Debt in America hit a whopping $16.9 trillion last year. If you’re looking to get rid of debt, this guide is for you. From making a budget to setting goals, we’ve rounded up everything you need to know about paying off a loan.
Between loan interest and loan payments, it might seem impossible to get rid of debt. Thankfully, there are a few easy-to-follow tips you can follow to start paying off your debt today. Let’s jump in and start lowering your loan payments.
1. Go Through Your Monthly Expenses
One of the fastest ways to get rid of debt starts with going through your monthly expenses. You need to know what payments you have coming out each month. This is the only way to get a clear financial picture.
Start by listing every bill, expense, and debt payment you have. Don’t forget to count your minimum credit card payments as well. Be thorough here to give yourself the best chance of paying off your loan.
Next, list all the income you have coming in. Every job you have or roommate payment, you receive, for example. Finally, separate your expenses into fixed and non-fixed expenses. This gives you a good idea of what you have left each month.
A fixed is one that’s essential. Rent, car payments, and student loans are examples of fixed payments. Music and TV streaming subscriptions are examples of non-fixed expenses that you can cut if you need to.
2. Set a Budget for Paying Off a Loan
Separating your expenses allows you to see where you can make adjustments to a budget. Setting a budget will give you goals to work towards and help you keep your expenses in check. It will also help ensure you pay for all your fixed expenses without missing payments.
Once you see what you have coming in and out each month, take a look at what is left. If you’re negative each month, you’ll want to make adjustments as soon as possible. Using your credit cards to float these expenses puts you in worse financial shape.
If you have room in your budget, this is where you can make the most of your loan payments. Focus on setting a comfortable budget for yourself. The key is to keep it realistic. If you have a surplus of a few hundred dollars each month, for example, use half to pay off your loan and keep the rest as a cushion.
When you set the rest of your budget, keep it real with yourself. If your monthly grocery budget for a family of five is always $600, going down to $100 isn’t realistic. Lowering budgets too much will cause overages and you won’t hit any of your goals.
3. Make Small Goals to Reach Bigger Goals
With a big goal of paying off your loan, use small goals to reach it. Think of the small goals as steps on a ladder. You need to climb each step to reach your final destination.
If your main goal is to pay off a loan, your small goals could be to cut unnecessary expenses or to pick up more shifts at work. Make these even more concrete by putting real numbers in here. You can write down that canceling subscriptions will save you $100 a month and extra shifts equal an extra $300 in income.
Paying off a small loan, a small credit card, or a car, are all examples of small goals that help you reach your big one. The more of these you pay off, the fewer your expenses. This helps reduce loan interest, helps you save more, and puts more money in your pocket.
4. Lower Your Loan Payments
The more you work towards paying off your loan, the lower your loan payment. Make this a priority in your budget. If you have a small loan with a high-interest rate, consider applying for a quick personal loan to pay it off.
Focus on the loans and debts with the lowest amounts. This way you can knock these out and focus on your bigger debts.
5. Make Cuts Where You Can
If you need more money each month to make loan payments, it’s time to make some cuts. Consider eating at home more or running instead of using a gym membership. Look through your budget and see where you have unnecessary expenses.
With everything written out, you may find duplicate expenses as well. Maybe you have two music subscription services or you’re paying for a yoga class you don’t go to.
6. Boost Your Income
One of the fastest ways to pay off your loan is to boost your income. Consider getting a second job or freelancing on projects. If you have extra space, get a roommate and collect rent as income.
Even a small job will add up and make a difference. Speak to your employer as well about a raise if one is due. Now is a great time to advocate for a job well done.
7. Avoid Unnecessary Debt
If you can, avoid any unnecessary debt while you’re paying off a loan. Try and push off major purchases such as a new car as long as you can. Don’t open any new store credit cards.
A small personal loan will actually help you pay off a high-interest credit card and other debt. These easy online loans will lower your debt instead of adding to it.
Apply for a Loan and Learn More About Online Loans Today
Paying off a loan is possible. With these helpful tips, it might even happen sooner than you think. From setting a budget to setting goals, there are a few realistic steps you can take to get yourself out of debt and onto a better financial path.
If you’re interested in getting a quick and easy online loan, fill out the application form here to get more information. You’ll have the cash to consolidate debt or pay for emergencies.