Whether it is consumer debt on credit cards, student loans or a mortgage, most people find themselves weighed down by debt at some point in their lives. Having this financial burden will add more stress in life. By paying loan faster it will definitely help to reduce the pressure. Here are steps that can ease your loan burden.
Stop creating new debts
This is the point where you are in this situation, so instead of cover one debt with another how about stop it in the first place? Start by making a stand against all of the offers that lead to another loan and be firm with it. If you still have a credit card, it is recommended to stay away or even cut off your credit card. If you still in doubt, freeze them. Fill in the container of water, put the credit cards and keep them in the freezer. Whenever there is an opportunity comes, you still have time to wait until it melts while decide whether you need to continue the purchase.
Rank debts by interest rate
Make a list of all your debt with amounts and the interest rate. The highest interest rate should be at the top as this is what you will pay off first. Interest is a powerful weapon and right now the bank or other financial institutions are using it against you. Interest significantly increases the amount you need to pay back and often we are completely unaware of how much that is.
Create a strategic spending plan
Strategic spending planning will improve the financial control for almost of everything. Firstly calculate your income after tax and all expenses. Rank your expenses in order of the importance and examine items in the bottom of the expenses list and decide whether you really need them. The objective of this makes your expenses lower than your income. In this part, deciding how much money to spend and to limit in each area such as rent, groceries, clothes etc. It is also recommended to have a fun account of spending money of something that you like and emergency account as well. Include as well in the strategic planning the extra amount to use for paying the debt off, how to obtained this money and be realistic with it.
Find a side job or a small part time job, launch a garage sale and sell items you do need will helps your income. It seems small but if added up it will assist to lift the loan.
Create a repayment schedule
This is the essential step and you need to be discipline. The reason is that anytime you miss the payment, fees will be added up quickly, and you need to be more cautious for the debt that has highest interest rate. Make sure you make at least fulfil minimum payment of the debt. If possible even more by rounding it up each time you make payment. For instance, if the debt you need to pay is $233, then round it up to$250. In addition to that make the payment arrangement as often as possible, for example making bi-weekly payments. This will accomplish three things. Firstly less interest will accumulate, because your payments will be applied more often. Secondly, you basically make pay an extra payment, because there are 52 weeks in a year, which equals 26 yearly payments and by doing this for the duration of the loan could shave off several months. Discuss with your lender whether this kind of arrangement is possible, because it may incur the penalty for any extra payments or pay off the loan balance early.
If you do not have the cash flow to commit to bi-weekly payments, you can achieve the same result by making one extra payment per year. Use money from a tax refund or bonus from work to help pay down your loan faster.
If possible, pay off your loan as early as possible. By paying off your loan early will save money in interest and decrease the overall term of the loan. Just imagine what you could do with your extra money: save for retirement, make home improvements, or pay off other debts. There are