A loan is something that you will have to manage well. Even if your debt levels are low, you still have to make sure payments are made to prevent loans from getting out of control. Whether it be a big or small amount, it’s important that you always try to reduce loan debts. That said, here are ways you can reduce your loan debts faster:
1. Increase Monthly Payments
The rule of thumb for loans is not to pay the minimum amount of payment for your debt. This will only make it longer for you to pay off your loan. Moreover, if you only pay the minimum amount, especially for credit cards, you will be charged interest rates for the remaining amount on a compounding basis. Aside from increasing monthly payments, another option is to look for loans with lower interest rates. For instance, the Nation 21 Loans website can help you avail of quick cash loans with lower interest rates in times of emergencies.
So, if you want to reduce your loan debts faster, make bigger payments on a monthly basis. Don’t just stick to the minimum amount due.
2. Get a Side Hustle
Another way to reduce your loan debts is to earn money by getting side hustles. There are a lot of ways that you can get a side job. In the same way, there are also a lot of side jobs available that you can choose from. If you still have some free time, be productive with it by getting a side job to earn you extra income to pay off your debts faster. Here are just some suggestions for side jobs:
Being a virtual assistant
Writing content as a freelancer
Walking the dog of your neighbor
Babysitting your neighbor’s kid
Answering surveys online
Designing brochures, posters, and logos online
Teaching another language
Selling your handcrafted goods
Starting a side business selling baked goods
3. Reduce Your Expenses
If you are struggling to make ends meet, it will be useful if you can cut your expenses to improve your personal finances. Try to look for cheaper alternative modes of transport such as the bus, or walking more. Another way to save money is to lessen eating out in a restaurant since food in restaurants are priced much higher. Instead, you can try to buy ingredients from the market and cook at home for your meals.
4. Ask the Lender for Lower Interest Rates
Sometimes, it’s the high interest rates that make your loans pile up. In some situations, if you ask your lender to lower the interest rates, they might just agree. Having a good payment history will help a lot when you try to negotiate for lower interest rates. Usually, the bank prefers that you be able to pay principal payments and will typically agree to lower interest rates if you have a good track record with payments.
5. Use Your Life Insurance Policy
If you have a life insurance policy, you can cash out from this fund and use it to pay for your debt. However, before you do this, be sure to read your policy well. Know what the effect is when you try to withdraw some funds from your life insurance policy. The major effect that it will most probably have is lower benefits for your beneficiaries when they try to claim the life insurance.
6. Focus on One Debt to Pay off
If you have several loans, you must first list all of them down. After that, focus on paying one loan at a time. Try to get rid of the loans with higher interest rates first to prevent these from piling up. Another strategy is to pay off loans with the smallest balances first to scratch that loan off your list.
7. Combine Debt
Another strategy to avoid debt with higher interest rates is to use the balance transfer option on your credit card. Check which loans have the highest interest rates, then transfer the balances of loans with the highest interest rates to a card with lower interest rates.
This will save you a lot of money from paying interest rates, and it will allow you to use that money to pay for principal repayments instead to reduce your loan. In addition to that, when you consolidate your debt, it will be easier for you to monitor your debt and make timely payments on your loans.
Little debts can start piling up pretty fast, so it’s important to manage your debt well before that even happens. You can do this by following the suggestions above to be able to reduce your debt faster.