Debt is not fun. Yet, at times it is necessary to take a loan. For example, if you are unable to pay for your tuition. It will mean having student debt. Though it is worth it, it is also essential to have a plan for how you will repay your debts. It will allow you to start making plans for your future life and goals. Here are thirty ways you can get out of debt.
1. Make a list of all debts
If you have taken more than one loan, you should make a list of every one of them. It will help you create a repayment plan. You are more likely to pay back the loan in a shorter time if you organize a strategy for repayment.
2. Avoid taking other loans
Unless it is the only option, you should avoid taking another loan until you pay off the ones you currently have. Taking more loans will only increase the amount of debt you have, thus making it harder to get out of them. Therefore, do not be tempted to take another loan unless it is for an emergency.
3. Generate more income
It is necessary that you find ways to generate more income. Relying on income solely from your salary might be difficult. With more income, you will find it easier to split your money between paying debts and having money for upkeep.
4. Pay the debt ahead of time
One thing people fail to understand is that the longer you take to pay your debt, the more money you will pay. It is because known, interest on debts are charged annually. Therefore, it is better to pay back your debt before time as you will end up paying less compared to taking a long time.
5. Pay more than the minimum monthly payment
If you are supposed to make a minimum monthly payment of $300 but instead you pay $400 you can end up whittling down on the debt faster. Also, less money will go towards paying the interest on the loan. Thus you can save money for other things. For this reason, if you have any extra cash you should request your lender to indicate it as an additional payment.
6. Refinance that loan
Refinancing means taking a new loan to clear an existing one that has a higher interest rate. With a lower interest rate, you can focus on reducing the principal thus you will take a shorter time repaying. However, make sure to research carefully before making this decision.
7. Loan forgiveness programs
Finding a loan forgiveness program is crucial. Luckily, there are various ways of getting forgiveness on your debt. First, there is the Public Service Loan Forgiveness which covers those who take up jobs with the government. To qualify, you will have to prove that you work with the government and then make 120 monthly payments towards the loan. Other loan forgiveness programs include student loan forgiveness for teachers and nurses.
8. Automate your loans
You can automate your loan repayment by getting into an agreement with the bank. The bank will automatically deduct an agreed amount of money on a given day every month. It is a great plan that will see to it that you pay your loan faster. Also, this system makes sure that you will not miss any payments, which would otherwise attract penalties. If you get into this agreement, your lender might be willing to reduce the interest rate.
Making a budget is one of the best money-saving practices which will allow you to settle your debt within a shorter time. It is crucial that you spend within your means. If you stick to your budget, you can end up saving money which you can use for the repayment of the debts.
10. Seek employer-student loan benefit programs
Do not shy away from inquiring whether there are student loan benefit programs at your place of work. Some companies provide this incentive to their employees. Such programs aim at helping employees reduce their debts.
11. Make bi-weekly payments as opposed to monthly payments
Consider making payments bi-weekly. That way, the additional money you pay will help to clear your loan faster.
12. Request to receive loan repayment money instead of gifts
Many people love giving gifts on special days such as birthdays, Thanksgiving and Christmas. Instead of receiving expensive gifts from them, you should request that they give money so that you can pay off your debts.
13. Enjoy the benefits of tax deduction
Tax deductions and refunds come yearly. If you plan correctly, you can use that money to make more than your minimum payment for that month. That way, you can finish up making loan repayments faster. It is a better way to spend it than going for a vacation or buying new technology devices.
14. Prioritize your life
Before you go impulse buying or on vacation, ask yourself if it is essential. Would you not instead put that money into bigger priorities such as paying back your debts? If your priorities are in order, you are most likely going to deal with matters of more importance first.
15. Have debt goals
In whatever you do in life, having goals is very important. It is no different in the case of paying back loans. Settings goals help to give you a push towards ensuring you achieve what you desire. For instance, if you set a goal to clear your debts within five years, you will work harder and find ways through which you can realize that goal.
16. Give priority to high-interest rate loans first
It is better to settle loans that have high interest rates first. It is because these kinds of a loan will cost you more if the interest keeps accumulating. Therefore, find a way through which you can begin by clearing loans which have high interest rates first.
17. Save on rent
Rent is one of the most significant expenses you incur monthly. Finding a way to reduce the amount that goes into rent every month is crucial. For instance, you can move in with your parents, move into a smaller house or put up with a friend. The money that you save can help you to make faster repayments on your debt.
18. Stop using credit cards
As much as they can be helpful, credit cards can also be misleading. When you use your credit cards, you will not feel the impact at that time. By the time the month comes to an end, you find yourself in more debt. Instead of using credit cards, consider making payments with cash.
19. Put your skills and talent to work
Skills and talents are an excellent way to earn extra money. The money you earn from taking advantage of their skills can be beneficial towards repayments of loans. You can dedicate that money towards making additional monthly payments. Take on side gigs like babysitting, dog walking, or helping out for some extra cash. Do enough, and it will add up to be a significant income.
20. Sell items which you do not need
If there are things which you own but do not need, it will be wise to sell them. When you sell them, you can earn some extra money. That money should be put either towards repayment of the loan or at least your upkeep as you repay the loan. The good thing is that selling items has been made easier through platforms such as eBay, Facebook, and Amazon.
21. Be creative
Creativity can help you in more many ways. If you are creative, you can find ways of saving money, earning extra money or means to make more payments towards the loan. For instance, instead of meeting up with your friends for lunch at an expensive restaurant, consider inviting them over to your place and making a meal for them.
22. Use windfall money towards loan repayment
If you get a raise at your place of work, or a bonus or commission which you did not expect, do not go on a shopping spree. Windfall money should be used creatively towards the repayments of your student’s loan. That way, you can finish making repayments faster than when you anticipated.
23. Put a pause on investment and setting up retirement benefits
As much as these two are very important, you should consider setting them aside as you repay your debts. The goal is to finish getting out of the debt as early as you can. Otherwise, the interest you pay will keep growing, and you will end up paying more. By using the money to repay debts instead, you will get out of debt faster.
24. Request your bank or lender for a lower interest rate
What most people do not know is that banks can agree to lower your interest rate. If you ask them and show that you are not making enough money, they might empathize with your situation and reduce the interest rate.
25. Make gifts instead of buying them
Instead of putting a lot of money into purchasing gifts for your loved ones, you can make them a gift. Just be creative and think of something that they would appreciate. Use the money you save to repay your debts.
26. Join conversations with other people who are repaying loans
Learn from the experiences of people who have repaid their debts. People who have been in your situation and solved it can help by giving advice that you might not have considered.
27. Learn more about how to make more money
There are many ways through which you can earn extra money. They include doing surveys, freelance writing, taking a part-time job among many others. It might be hard choosing one job out of the many. However, if you find something that you are passionate about, you can earn more money which can be helpful for your loan repayments.
28. Try bargaining
Another way that can assist you to save money is by bargaining. The money that you will save can be beneficial in paying for some of your bills. Remember, you don’t get what you don’t ask for.
29. Keep up with payments
List your payments and cross out the ones you have paid. Tracking payments will ensure that you do not forget to make payment on one loan as it can lead to penalties against you.
30. Research and read books on loans and finance
Knowledge is power. Acquiring as much knowledge as you can on loan repayment can help you complete repayment of debts faster. Be actively involved as much as you can on gaining knowledge on loans repayment. It will help you make sound financial decisions in the future.
To conclude, finding techniques which will help you get out of debt within a shorter time is vital. They center on helping you save money, make more money, and follow best practices that will allow you to repay your debts.