Every working citizen
looks forward to the day when they don’t have to engage in laborious and
time-consuming work in order to live a stress-free life without any debt. The
road to financial freedom is long and arduous, paved with challenges,
difficulties, and some setbacks. But know that you can shorten this journey and
that power to do it rests in you. Here are some strategies that you can use in
order to manage your loan repayments without getting a big headache:
Owing too much and with too many lenders means varied interest rates, fees, and
charges. This has the capacity to affect your ability to pay your debt.
Consider combining all your debt into a single account. A trustworthy
company like Barron Advisors says that consolidating all your debt with one
interest rate and a fixed repayment schedule is a smart move. You’ll know
exactly how much you need to pay monthly until you are debt free. Be sure to
read the fine print, so you can gauge if the monthly payment is something that
you can really handle within your budget.
If you have a good payment history, you can typically ask your credit card
issuer to give you some allowances. You can sometimes negotiate for a lower
interest rate so that the debt doesn’t pile up. If you are saddled with a lot
of credit card debt, check with your card issuers to see if they will offer a
reduced rate to help pay off your balance.
If your old credit card company refuses to accommodate you, find another lender. Sometimes, the opportunities are literally sitting in your mailbox in the form of pre-approved 0% APR cards. Baron Advisor recommend that availing of credit card balance transfers with no penalties and zero percent interest buys you time and it means you save a lot of money that can be used to pay off that loan.
Just remember when the 0% APR ends and know what rate it will be after. You don’t want to be caught be off guard when you get hit by a high interest rate. You should also keep in mind that balance transfers can negatively affect your credit score, so this option should be used sparingly.
Cut the Cards
Eradicating debt starts with the source. Cut variable spending and take away the temptation by keeping your collection of credit cards to the bare minimum. Doing so limits your potential future debt. It will stop you from going on a spending spree, which will only serve to rack up more debt by compounding your interest. On top of that, sticking to one card allows you to keep track of all your purchases to ensure you don’t go over your spending limit. Sticking to a budget, planning, and managing your resources properly are the most important considerations for getting out of debt.
Refinance Your Loans
Depending on your current circumstances, refinancing your home or student loan might be a consideration for you. You may be able to consolidate personal debt and join them together with your home loan. At times, you can even use the equity earned from your home for a major purchase. Refinancing to a significantly lower interest rate is also tempting, but before you take the plunge, be sure to assess the other incidental fees like entry and exit fees, account keeping, valuation and legal fees. You have to factor the lump sum of these items and compare if refinancing is indeed cheaper.
Pay the Principal
Paying more than the minimum monthly payment dramatically reduces the total accrual of interest on your loan. Making extra payments using your tax refunds and bonuses goes directly toward the principal, and results in lowering the amount you are paying interest on. This translates to more money in your pocket. On top of that, doing this also shortens the time span of your loan. Adding a few extra dollars every month to your principal payment and consolidating your debt through a trusted lender, like Barron Advisors, can both result in faster debt repayment.
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