If we have to mention one thing that keeps you away from saving and getting an upper hand on money management, we would say debts. Paying off debts faster liberates you from the shackles of financial and emotional stress.
Fortunately, you can pay your debts early with some debt education and strategies. Read further to know how you can get debt-free faster.
1. A Little Extra Goes A Long Way
Beefing up the minimum amount you pay each month can help you get rid of your debts quickly. All you need to do is add a little amount to your minimum monthly installments whenever possible.
Make sure you take this route only if you have sufficient money to cover your essential expenses, like rent, food, transportation, etc. Paying extra will also save a good deal of money on interest. Talk to your lender regarding the same and discuss if there are any prepayment penalties.
2. Make Two Payments Instead Of One
A bi-weekly payment plan against a monthly payment schedule is more rewarding than you imagine. It might not help you get rid of your loans quickly, but it will impact the interest you are paying. Additionally, it is more manageable than paying monthly.
3. The Debt Snowball
It is one of the most effective strategies to pay off your debts faster. Under this strategy, you start by paying off your smallest debt first and then ascending to the larger ones.
Start by listing your debts by balance. Pay the minimum on all other loans and the extra amount on your smallest debt. Once you repay it, move to another one on the list.
As you keep going with this list and cutting off the debts, you will have extra funds to add to your payments and get rid of your debts more quickly than you would have anticipated.
4. The Debt Avalanche
Another strategy that can help you get rid of your debts is debt avalanches. It entails paying off your high-interest debts first.
Here too, you start by creating a list of your debts, but in the order of their interest rates. Pick the most expensive debt and add the extra cash to it. Pay the minimum amount on your other debts.
This strategy goes a long way if you want to do away with your bad debts.
5. Check The Lender Payment Programs
If you are lucky enough, your lenders will have a program in place to help you pay your debts more quickly. Check out these programs and find the one that best suits your situation. However, before hopping on this wagon, make sure you know everything about the additional charges.
If you are apprehensive about paying any extra charge, weigh it against the money you will save if you indulge in the payment program. In most cases, paying extra fees to get rid of the debts is always worth it.
Reach out to a credit counseling agency to get the details about these programs.
6. Check Out Debt Relief Options
Debt relief options come to your rescue when you don’t have enough funds to repay your loans. But you can also use them to pay off your debts quickly, for instance, through debt consolidation.
It allows you to consolidate your debts into a single loan and pay it off with one monthly payment. It lowers the interest rate and hence, proves beneficial.
The Bottom Line
Debts are a big burden. The sooner you get rid of them, the better it is. Use these strategies and tips to repay your loans faster and lead a stress-free life.
Furthermore, learn to be smart with your money. Consider enrolling in financial education workshops to develop money management skills.