how fast you keep that house if you don't pay insurance and you don't pay your taxes. That's going to be coming real quick, right? So I always want to just caution people against thinking that like there's this emotional thing or satisfaction from paying it off when, yeah, there is. Like your repayment goes down, but you're always going to pay the government something.
The Emotional Side of Paying Off a Mortgage Early
[10:00] DANO WEIR: Yeah. But back to the scenario. So with that in mind, not necessarily with the goal of paying it off or not, but with just the eye to straight money, you're paying less in interest by doing it this way. That's right. And you are eventually getting to your goal quicker with, you know, and that's $174,000 you could do something else with.
[10:22] DAREN BLONSKI, CFP®: That's right. Well, you have to also, there's a different piece of this. Now, I've tried to do this for homes I've owned, and it's actually not easy to do. So a word of caution, you can't just call up your mortgage person or your servicer and be like, hey, I want biweekly payments now. Click, click, click, radio button. Let's go. It's okay, Mr. Blonsky. If you would like biweekly payments, you need to send us an additional payment for your mortgage. So you need to pay in advance. And once that's in receipt, then we can go ahead and process this. And that's if there's, well, in the United States, we don't have prepayment penalties, but if you're outside the United States, maybe there's a prepayment penalty. Have to look at the covenants in your actual loan that documents to know whether you can do this and how it's set up. But if you can do it and you're willing to have an additional payment because you got to pay, most servicers I've talked to will require you give them one additional payment, then they'll change your cycle of payment before they'll switch you over. So it becomes administratively a pain.
A Warning From a Mortgage Pro: Watch Out for Third-Party Biweekly Programs
[11:20] DANO WEIR: So I checked in with a friend of mine who's in the mortgage business, and I asked him about this. And I said, you know, what's your take on this as a loan officer? And he said it's fine, you know, of no impact at the time of the loan if you decide to set it up. You can also set it up after the fact. And this is just anecdotal. But he said, if you do do this, and I don't know how this happens. We need to get to the bottom of this. But somehow when you start making, it must be when it hits your credit report. But somehow the loan world gets notice that.
[11:51] DAREN BLONSKI, CFP®: But what I don't understand is why would they get your credit get hit to do biweekly payments? I don't know. That doesn't make any sense to me. I get it if you're refinancing, you get just hit with calls.
[12:02] DANO WEIR: My friend in the mortgage business said to me that there are fraudulent third parties out there who are not your servicer and who are not your loan agent. There are some other fraudster who. Who go, oh, you want to do biweekly payments. We do that. All you have to do is pay this, this, and this. And they end up taking the money and running. So that's just a tip. That's just an anecdote I wanted to share with you. And it goes back to something we've said in episode zero, which is just be on your toes, right? And work with people that you feel you trust. And you can always, if you have someone that you feel you trust, then you touch base with them and go, this seems a little weird. I've never heard of this company or something like that. I just want to pass that along. Keep an eye out for that if you decide to pursue biweekly payments.
[12:47] DAREN BLONSKI, CFP®: Fair. I mean, and again, it's not like it's a fantasy. It's not like it's a silver bullet. It's not like a magical trick. It's just forcing the process to take advantage of your psychology because psychology is not such that, hey, I'm going to pay this off. And the other piece I think we need to bring up.
[13:05] DANO WEIR: You almost said Chris.
[13:06] DAREN BLONSKI, CFP®: I did. Darren's business partner is Chris Sipes that's right and usually when I'm on podcasts I'm talking to Chris on our Friday podcast a second share I know wow alright so most people our age aren't going to stay in their home 30 years that doesn't seem to be the trajectory Right. And so what I wrestle with, right, because I like to always talk out of both sides of my mouth when I'm talking about finance, because you you got to weigh the pros and cons because it's about trade offs. Right. Right. And if you're not going to be in the house for 30 years, does it really make sense to pay it off quicker? The amount of interest you're going to save is going to be negligible. Right. And so I think you have to weigh that. If this is your forever home, then this type of scenario might make sense. If it's a stop in the train life, then. And you're not going to own the home for 30 years, it might not make sense. So again, you go back to the individual and does it make sense for this person?
How to Actually Set This Up Yourself
[14:07] DANO WEIR: So if someone wanted to do this, what would be their next steps?
