Being broke is a state most people find themselves in at one point or another. Hopefully you visit the land of the cashless infrequently, but once you’re there, you may need to find support in the form of a loan. A few of the most commonly utilized loans are payday loans, short-term loans and cash advances. While these loans can be necessary, it is important you do not sink yourself further in debt by overusing them. Included here are a few ways you can pay back your loans quickly and move yourself out of debt.
Make a Plan
The best way to get yourself out of debt is to acknowledge the problem. Are you consistently overspending each month on entertainment? Always overdrafting that third week of the month? Figure out what your problem area is and make a plan to resolve it. Once you know to make a change, you can plan for how long it will take you to get out of debt and have a goal to work towards.
Pay Monthly Overage
It is no surprise that the biggest money-pit can be found in the compounding interest from a loan. Mortgages, which boast relatively low interest, can more than double their cost over the course of a 30 year mortgage if you pay the minimum payment each month. Short term loans are the same if not even worse. Pay attention to that interest rate, and be aware of how much extra you are wasting paying interest each month.
One of the easiest ways to get rid of your loan is to pay extra on the principal. This means checking your budget and seeing if you have enough to pay double principal or any extra to the loan each month. By committing to the payment as a monthly bill it will be easier to pay it off more quickly.
Add the Extra Pennies
Nearly everyone tends to spend a little money each month on non-necessities. You may have chosen to get a latte, or buy the “fancy” mac’n’cheese or even rent a redbox movie. While it can be very difficult to scrimp and save, when getting out of debt, it is crucial to your success. Take all of your extraneous purchases and use those extra dollars to pay off your debt. Even if it’s just the cost of an extra beer or candy bar, it will help drop the debt you owe.
For those with large amounts of debt, a great option can be debt consolidation. Sometimes those monthly minimum payments can add up to astronomical sums and can overwhelm your budget. Work with a bank or lender to find a debt consolidation program that works for you and you will likely be able to lower your monthly payments and interest rate!