Finding techniques that will help you get out of debt faster is vital. They center on helping you save money, make more money, and make faster loan repayments.
Heads up: This article was commissioned as a part of the Adam Rush Project. It was an experiment I did a few years ago to see if having books written by ghostwriters would be commercially viable. It wasn't. That said, the following article was written by someone else and not yet edited to my standards. I hope to find time to rewrite it myself in the future, but for now, read with caution.
Having debt is frustrating. However, loans are sometimes a necessary evil. For example, taking on debt to go to college may be worth taking on debt for a few years. Though many times it is worth it to take on debt, it is also essential to have a plan for repaying it. Having a clear plan will allow you to move on with your life and goals instead of constantly worrying about your debt.
1. Make a list of all your debts
If you have taken more than one loan, make a list of all of them. It will help you create a repayment plan. You are more likely to complete paying back your debts in a shorter time if you are strategic about how you will do it.
2. Avoid taking new loans
Unless it is the only option, you should avoid taking another loan before you complete paying your current ones. Taking more loans will only increase the amount of debt you have, thus making it harder to get out of them. Therefore, do not be tempted to take another loan unless it is for an emergency.
3. Make more money at your job
It may be necessary for you to find ways to generate more income. Relying on income solely from your current salary might be hard as you probably have other bills to pay. You will find it easier to split your money between paying debts and paying your other bills if you have more income. Ask for a promotion at your job or see if you can work overtime.
4. Pay off the debt ahead of time
One thing many people don’t realize is that the longer you take to pay your debt, the more money you will pay in interest. Therefore, if you are in the fortunate position where you can pay back your debt early, you will end up paying less overall. One way to whittle down on your debt is to pay more than the amount due each month.
5. Refinance your loan
Refinancing means taking a new loan that has a lower interest rate to pay off an old loan that has a higher interest rate. With a lower interest rate, you can pay less interest with each payment.
6. Loan forgiveness programs
It’s worthwhile to see if you qualify for any loan forgiveness programs. Public Service Loan Forgiveness covers those who take up jobs with the government or non-profit organizations. You can find others by searching online for “loan forgiveness programs.”
7. Automate your loan payments
You can set up automatic loan payments with your bank. The bank will automatically deduct an agreed amount of money on a given day every month. This will ensure that you do not miss any payments and incur penalties. Furthermore, you may be able to negotiate a lower interest rate with your lender if you agree to enroll in an automatic loan payment program.
8. Budget your money
Making a budget is one of the best money-saving practices you can do. Make a budget, including the amount you intend to set aside for loan payments, and stick with it.
9. Seek employer-student loan benefit programs
Check with your workplace to see if they have any student loan benefit programs. Some of the larger companies provide this incentive to their employees.
10. Make bi-weekly payments instead of monthly payments
Making loan payments bi-weekly instead of monthly can help you pay down your debt faster. If you get paid bi-weekly, it can also make it easier to manage and budget your money.
11. Ask for money instead of gifts
Friends and family often like to give gifts for special occasions such as birthdays, weddings, and holidays. Instead of receiving expensive gifts from them, request that they give you money instead so that you can get closer to paying off your debts.
12. Allocate windfall money to loan repayment
If you get a raise at your workplace, or a bonus or commission which you did not expect, do not go on a shopping spree! Windfall money should be a welcome surprise for paying off your debts earlier than expected. One windfall you can probably expect every year is tax refunds. Instead of using it to splurge on vacations or gadgets, use your tax refund to pay down debt.
13. Prioritize spending
If you want to free yourself from debt, it may be necessary to make some sacrifices for the sake of your future. Prioritize your spending and perhaps cut back on a few nonessential purchases in your life. You are making sacrifices now so you can rest easier in the future.
14. Have debt goals
In whatever you do in life, having goals is very important. It is no different in the case of student loans. Setting goals helps to give you a push towards ensuring you achieve what you desire. For instance, if you set a goal to clear your loan within five years, you will work harder and find ways to realize that goal.
15. Pay off high-interest rate loans first
Pay off the loans with the highest interest rates first. Pay all of your loans on time with the minimum amount necessary to avoid incurring penalties, then pay as much as you can toward the loan with the highest interest rate.
16. Stop using credit cards
As much as they can be helpful, credit cards can also be very misleading. When you use your credit cards, you will not feel the impact at that time. By the time the month comes to an end, you find yourself in more debt. This slows down the rate at which you can clear your other debts. Instead of credit cards, consider making payments using cash.
17. Do a side hustle (or two)
Your skills and talents are a nice way to earn extra money. You can dedicate the money you make on the side towards paying down debts. Some ways to earn extra money on the side include doing surveys, freelance writing, taking a part-time job among many others. Take advantage of professional skills or hobbies to make extra money outside of your job.
18. Do things yourself
You can save a lot of money by doing as much as possible yourself. Instead of paying someone to cook for you at a restaurant, cook for yourself. Instead of paying someone to mow your lawn, mow it yourself. The more things you can do for yourself, the less money you will need to spend. And learning to do things yourself will foster independence, which will help you in the future.
19. Take care of debts before saving money
As much as retirement accounts and investments are important, you should consider putting them on the backburner until you repay your debts. Debt is like a parasite that follows you around and leeches away your money. You will never feel like you can retire until your debts are paid in full.
20. Ask your lender for a lower interest rate
You don’t get what you don’t ask for. There’s no harm in asking. Those are two clichés that are also very true. Banks would rather you pay them less interest than default on your loans.
21. Talk with other people who are repaying loans
This is a wonderful technique. You get to learn from the experiences of people who are repaying loans. Network and get tips on how you can get out of debt faster or how to earn more money for repaying loans.
22. Make a game out of it
This works especially well if you have a spouse or partner who is in debt with you. Keep a list of debts you owe. Keep track of how much debt has been repaid, how much extra money you’re making, and look for ways to save money. Set up ways to reward yourself for reaching milestones.
23. Read books on loans and finance
Knowledge is power. Acquiring as much knowledge as you can on loan repayment can help you repay debts faster. Therefore, be actively involved as much as you can on gaining knowledge on money. That can help you make better financial decisions.
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