You can save more money if you pay off your debts quickly. Sounds logical, doesn`t it? For many of us this is a great motivation, so here we recommend you 5 practical pieces of advice for those who want to get rid of the debt load quickly.
- Plan your money.
The first thing is to create a detailed analysis of your earnings and expenses, it is better even to have a book of records and write your results on a monthly basis. This will help you to understand how you can save, so that this money can be spent more profitably. The main thing is to draw up a schedule of payments and try to stick to it. When calculating monthly expenses, remember that you do not need to refuse the most necessary ones, for example, you do not need to save on medicines or paying bills, but shopping and various entertainment will be at the time of loan repayment your worst enemies!
- Save your money.
That is the best way to pay off debt early – to save money and to stop paying interest.
Look again at the plan of your expenses and decrease it by 30%, eliminating various trifles, such as dinner outside the house, buying coffee in a vending machine or another detective novel for reading on the bus – you will be surprised at how much money you will have. Having understood the movement of your money, you can easily save one or two times a month (depending on how often you receive a salary) some amount to pay the loan.
- Find additional sources of income.
For the time of the accelerated repayment of the loan, the main thing is not to feel sorry for yourself and find a sub-work. Ask for a little more work on the place of your main employment or take a part-time job, which then can simply be discarded (private lessons, consultations, internet work: writing texts, working in social networks, etc.). All the money you receive should be directed to repay the loan as quickly as possible. Do not forget also about the return of old debts, cash gifts, bonuses, etc.
- Overpay a month for 10%.
Many people think that they save by paying out a stipulated amount on the loan. In fact, the bank calculates the minimum interest on the loan in such a way that you pay it as long as possible, and the credit organization could earn as much as you can pay them.
Therefore, it is necessary to increase all of its payments on the loan by 10%. However, if you have several loans, you need to apply one trick. For example, you have a mortgage, a loan for a car, a loan for apartment repairs and a credit card. Increasing payments on all loans by 10% will not do anything, but if you go from smaller to bigger, the task will be much simpler. First, raise payments on the credit card and close it for a few months. Then the money that used to go to payment on the card, let’s pay for a more complicated loan – a loan for repairs, and add to it the same 10% of the amount of all payments. Thus, you can close the loan two or three times faster than originally thought. Similarly, we come with car loans.
When there is only a mortgage for payment, it is necessary to use all the money you spent on previous loans to pay for it. This significant increase to payout will help to jump out of the debt hole a few years earlier.
- Refinance your loan
Borrowers are valuable people for banks, so they can rely on various additional services. Among them there is also a refinancing of the loan – this service allows you to issue a new loan to pay off old, but already at a lower interest rate, which allows you to reduce the amount of over payments.
In addition, in some banks it is possible to collect several loans into one. The main thing to remember is that “convenient” does not always mean “profitable,” so you need to study all the conditions in advance. Nowadays it’s getting popular to work with direct lenders. But use only trusted websites. Be always careful with direct lenders, make sure that you are not falling into a trap, and deal with lenders smartly.