What is the Half Payment Method and How does it Help?

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The half payment method is where you take a regularly occurring payment you have and you divide it in half. For example, let’s say you have a $300 car payment you need to make each month. Instead of sending in $300 at once, you only send in $150 and then set aside the other $150 (or whatever half of your bill is) at the beginning of the month. You then make the other half of the payment toward the end of the month. By the end of the month, you will have sent in the full $300 by the due date, but you will have been able to break up the payment into two smaller payments. If your creditor allows you to do this, as long as you get both smaller payments in on time, it may be able to benefit you.

Here is a break down of how it works if you receive a bi-monthly paycheck (using the $300 car payment example from above):

Paycheck #1: $600

Half payment for car payment: $150

Total left from paycheck #1: $450

Paycheck #2: $600

Half payment for car payment: $150

Total left from paycheck #2: $450

What is the purpose behind using this system? Take a look below at what happens when you don’t use the half payment method.

Paycheck #1: $600

No half payment

Total left from paycheck #1: $600

Paycheck #2: $600

No half payment

Full car payment: $300

Total left from paycheck #2: $300

Although you may not think there is much of a benefit from paying the full bill now or doing half payments twice a month, the half payments can actually be really helpful. If you pay the full amount on your payment (like option two above) you have lost an additional $150 from your second paycheck. You can argue that in your first paycheck you would gain $300, but that means there is so much fluctuation in your incoming and outgoing money. When you pay off an entire payment all at once, you are more likely to spend more money because you think you have a lot to spend. Using the half payment method, you would have your car payment taken care of and also not feel like you have to scrape by at the end of the month. Overall, your finances would become much easier to manage.

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This system will work even if you are just paid once a month by making quarter payments or small payments every week.

It is easiest to start using the half payment method if you start by doing this with your lowest regular payment. Once you have the habit of dividing your payments in half with that item, move on to the next lowest regular payment you need to make and keep continuing with that trend. For information on other payoff methods such as, The Snowball Method, please read this article.