The following some of the things you can do to clear your loans faster.
Make the most out of whatever you get
The key to any financial plan, especially if you have a debt you want to clear is to create a budget. It is advisable to allocate 50% of your income to necessary expenses such as housing. You can allocate 30% of your income to wants and 20% to clearing debt and savings.Since your goal is clearing the debt, you can use some of the money you have allocated for wants to make extra loan payments. This way, you can clear your loan faster and save on the interest.
Consolidate your loans
If you are struggling to repay your loans as required, you can consider consolidating them. Debt consolidation involves merging all the loans you have into one loan. You will then make one monthly payment for the loan, and the interest rate will also be lower. You can consolidate credit card debt, student loans and other unsecured loans.
Find ways to earn additional income
Consider finding a side job to help you clear the loan. There are many side jobs that you can do to earn extra income. For instance, if you like writing, you can start an online freelancing job and use your earnings towards paying off the loan. If you like animals, you could offer mobile grooming services. Although the amount you will earn from your side job may not be much, it will definitely add up and can help you clear your loans faster.Align your values and spending
Many people like to maintain the appearance of having it all an end up overspending. Various things can tell you are overspending, including breaking the spending goals that you have set, buying stuff out of boredom and failing to meet your saving goals.
To stop overspending, you can create a reasonable budget and analyze your credit card statements. You should also work towards building new helpful habits such as cooking at home rather than eating out. Apart from downscaling your lifestyle, you should also assess your spending in light of your values. You can do this by creating a list of what you value in life and then list what you spent your money on for a particular duration such as a month. If the lists fail to match, you should try as much as you can to spend money on the things you value.
Try making bi-weekly payments
Try submitting half of your loan payments to the lender every two weeks rather than every month. This way, the less interest will accumulate since you will make payments more often. You will also be in a position to clear your loan faster.You should, however, discuss the decision of clearing your loan on a bi-weekly basis with your lender before you start doing so to avoid being penalized for paying off your loan early or for extra payments. When you make extra payments every month, your credit utilization ratio may also reduce and this can improve your credit rating.
Getting out of debt within a short time is possible if you have a good debt repayment plan. Clearing your loan early will help you save money that you would have spent on interest. It will also help minimize the overall loan term.
Trying the tips mentioned above can help you clear your loan early and be stress-free. After clearing the loans, you can focus on other things such as saving for retirement, investing and doing home improvements among others.