[14:10] DAREN BLONSKI, CFP®: Well, you got to find out who you're, I mean, you obviously would know who your loan servicer is. You reach out to them and figure out what their process is because each loan servicer has a totally different process. We have to talk about McDonald's now, right? And that's our next quick hitter?
A Quick Word on Sonoma Wealth Advisors
[14:25] DANO WEIR: Yeah, I'll, let's... Take a second to talk about Sino-Waltz advisors, and then we'll do a couple of these out the door.
The McDonald's Price History Rabbit Hole
[14:32] DAREN BLONSKI, CFP®: You know, speaking of McDonald's, I was in the McDonald's line the other day. And did you know that McDonald's brought back their $1 meal? So what they said is if you buy one McChicken, you get another McChicken for a dollar. So back in high school, we're going back to our high school time. I go to the McDonald's, you know where that one is on Lakeville. That was the place we could get there just in time before.
[15:00] DANO WEIR: It was just at the edge of Casa Grande's radius of you could get there, get food and get back in time.
[15:05] DAREN BLONSKI, CFP®: That's right. We'd roll in there and get five McChickens, one for a dollar. And so Brighton, my son, he's like, dad, that's a deal. You can buy one McChicken, get another one for a dollar. That's huge. I'm like, hey, buddy, back in my day, for five bucks, I could get five. What? Mind blown. Right? And so it got me thinking, like, what is, what are we going to look back and be like, man, that was a deal.
[15:30] DANO WEIR: And there was even, they ran a throwback promotion when we were in high school. They threw it back to like, I can't remember what it was, but for some reason they did a throwback to like the 50s prices. So I have in my life bought a McDonald's cheeseburger for 39 cents.
[15:46] DAREN BLONSKI, CFP®: Whoa, I can't remember that vaguely.
[15:48] DANO WEIR: 29 for burgers and 39 for cheeseburgers.
[15:51] DAREN BLONSKI, CFP®: I can't remember that deal and I've forgotten all about that.
[15:53] DANO WEIR: I'm going to make McDonald's because I'll never forget. That yeah everything's expensive but bringing a letter from McDonald's now you really are so i just wanted to out the door talk about a couple of money related stories that come out people have been talking about inflation and for whatever reason they're drawn to McDonald's i think because there's a perception of it's the value food the value meal so the these these numbers are coming from the daily mail you can easily find them anywhere suddenly everyone's looking at McDonald's inflation prices in 2014 is a 10 year difference. So in 2014, you could get a quarter pounder with cheese meal for $5.39. So that's the burger, that's the drink, and that's the fries. That exact same meal in 2024, 10 years later, is $11.99 for a 10 year.
[16:40] DAREN BLONSKI, CFP®: But wait, are the sizes smaller, Dan? Because that's the other thing, right?
[16:43] DANO WEIR: That I don't know. I don't know if the sizes have changed. I'm guessing they didn't increase.
[16:48] DAREN BLONSKI, CFP®: Have you noticed that with ice cream, by the way? There's a particular brand of ice cream that it used to be a beautiful gallon you know or whatever half gallon and now it's just shrunk it's awful some some of that is i don't know this for for a fact but i think there has been a movement.
[17:07] DANO WEIR: From the obesity angle to take, quote, calories off the shelf. And so there's been a movement from health advocates that to somehow decrease the calories in the product, knowing that people are maybe if they're, I'm going to eat a candy bar. Well, if the candy bar is smaller than it used to be, therefore it's less calories. But I can't tell if that's actually from the health angle or that you get to charge the old price for the smaller size. I still can't tell.
[17:31] DAREN BLONSKI, CFP®: That sounds really similar to. The food pyramid scandal that's out there now and how sugar is placed in there. But yeah. Okay, so McDouble.
[17:39] DANO WEIR: McDouble in 2014 is $1.19. It is now $3.19 for an increase of 268%. So then I noticed this. So then you know this, the Consumer Price Index, often called the CPI. May 15th, the Bureau Of Labor And Statistics releases their 2024 numbers showing that inflation was at least flat. It wasn't increasing. It was about where it was. May 16th, the very next day, suddenly McDonald's busts out and they have a $5 value meal that's coming back. And then Wendy's and then Burger King are following suit. I just bring this up to say it's interesting to see how things in the market just change all of a sudden. Because just six months ago, Wendy's was looking at, quote, surge pricing, which was they were going to charge more for the same food at certain times of day, kind of like DoorDash does. Now, all of a sudden, based on the CPI of April 2024, we're all doing a value meal. The prices are all it's the same food. Yeah, you know, it's that. But the numbers are just all over the place. And when you're a parent, you know, you're trying to take the kids somewhere quick or whatever, you know, again, it ends up hitting your checking account.
