Over the last twenty years or so, debt has become a big part of all of our lives. That it has isn’t really the fault of any individual person. We live in a system where debt is encouraged. Without debt, banking and finance as we know it, could not survive.
But there are costs to this ever-expanding level of debt. Many people are finding it harder and harder to keep up. Some are overwhelmed with bills and can’t make repayments on one-off expenses. What’s worse, stagnant wages mean that people are struggling to keep up with the costs of living. They’re already living on the edge, but when a large bill comes along, that can be enough to tip them over.
Ignoring debt simply isn’t an option. The problem will continue to grow until it is unmanageable. That’s why it’s worth investigating the ways that you can pay off debt faster. Here are some helpful tips.
Sacrifice To Meet Your Goals
Before you even begin to pay off debt faster, you’ll need to make a few sacrifices. Let’s face it, the only way that you’re going to be able to pay down debts is if you change your lifestyle. It’s worth preparing yourself for this eventuality in advance.
You’ll want to cut down on all discretionary expenditure. That means not going for a takeaway on Friday nights like you’re used to. And it means keeping your 15-year-old TV, and not replacing it with a better one until you’re out of debt. The people who pay off their debts don’t immediately get the finer things in life. They don’t have expensive cell phone plans, designer clothes or games consoles. They make do with what they have and only buy the things that they need to survive.
Well, at least in the short term. In the long run, it’s a different story. Once you’ve paid off those debts, you’ll no longer be paying interest, and all your money will be yours. Ultimately, you’ll have more to spend on the things you like.
Make More Than The Minimum Payment
Interest charges can soon rack up and ruin your repayment schedule and current finances. That’s why those who pay off debt faster, pay more than the minimum payment required. Watching the interest on debts accrue is no fun at all. So that should be motivation enough to make you want to pay off the loan faster, whenever you get the chance.
Use Short Term Loans
With finances stretched, there are often good reasons to go into debt. If you need your car for work, but it has broken down, it’s worth going into debt to repair it. The problem, however, is that many people choose to go into debt over the longer term. But unsecured finance facilities, like installment loan lending, should only be used over the short term. Using short-term facilities is a way to incorporate discipline into your loan schedule. The shorter the loans, the more it is incumbent upon you to pay them back quickly.
Start Paying Off Loans Immediately
For many loans, there is a grace period where no repayments are required. Of course, a grace period might sound good, but it means that overall you’ll end up paying a lot more interest.
The solution? Don’t wait for grace periods to end before you start repaying your loans. Instead, start paying off what you owe as soon as you can. This way you are again reducing the overall amount of interest you’ll pay.
Track Your Payments Closely
Finding motivation for paying off debts can be hard. It’s no fun earning money, just to pay somebody else back immediately.
But many people find a sense of satisfaction in watching the amount of money they owe go down each month. If you are one of these people, keep track of your repayments to motivate you to reduce your debts further and faster.
Pay Off High-Rate Loans First
If you’re like most people, you’ll have a whole raft of loans that need to be repaid. These loans, however, differ in the rate of interest they charge. Some loans will mature fast and have a high rate of interest. Others are a lot slower. Pay off high-interest loans first to reduce your overall interest payment.
Set Milestones And Rewards
Finally, set yourself challenges and rewards. For some people, the reward of seeing the amount owed go to zero will be enough. Other people will want to splurge on the things that they want. Give yourself an affordable treat once you’ve reached a significant milestone to stay motivated.