This Simple $5-a-Day Trick Could Save You Thousands on Your Mortgage—But Is It Worth It?

If you're paying off a 30-year mortgage, interest can add up fast often costing more than the original loan amount over time. But what if you added just $5 a day ($150/month) to your payment?

That small extra amount goes directly toward the principal, helping you pay off your loan years earlier and potentially saving tens of thousands in interest. It’s a low-effort strategy with high-impact results especially if your mortgage rate is higher than typical investment returns.

If you take out a 30-year fixed-rate mortgage of $350,000 at a 6.00% interest rate, your monthly payment will be $2,098.43. Over the full term, you’ll pay a total of $755,433.66 with $405,433.66 going toward interest alone.

• Monthly payment (principal + interest): $2,098.43
• Total paid over 30 years: $755,433.66
• Interest paid: $405,433.66

That’s $55,433.66 more than the original loan amount, just in interest highlighting how long-term mortgages can significantly increase your total cost of homeownership.

You don’t need to pay $5 daily just set aside $150 monthly, then apply it directly to your mortgage principal. With a standard $2,098.43 monthly payment on a $350,000 loan at 6.00%, this extra amount accelerates your payoff timeline.

Instead of 30 years, you’ll be mortgage-free in 25 years and 3 months saving $76,276.94 in interest, a 19% reduction. You’ll also pay less toward interest than principal, flipping the typical mortgage payment structure.

• Standard monthly payment: $2,098.43
• Extra monthly toward principal: $150
• Total paid over 25 years and 3 months: $679,156.72
• Interest paid: $329,156.72
• Interest saved: $76,276.94

At first glance, the $5-a-day trick looks like a no-brainer: for less than the cost of a daily latte, you could save $76,277 in mortgage interest. But what if you invested that money instead?

Historically, the S&P 500’s inflation-adjusted return averages around 6.68%. If you invested $150/month in an index fund for 30 years, you’d end up with $171,850 $54,000 in contributions and $117,850 in earnings.

That seems better than the mortgage savings until you realize you’re investing for 30 years, while the mortgage payoff strategy ends in 25 years and 3 months. If you then invest the full mortgage payment ($2,248.43/month) for the remaining 5 years, you’d build $160,000 $135,000 in contributions and $25,000 in earnings.

Both strategies yield similar results. The real decision is whether you prefer to be mortgage-free sooner or maximize long-term investment growth. Either way, the key is to consistently invest that $150/month whether into your mortgage or the market.

If you locked in a mortgage at 3% or less, your monthly payment on a $350,000 loan would be around $1,475.61. Over 30 years, you’d pay $531,221.08 total, with $181,221.08 in interest.

Now compare that to investing $150/month in an index fund with a 6.68% return you’d end up with $171,850 after 30 years. That’s nearly equal to the interest paid on your mortgage, meaning the two strategies effectively cancel each other out.

With a low mortgage rate, there’s less incentive to aggressively pay down your loan. You may build more wealth by investing that extra cash instead.

If your mortgage rate jumps to 9%, the financial picture shifts dramatically. A $350,000 loan at that rate means a monthly payment of $2,816.18, totaling $1,013,824.50 over 30 years with $663,824.50 in interest alone.

Using the $5-a-day trick (an extra $150/month toward principal), you could pay off your mortgage in 24 years and 2 months, saving over $150,000 in interest. That leaves nearly 6 years to invest the full mortgage payment.

Investing $2,816.18/month for 6 years at a 6.68% return could grow your account to over $260,000. In this scenario, early mortgage payoff wins especially when your loan rate far exceeds expected investment returns.

The $5-a-day trick can save you thousands in interest, but it’s not a one-size-fits-all solution.

• If your mortgage rate is close to your investment return, there’s little financial difference between prepaying your loan or investing the extra cash.
• If your mortgage rate is lower, you’ll likely build more wealth by investing the extra $150/month in a low-cost index fund.
• If your mortgage rate is higher, prepaying with the $5-a-day strategy can help you pay off your loan years early, save tens of thousands in interest, and unlock more cash flow for future investments.