In 2017, across the world there was a total of forty-four trillion dollars in household debt. With college tuition rising every year and the constant rise in cost of living, it is hard to get away with going your whole life never having some sort of debt.
Any loans big or small can be a huge stressor by causing poor credit and financial discomfort. The longer the debts are piling up, the harder they will become to pay off. That’s why it is best to get started on paying them as soon as possible.
If you are looking for some tips on how to pay off your debts, here are four ways you can start.
- Explore Other Loan Options
Not paying on loans and having high interest rates can snowball your life into the wrong direction. Collections agencies will get ahold of your debt, and it will drastically hurt your credit score. Interest rates can cause you to owe thousands of dollars more than the loan is worth.
One option for paying off these debts sooner is to find a personal loan at a little to none interest rate. Exploring loans from your bank or an online vendor such as Lainaa-Heti can give you the opportunity to get a better loan immediately. While it can be possible to find a bank that will give you a low interest rate with bad credit, it is important to seek out these other loan options before the debt is placed in collections.
There are multiple types of loans for different age groups, amounts, and interest rates and all this is constantly changing. It is important to always keep up with the options because there could be loan opportunities that are more helpful to you than the ones you currently have. There are websites that allow you to compare loans to see how much you will owe all together with the differing interest and payment lengths.
- Pay More
Most of the time it is easy to just set up an auto pay method whether it be a credit card or student loan. This allows the company to just take the minimum payment out of your bank account every month. It may seem helpful because you are not missing payments, but it is also a good way to add up substantial interest.
A better way to start clearing the debt faster is to pay more than your minimum payment. Even if it is just a few dollars more, it will still end up helping to reduce the interest that gets tacked on at the end.
- Pay the Most Important Balances First
If you owe on your house, utilities and student loans but do not have enough money to pay on them all, pay the important ones first. Your student loans are not a factor that will affect your life tremendously if you pay late or gather interest on. However, without a home or running water, you would not be able to make the money to pay off the other debts that you have. Utilities and small debts such as that will also be paid off sooner, which will in turn lead to more money you can put into your bigger loans.
- Make a Budget
There are undoubtedly things that people can live without on a day to day basis. Budgeting can be a very helpful skill if you are seriously trying to pay down your debts. Buying cheaper food, clothes, and only spending money on things you need can save up small amounts here and there. That is all money you can put towards your debts to speed up the road to financial freedom.
As much as you might feel chained down by debt, it is possible to start clearing it sooner than you think. With so many options to save money or pay it down by spreading out the loan with a lower interest rate, it is possible to achieve financial freedom.
