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Finding the Right Approach: Balancing Extra Repayments with Other Financial Goals

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Achieving financial goals like balancing extra repayments requires careful planning and prioritisation. One common dilemma faced by individuals in Australia is how to balance making extra loan repayments with pursuing other financial objectives. Whether it’s saving for retirement, building an emergency fund, or investing in other opportunities, finding the right approach is crucial. 

In this article, we will explore strategies to help you strike a balance between making extra repayments on your loans and pursuing your other financial goals effectively.

1. Define Your Financial Goals

Before diving into the decision-making process, it’s important to identify and define your financial goals. Determine your short-term and long-term objectives, such as paying off debt, saving for a down payment, investing, or funding your children’s education. Having a clear understanding of your goals will guide you in making informed decisions about allocating your financial resources.

2. Evaluate Your Current Financial Situation

Next, assess your current financial situation. Take stock of your income, expenses, debts, and savings. Consider factors like your income stability, existing debts and interest rates, and the availability of emergency funds. Understanding your financial standing will provide a realistic foundation for determining how much you can comfortably allocate towards extra loan repayments while still working towards other goals. Speak with a financial expert if you need help in accessing your finances.

3. Prioritise High-Interest Debt

If you have multiple debts, prioritise paying off high-interest debt first. By focusing on reducing debt with higher interest rates, you can save money in the long run and free up more resources for other financial goals. Consider consolidating or refinancing your loans to secure more favourable terms, which can help accelerate your debt repayment journey.

4. Create a Comprehensive Budget

Developing a comprehensive budget is crucial for effective financial planning. Allocate a portion of your income towards making extra loan repayments while also setting aside funds for your other financial goals. This may require making adjustments to your spending habits or identifying areas where you can cut back. A budget will help you stay on track and ensure you’re making progress towards all your goals simultaneously.

5. Automate Your Finances

Automation can be a powerful tool for achieving a balanced approach. Set up automatic payments for your loan repayments and savings contributions. By automating these processes, you reduce the risk of forgetting or delaying payments and ensure consistent progress towards your goals. This approach instils discipline and removes the temptation to divert funds meant for repayments to other areas.

6. Regularly Review and Adjust

Periodically reassess your financial situation and goals. Life circumstances change, and your priorities may shift over time. Regularly review your progress, evaluate the effectiveness of your approach, and make adjustments as needed. This flexibility allows you to adapt your strategy to suit your evolving needs and financial landscape.

Demonstrating How Balancing Extra Repayments Work

Scenario 1: Practicing the Points

John is a diligent individual who follows the recommended strategies for balancing extra loan repayments with other financial goals:

Define Your Financial Goals: John clearly outlines his goals, which include paying off his mortgage, saving for his children’s education, and building an emergency fund.

Evaluate Your Current Financial Situation: John assesses his income, expenses, debts, and savings. He determines that he has a stable income, manageable debts, and a small emergency fund.

Prioritise High-Interest Debt: John identifies a credit card with a high-interest rate and focuses on paying it off first. By allocating extra funds towards this debt, he saves on interest payments and gradually reduces his outstanding balance.

Create a Comprehensive Budget: John develops a detailed budget that includes a dedicated portion for extra loan repayments. He makes necessary adjustments to his spending habits and identifies areas where he can save money.

Automate Your Finances: John sets up automatic payments for his mortgage and savings contributions. This ensures consistent progress towards his goals and prevents any missed payments.

Regularly Review and Adjust: John periodically reviews his financial situation and goals. As his income increases, he adjusts his extra loan repayments and allocates more funds towards his children’s education savings.

Impact: John successfully balances his extra loan repayments with his other financial goals. Over time, he pays off his mortgage faster, builds a substantial education fund for his children, and establishes a robust emergency fund.

Scenario 2: Not Putting Balancing Extra Repayment into Practice

Sarah overlooks the recommended strategies and doesn’t effectively balance her extra loan repayments with other financial goals:

Define Your Financial Goals: Sarah has various financial goals in mind, but she hasn’t clearly defined or prioritised them.

Evaluate Your Current Financial Situation: Sarah has a limited understanding of her current financial situation. She doesn’t keep track of her income, expenses, or debts, which makes it challenging to make informed decisions.

Prioritise High-Interest Debt: Sarah doesn’t prioritise paying off her high-interest credit card debt. She makes only minimum payments, leading to high-interest charges and slow progress in reducing the outstanding balance.

Create a Comprehensive Budget: Sarah doesn’t create a budget or allocate specific amounts towards extra loan repayments or other financial goals. As a result, she struggles to manage her finances effectively.

Automate Your Finances: Sarah doesn’t automate her loan repayments or savings contributions. She often forgets to make payments on time, leading to late fees and missed opportunities to reduce her debt.

Regularly Review and Adjust: Sarah rarely reviews her financial situation or goals. She continues with the same approach without adapting to changes in her circumstances or adjusting her strategies.

Impact: Sarah finds it difficult to balance her loan repayments with other financial goals. Her debt remains high, and she struggles to make progress in saving for her other objectives. Without a clear plan or regular reviews, she feels overwhelmed and unable to achieve the financial stability she desires.

These scenarios highlight the importance of practising the recommended strategies to effectively balance extra loan repayments with other financial goals. By following the outlined points, individuals can make informed decisions, stay on track, and achieve a more balanced and successful financial journey.


Balancing extra loan repayments with other financial goals is a personal journey that requires thoughtful consideration. By defining your financial goals, evaluating your situation, prioritising high-interest debt, creating a budget, automating your finances, and regularly reviewing your progress, you can find the right approach for your unique circumstances. Achieving a balance between debt reduction and pursuing other financial aspirations will empower you to make significant strides towards a more secure and prosperous future.

To help you on this journey, we invite you to try our Extra Repayment Calculator. This powerful tool is designed to provide you with a clear understanding of how extra loan repayments can impact your overall financial goals. Use the calculator and gain valuable insights into optimising your loan repayment strategy while pursuing your other financial objectives. Take control of your financial future today!

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