Four Ways to Get Rid of Debt Faster
Being in some debt isn’t uncommon today. It’s becoming more and more essential to borrow money, whether you’re buying a new car, need a new smartphone, are making improvements to your home or simply want to treat yourself. And, being in some debt isn’t always a bad thing – if you’re able to manage it responsibly and avoid borrowing more than you can afford to pay back, it can improve your credit rating and help you boost your eligibility for a mortgage and other types of credit that you might need in the future. But living with the responsibility of paying off your debts every month can take its toll. The good news is that there are several things that you can do to pay what you owe back faster. These include:
#1. Make Overpayments:
Overpaying your debts whenever you can will help you clear them off faster, along with helping you avoid paying too much interest. When you pay off more than you need to each month, your total debt will naturally reduce faster, shortening your repayment term and reducing the total amount that you repay. This can be done with any type of debt from mortgages to short-term online loans, and the good news is that you only need to overpay when you can afford to. Check out this handy loan overpayment calculator from LoanPig to learn more about how much you could save.
#2. Consolidate Your Debt:
If you can’t afford to pay any extra to your current debts, then a debt consolidation loan could be a great way to not only clear off your debts faster, but also pay less in the meantime. If you have several smaller lines of credit that you are repaying individually each month, you can use a consolidation loan to pay them all off in full, leaving you with just one monthly repayment to make to the consolidation loan, which you can set to have a shorter repayment term than your original debts if you like.
#3. Try the Snowball Method:
If you’ve got some spare money that you can use to repay your debts but not enough to overpay all of them, then the snowball method could be an ideal option for you. Firstly, list everything that you owe in order of smallest to largest and put all your excess funds towards the smallest balance, whilst keeping up with the minimum payments on the others. Once you have repaid the smallest balance, you will have the extra money that you’d usually pay this with to put towards the next one up. Over time, your small debts will disappear one by one, leaving you with more money to pay towards your larger debts.
#4. Tighten Your Budget:
Finally, if you’re struggling to repay any more to your debts, then it’s worth going over your budget to see where you could be saving money to put towards making additional payments. Find ways where you can tighten your purse strings, whether it’s downgrading your cell phone contract, switching utilities, shopping at a cheaper grocery store, or cancelling any subscriptions that you don’t need.
Did you find these ideas helpful for repaying your debts faster? We’d love to hear from you in the comments.