Most people in the US are in some kind of debt. Be it student loans, car loans or other forms of credit, the majority of people will be making repayments at some point in their lives.
If you’re planning on living debt-free, fret not. We will provide you with the simplest and easiest repayment plan to bring you back on your feet.
Save some money
Unless you have extra money on your hand, it would be impossible to pay off a debt. Therefore, the first thing you should do is save some extra money. Don’t splurge for some time and if possible, avoid going out or buying anything new that isn’t needed urgently. This would pinch you hard for a few months but would eventually give you the financial freedom you always wanted.
Started paying more
Now, start making higher payments towards your loans if you can. Though it may seem wise to increase the payments equally, it would be better to adopt either the debt snowball or debt avalanche method. Simply list down all your loans, write down monthly payments, pending loan amount and interest rates. To follow the debt snowball method, use the extra money you saved to pay off the smallest loan first. To follow the debt avalanche method, use the extra money to pay off the loan with the highest interest rate.
Make more payments
You can also start making bi-weekly payments (instead of monthly) to bring down the debt faster. When making an extra payment, make sure that you tell your lender explicitly about using the payment to deduct the principal. It is essential that you pass this instruction to the lender, or your total loan amount will never go down. You may want to call your lender and ask if such a payment can be made.
Earn an extra income
It might not be easy to pay your loans with your existing income. The gig economy opens a world of opportunity for you. Download an app that lets you do small gigs and earn an extra income. Dedicate whatever you earn towards debt repayment and find yourself free from financial worries sooner than expected.
By using the methods listed above, you could make the first steps to being debt-free. However, if you find yourself in need of a small cash boost before payday, then a quick loan could be your best option provided you budget for the repayments.