Thursday, May 18, 2017

Erasing Debt: 5 Great Tips for Paying off Loans Quicker

Loans are the great discouragement in many people’s lives. Because of loans, you may not be able to take your dream vacation, invest money into your retirement fund, help your child out with college payments or even have a date night once month with your significant other. 

Unpaid loans can cause stress and anxiety particularly for women who long for that elusive feeling of security. Plus, it can be incredibly difficult to watch your loan amounts go down so slowly as you keep paying interest. 

Whether you have auto, home or students loans or some other type of debt, here are five easy ways to get your loan paid off faster than you imagined.

Round Up Payments

While creating and working closely with a budget goes without saying if you are trying to be wise with your money, you may want to rethink how much money you allocate towards your loan repayments. 

Consider rounding up your payments to the next $50 or $100 mark. For example, if you have a student loan payment of $256 per month, you could round it up and make it $300 per month. 

While an extra $44 per month may not be easily missed in your spending habits, it will make a great deal of difference in the amount of money you are paying interest on for your loan. In fact, just that small amount will give you over $500 in extra payments every year.

Make One Extra Payment per Year

Another way to pay down a loan faster is to make an extra payment per year. This is much easier to swing if you consider making payments on your loan every two weeks rather than once per month. 

Split your monthly payment in half, and pay this amount every two weeks. For example, if you have a monthly charge of $200, you would be paying $2,400 per year with the traditional method, but $2,600 per year with the every two week method. 

For a home mortgage, making one extra payment per year for a total of 13 full payments would help you shorten the time on your 30-year mortgage by almost 4 years.

Find a Way to Get a Lower Interest Rate

Even if you have no way to make extra payments every month or every year, you may still be able to pay off your loan faster while making the same monthly payments. 

The only way to do this would be to lower your interest rate so that more of the money you are paying in goes to principal rather than interest. 

You could simply ask your lender to match a new rate that you have seen a competitor offer, request to refinance a loan or combine all of your loans into one new loan that offers a better interest rate.

Take Control of Your Spending

When you carefully budget your money and control your spending, it may be uncomfortable initially. 

You may find that you cannot go out to eat as often as you once did or purchase so many personal choice items. However, this will give you more money that you can put towards paying down your loans.

Find a Way to Make Extra Money

If you have put as much money as you can towards paying down loans but still feel that you are not paying your loans down fast enough, consider how you can increase your income. 

You may want to consider getting a part-time job, selling some clothes to a consignment store, having a garage sale or selling some items that you have crafted. 

If you are stretched for cash one month, you could consider getting a payday advance that will help cover your needs until you receive your next paycheck.

When you have paid off all of your loans and are debt-free, the weight that is lifted from your shoulders is enormous. 

You can feel relief that you have more spending money as well as more funds to invest in what is important to you. Plus, know that the faster you pay off your loans, the less you will spend overall on interest.

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