Easy Tips To Pay Off A Loan
Nobody likes to be in debt. The money you waste on interest can be better used for retirement savings or just living a better life. If you are ready to get rid of that loan debt, here are a six tips that can help you do just that.
1) Increase Your Payments
Obviously, the more you pay each month, the faster you will pay off the loan, so simply kick up your payment to the next level. If your loan payment is $180, kick it up to $200. Even a trivial amount like $20 can add up over time. This little bit of extra money likely means next to nothing to you in a month, but over the course of months or years, it can make a very big impact on your loan debt.
When making extra payments, make sure that your lender applies the extra payment to the principal. Mortgage accounts, for example may put the extra money in a suspense account instead of applying it to your loan balance.
2) Earn More Money
If you have extra time, use it wisely and earn more money. Get a part time job, start a blog or even do surveys online. Your time so valuable, so why waste it watching television or blindly searching social media.
Earning extra money is especially important when you are young, before you start a family or take on a more demanding job. One day, you will not have as much time on your hands, so use what you have now to pay off your loan fast and get out of debt.
3) Use Windfalls Wisely
A windfall is any money that you were not expecting. It could be anything from a bonus at work to a surprise tax refund that you were not counting on. Since you were not expecting this money, you would not have planned on a way to spend it. Resist the urge to blow this cash and instead use it to pay down your debt.
Paying down debt is not as fun as treating yourself to a new purse or a big screen TV, but it is certainly smart. You will have time to reward yourself in the future when you are not wasting interest money on loan debt.
4) Trim Your Budget
Every dollar that you save is a dollar that you can use to pay down your loan debt. Take a look at your budget and see where you can save. Get creative if necessary.
One of the first places that you should look is your food budget. Cut out restaurant and fast food meals in favor of eating at home and bringing your lunch to work. You can save hundreds of dollars month after month, and you might even get a little healthier.
Another way to save on food is by meal planning. It allows you to cut down on food waste by planning your meals and buying just what you need.
Your food budget is the easiest place to save, but there are dozens of ways that you can trim your budget to free up money for your loan. Shop for better car insurance, put your gym membership on hold or cancel your cable subscription. Look closely at your budget, the savings are there.
5) Refinance Your Loan
If you have had your loan for some time, and have been making your payments in a timely manner, your credit may have improved. Take advantage of your higher credit score to cut the interest rate on your loan. The less interest you pay, the more you can devote to principal.
Even if your credit rating has not improved much, you might be able to benefit from a shorter loan term. Shorter term loans carry lower interest rates and with the money you have already paid, a short term loan will probably have a similar loan payment.
When refinancing, be sure to take any loan fees into consideration. They could reduce or even negate the savings that you get from refinancing.
6) Pay Bi-Weekly
If you are like most people, you get paid every two weeks but only make your loan payment once a month. Cut your payment in half and then make it every two weeks. This will result in you making one full additional payment each year.
Want to pay back your loan even faster, pay more than half of your payment each time. If your monthly payment is 600 dollars, half would be 300 dollars. Pay 320 dollars and reduce your debt by over 500 more dollars a year. You would barely notice the extra twenty, until the end of the year that is.
7) Have A Goal
Paying off your loans early is a hard thing to do. It will require sacrifice and hard work, so you should have a reward in mind. What will you do with all of the money that you were paying towards your loan principal and interest?
Do you want to buy a house, start planning for retirement or just take a well deserved vacation? Have a well defined goal and then chart your loan payoff progress so that you can see yourself getting closer.