Pay extra on your mortgage principal

The extra money should be marked for your principal. Putting your money on the principal will reduce the amount of interest you pay. It would be good to make that extra payment on a separate check, and mark it as payment to principal only.

The amount of interest you pay is the principal multiplied by the interest rate. So reducing the principal will reduce your interest.

I recommend you first establish a contingency fund equal to 6 months of living expenses. This will come in handy when something around the house needs repair. You can then pay cash for the repair/replacement of the item instead of charging it to credit.

Establish the contingency fund.
Pay extra on your mortgage principal.