[18:49] DAREN BLONSKI, CFP®: Like, hey, kids, it's three o'clock. We're going to McDonald's.
[18:52] DANO WEIR: It's cheaper now.
[18:53] DAREN BLONSKI, CFP®: All right.
Should the Stock Market Trade 24/7? The NYSE News Debate
[18:55] DANO WEIR: One more. Did you see that the New York Stock Exchange is pulling? Relevant parties, whoever that is, for an interest level in 24-7, 365 stock trading. Have you heard about that?
[19:09] DAREN BLONSKI, CFP®: Do you know what my feeling was when I heard about that? I just, my eyes hit the back of my head because one of the blessings of the way we do the stock market is Friday at one on the West Coast, we're done. Like we don't have to watch the market constantly or pay attention to what's going on constantly. We get the weekend. Bitcoin, crypto, that whole world has opened up this idea of 24-7 trading. All these trading companies are realizing we're making gobs of money with everyone connected to their Robinhood account, click, click, click, click, clicking on their phone and trading because they can charge on all those trades, whether it's the actual cost of the trade or what most people don't know about. There's actually a spread there sometimes that they're making money on the trade. And what? Well, that's another episode. We'll talk about spreads.
[19:55] DANO WEIR: Right. And 15 other episode ideas. Can we review that? Thanks.
[20:02] DAREN BLONSKI, CFP®: So 24-7 would mean that people are trading around the clock. People in my profession who spend a lot of time watching the markets, I would have to create some boundaries.
[20:12] DANO WEIR: How does it work? I mean, that changes everything.
[20:15] DAREN BLONSKI, CFP®: It does. It changes dynamics of the market. Well, I think what a lot of people don't realize is the market is dynamic, right? And like… Like literally right now, if you're a trader, we know that when the market opens at 6.30 on the West Coast to about 9 o'clock is active. What happens at 9 in New York? It's lunchtime. Everyone's going to McDonald's. So trading slows way down, right? And then it starts to kick back up about 1, 1.30 West East Coast, which for us is going to be around 10, 10.30. Market starts kicking back up. So what the... Actual investments do between 9 and 10.30 in the morning West Coast, we call it false signals, right? Like you can't really pay attention to what the market's doing because there's not enough players in the market. Then all of a sudden they come back from lunch and like, let's go. So from that 10.30 point on, it starts heating up right into that last hour from 12 to 1 West Coast time, market really happens. So you can't really read the signals of the day during that lunch hour. Which is amazing to me and just tells you it's a human system. It's a psychological system, right? The market actually has a tempo to it. You make it 24-7, like are we taking a break from 9 to 10 West Coast and then we'll do another 12 to 1 West Coast and then maybe a lunch break dinner? Like how does that all work out? It throws a wrench in everything. I think the exchanges would love to make more money on our trades. I think most of the professionals in the business don't want it because it just... It doesn't give us a chance to check out and not be paying attention to the market constantly.
[21:50] DANO WEIR: And there's such an analog there between, so such a connection between that. And what the NFL is doing with their players, which is that the NFL has moved from 16 games and now they want 18 games. And the players are like, dude, and the playoffs. Yeah. And preseason. At a certain point, like, my body's going to give out and the league's like, more. Because every game that they can have on TV is more money that they can charge, right? It's a very, very similar situation. At a certain point, the body gives out.
[22:17] DAREN BLONSKI, CFP®: Well, we're going to pretty soon have the NFL, but it's going to be like the MLB where it's like 180 games. That's crazy.
[22:22] DANO WEIR: Like 24-7 football.
[22:24] DAREN BLONSKI, CFP®: At some point, it's like, jeez, I like boundaries on it. I hope they keep it up. They don't do 24-7. But, hey, you got to adapt. Things are changing.
Wrap-Up and Disclosures
[22:35] DANO WEIR: Thanks for checking out It's All Money.
[22:36] This content was produced by Fermata Advisors, LLC and SEC Registered Investment Advisor, DBA, Sonoma Wealth Advisors. The opinions expressed by Fermata Advisors LLC on this show are their own. All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Viewers and listeners are encouraged to seek advice from a qualified tax, legal, or investment advisor to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance.