Key Tips To Pay Off Your Online Loans Faster

June 16, 2020 By Leave a Comment

Paying for big-ticket items in life, like a house, car, or even school, may require taking out loans. Some people even juggle multiple loan payments at once. Whether it’s from a traditional lender or online, loans can put a significant amount of stress on your finances, not to mention their effect on your mental well-being.

While debts, such as online loans, may be necessary at some point in your life, it’s essential to try and pay them back quickly to ensure that they don’t spiral out of control. Doing so can also help you save on interest charges. Fortunately, there are vital tips that can help anyone pay off their loans faster.

Read on below for the top 12 tips for paying off online loans as quickly as possible and achieve financial nirvana.

  1. Create Your Plan And Budget

Creating a plan and a budget is a vital step to helping you figure out what strategy to employ for paying off your debt, as well as understanding your income and expenses better. As a general rule, it’s best to pay down loans with the highest rates first. Also, once your budget is clear, you can start looking at ways to cut down on your spending and allocate any additional savings to your debts.

  1. Bump Up Your Payments

This process could be as simple as just rounding up your monthly payments. For example, if you owe $355 each month, then, pay $400 instead. Bumping up payments means paying more than the minimum amount of payment your online payday loans or any other types of loans require. It’s extremely beneficial if you want to reduce the time it would take for you to ultimately pay off your debt. Also, if you know that you’re already allocating funds for a larger payment every month, you can budget your money accordingly. Another option is to add an extra $100 to your payment principal.

  1. Add One Extra Payment

An extra monthly payment each year can also help you pay off loans more quickly. For instance, if your monthly payment is $2,000, just pay an extra $2,000 sometime during the year. A tax refund or a monetary bonus from your job can be used for this purpose.

Spreading the extra payment out over the whole year is an alternative you can take. What you can do is to divide your payment each month by twelve and add the resulting amount to each monthly payment (2,000 divided by 12 = 167 + 2,000 = 2,167). Your $2,000 payment will become $2,167 after that. This option is ideal if you’re like most people who find it hard to really come up with the extra monthly payment.

  1. Submit Bi-Weekly Payments Instead Of Monthly

With bi-weekly payments, you’ll end up making an extra payment equivalent to one month each year. Are you wondering how this strategy can help you pay off your loan faster?  Well, what happens is that you’ll be paying half your required payment every other week. Since there are 52 weeks in one year, that means you’ll be making 26 partial payments. Instead of just 12 full payments over the year, it equals out to 13. Without realizing it, you’ve made an extra payment with this simple change.

Some online lenders penalize borrowers for paying off the loan balance early or for making any extra payments, so make sure to discuss your plans with them first.

  1. Use The Snowball Method

This method is an excellent way to pay off several loans over time. Have you never heard of it? It’s time you do.

All you need to do is to list all your loans, from smallest to largest, in terms of balance. Pay extra on one of your loans with the lowest balance, while paying minimum payments on everything else. Next is to move on to the next loan on the list after paying off the smallest one, and, then,  take the full payment you are paying on your lowest loan and add it to whatever amount you’re already spending on the next.

The snowball method is useful when you’re already feeling overwhelmed by debt. You only have to repeat the entire process; before you know it, everything is already paid off.

  1. Lower Your Loan’s Interest Rate

Sometimes, an interest-free credit card could help you pay your entire loan balance and divert your payments to the credit card. You can also talk to the lender about the potential of lowering your interest rate. The less interest you pay, the faster the loan balance will fall since you’ll be paying off more of your actual principal loan amount. However, be careful as these are usually shorter terms.

  1. Automate Payments

If you only rely on yourself to remember paying off your monthly payments on time, it can result in odd penalty fees. Some even get tempted to use the money for other expenses. Consider having your payments automated. By automating your loan repayments, you can’t only avoid impulse spending, but also ensure that the required funds get always allocated to your debt, and nothing is missed.

  1. Live Cheap To Save Money

Try cutting unnecessary costs away by re-evaluating your budget. Consider limiting expensive vacation trips, shopping for clothes online, or eating out in restaurants. Incorporate some changes into your current lifestyle to accumulate some extra funds you can use for paying your loan faster. Also, if you’re currently renting an apartment, consider moving back home and living with your parents until you’re ready to look for an apartment again.

Model your finances after celebrities, like Sara Jessica Parker, who lives a down-to-earth lifestyle. Start living cheaply, and, again, make sure to use the saved money for paying off your online loans and not for any other purposes.

  1. Look For An Extra Job

You could look for another stream of income by pursuing an additional job and using the extra money for paying off your loans. Of course, it will only work if you got some spare time on your hands, which is most likely weekends and evenings. It may not be easy to overcome pride and apply for a job that pays hourly wages, especially if you’re actually further along in life or haven’t had any part-time job for years. However, it’s still an avenue that’s worth pursuing if you have the ability and the time to make it happen.

If you’re a student, you could revisit the idea of working during the weekends as a waitress or doubling as a nanny, while filling your week with a more career-oriented job. It will definitely put you ahead of those loan costs if you’re willing to give up your free time in the short term to pay less loan repayments in the long term.

  1. Sell Unwanted Stuff

Do you have some stuff lying around your home that you rarely use and could actually live without?  They can be a quick way to drum up some funds. Why not sell those extra pieces of clothes or a pair of shoes to help you pay off your debts?  You can consider selling them through social media, like Facebook, one of the online selling platforms out there, or a consignment shop. A good old-fashioned garage sale is also a good idea. It is usually the easiest and cheapest way to unload some of your unwanted belongings for a profit if you’re living in a neighborhood that permits it.

  1. Put Any Extra Money Towards Your Loans

This tip relates to living cheaply, looking for an extra job, and selling anything you don’t need. Make sure that any extra money you’ll get goes to the repayment of your loans. However, there can be other sources for extra money, which could be your tax return refund, lottery winnings, or even an inheritance. Don’t be tempted to put them towards your wants. Put the extra cash towards something that matters to you the most at the moment. For instance, use the newly gained money for your loan payments.

You’ll surely thank yourself later by the time all your loans are paid off, and it’s the perfect time to reward yourself with that wanted item. It’s the most fiscally responsible decision you can make; maybe, not the most glamorous scenario, but something that will definitely save you from the interest costs in the end.

  1. Refinance Your Loan

Consider refinancing if you have a higher loan interest rate than what you could get on a new one. Lowering the interest rate can save you a considerable amount of money throughout the loan. Don’t forget that a substantial amount of your payment goes towards the interest when you first take out a new loan.

To see how much a refinance may save you and if you’re a good candidate, contact your current lender. It’s important to note, however, that many fees may be charged to you for refinancing a loan. Before talking to your lender, try to weigh the fees versus the savings you’ll get when opting for this option. If the former is higher than the latter from a lower interest rate, refinancing isn’t in your best interest.

Conclusion

If you truly want to start paying off your online loans in a quick but efficient way, the tips above will help you set the foundation. Yes, it won’t be easy, but it will surely be worth it in the long run.

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Are You Stuck in the Debt Cycle? Here’s Your Way Out

February 27, 2020 By Leave a Comment

Woman breaking her debt cycle.

Okay, so this article isn’t our usual fare.  We mostly cover celebrity wealth, but we get a lot of people asking about some of the older articles we published on the site – which are mostly about debt – so here goes.

Did you know that the average US citizen has about $38,000 in personal debt, excluding home mortgages? Only 23 percent of Americans can say they carry no debt. Both of these numbers have gotten worse in the last year.

Unfortunately, this results in a debt cycle that has few people staying afloat. 2 in 10 Americans spend 50-100 percent of their monthly income on debt repayment. This leaves little leftover for savings, emergencies, and daily living expenses.

Some age groups, like older millennials (25-34), have even more debt, with numbers rising to $42,000.

Are you stuck in this debilitating cycle? What is a debt cycle exactly, and how can you get out of it?

We’re here to show you there is a light at the end of the tunnel. Keep reading for some strategies on getting out of this vicious cycle.

What Is a Debt Cycle?

Anyone can get caught in a debt cycle—TV celebrities, baby boomers, college graduates, even our nation as a whole. Debt knows no bounds. How does this happen?

Let’s look at an example. Say you’re a recent college graduate with about $30,000 in debt from student loans. To pay off those loans, you borrow more money—increasing your debt.

As your debt rises, it could start to negatively affect your credit rating score. Soon, you owe more money than you’re making- every paycheck goes to paying off that $30,000. But now, your debt has increased with your borrowing, and you owe even more than you initially did.

If you don’t pay attention, your debt gets larger and larger, and you just can’t make enough to pay it off. Your money goes to paying off your debts rather than to your savings account. This is the vicious debt cycle.

How to Get out of Debt

Knowing that debt Is Not A Life Sentence, you can make efforts to get out of the debt and also reclaim your financial freedom.

First, pay more than you ‘have to’, if you can.

Every month, you get a statement that tells you how much you owe. If you keep paying this dollar amount, you’re paying the least amount possible over the most extended term, and paying more interest in the process. If you can afford to pay more than the minimum, you’ll pay it off sooner—with less interest.

Next, lower your spending and increase your earnings.

This is perhaps the most obvious, and yet challenging, thing to do. Take a good hard look at your budget and come up with a viable debt repayment plan you can stick to. Cancel your many TV subscriptions, skip that fancy latte, and perhaps pick up a second (or third) job.

Last, consider consolidating your debt, which can help lower interest rates.

In turn, your money is going to the principle, not the interest. Debt consolidation combines your various debts into one single payment, making it more manageable. This tactic also turns high-interest debts into a low-interest amount you can actually afford—that way, you can pay it off even faster.

Keep Your Money!

Getting caught in the vicious debt cycle is difficult. It can take a toll emotionally, mentally, financially, and otherwise.

But there are ways out—and we hope you can see the other side. But make sure once you’re out of this cycle, you should take measures to avoid falling in the debt cycle again.

If you’re looking at reading more about debt, we recommend these websites:

Our Debt Free Family – A great narrative about one couple working hard to pay off their debts.  Recommended for great examples of paying off large amounts of debt.

Blogging Away Debt – A team website of men and women who are paying off their debts.

 

Filed Under: Debt, Personal Finance Tagged With: , , ,

Tips When Paying Off Your Mortgage Syracuse

February 6, 2020 By Leave a Comment

Buying a home is a substantial investment. The mortgage and accompanying interest rates take a lot out of your monthly budget, so you should first ensure that you can make and complete the payments according to the agreed schedule.

It’s also practical to aim for finishing off your mortgage payments earlier, regardless of whether you’re living in Syracuse, NY, or San Francisco, CA. While this would mean that you’ll have to tighten your belt for a while, you’ll be saving a significant amount on compound interest.

With this in mind, here are some tips that you should consider when paying off your mortgage:

  1. Buy A House Within Your Budget

Websites like empowerfcu.com offer a lot of mortgage options for homebuyers. The company even has a program specially created for first-time purchasers.

Whether you approach a lender directly or work with a broker, the main thing you should remember is to purchase a house that fits your budget and suits your financial considerations. You don’t wish to drown in debt just because you want to have a property with a pool, even if you can’t afford it.

Banks also conduct a background check on your financial situation before they lend you money for the actual transaction. They use information gleaned from their evaluation to give you the amount you qualify for.

Instead of going for the figure recommended by lenders, though, you should arrive at your own estimation and determine a comfortable range that you can manage each month. Most of the time, your calculations would turn out to be much lower than what the bank suggested, and you won’t have to struggle with monthly repayments in the future.

  1. Opt For Bi-Weekly Payments

Paying your mortgage twice a month may help you manage your monthly budget better. For instance, if you have to allocate 2,000 USD each month for the loan, try paying 1,000 USD every two weeks.

While you’re still going to end up paying your full due, you’d have made 13 full-sized payments after 12 months or 52 weeks. Technically, you would have paid for an extra month without much effort. This can also help you save on interest and allow you to complete paying off your mortgage sooner.

If, for some reason, your lender doesn’t allow bi-weekly payments, just make sure to set aside half of the required minimum amount after every payday so that you won’t have to worry when the due date rolls in.

  1. Make Extra Principal Payments If You Can

Some lenders also allow borrowers to send in extra payments that are “principal only.” This means that the additional amount you pay on top of your minimum due will be deducted from the principal.

One of the best ways to pay off your mortgage early is to prioritize your debt. Funnel any extra cash you have from birthday gifts or work bonuses toward paying off your mortgage to hasten the completion of payment. Again, you’ll save money on interest, which your future self will thank you for.

  1. Earn From Your Home

Find online platforms that can help you rent out your home to people on vacation. This tip is particularly useful if you’re living in a city that has a lot of tourist traffic, like Syracuse, NY.

Provide accommodation to travelers for a sum and direct your profit toward your mortgage payment. This additional income stream can help you eliminate your debt in a timely manner while allowing you to save thousands of dollars on interest.

  1. Refinance To A Shorter Mortgage Term

Most lenders offer fixed-rate mortgages, which means that you have to pay a single rate during your mortgage term. This is why you ought to refinance when the interest rates drop.

Observe the market and grab the opportunity if the prices decrease. Opt for a shorter mortgage term so that you can enjoy lower interest rates.

There’s a possibility that you’ll end up making the same monthly repayments, but the duration would be much shorter. If you plan to refinance your mortgage, you should ensure that you make timely payments each month to earn the lender’s trust.

Conclusion

When paying off your mortgage, it’s always better to go for the shortest route so that you can avoid paying hefty interest rates. The first thing you should do when looking for a home is to ensure that its cost fits right into your budget.

Next, pay your debts bi-weekly and direct extra cash into mortgage payments to lower the principal amount as soon as possible. Another way is to rent out your space to tourists and add the income to your payment funds.

Lastly, refinance to a shorter mortgage term once you’re eligible or when the interest rates drop and finish off your loan sooner.

Image source: Shutterstock.

Filed Under: Debt Tagged With: , ,

How To Use The Debt Snowball Method To Pay Off Debt

November 13, 2019 By Leave a Comment

debt

Nearly all Americans have some form of debt. And millions of Americans feel trapped by the amount of debt that they currently have. If this sounds like you, you likely know first-hand how unpleasant and stressful that can be.

But for so many, getting out of debt seems impossible. When debt starts to look like an insurmountable problem, the debt snowball method might be the strategy that empowers you to tackle that mountain of debt.

Many people once suffocated by their debt have found financial freedom by using the debt snowball method. The name comes from how one goes about building a snowman. First you create a tiny snowball and roll it across the yard so that the momentum and speed turn that tiny ball into a boulder of snow large enough to build a snowman. The backbone of the debt snowball is momentum! It ignores interest rates and instead uses your psychological state to push you forward.

The Four Steps of the Debt Snowball Method

·         Step One

Use an Excel spreadsheet, piece of paper, or budgeting app to list all of your debts–except your mortgage. This includes all your credit cards, student loans, tax debt, auto title loans and medical debts. Put them in order of smallest to largest–regardless of the interest rate!

·         Step Two

After determining which debt is the smallest, make only the minimum payment every month for each of your debts except for the smallest. The smallest debt is the one you tackle head on!

·         Step Three

Pay as much money as you can on your smallest debt each and every month. If you find you have extra money at the end of the month, then use that money to pay off that particular debt. Cut down on unnecessary expenses to increase the amount of money you can put towards that smallest debt. Keep doing this until the first debt is paid off completely!

·         Step Four

After you’ve defeated that first debt, roll those payments on over to the next smallest debt and start throwing all your extra money at that one. Having one less minimum payment will enable you to pay extra every month. Additionally, the feeling of accomplishment will likely fuel your motivation to reallocate even more funds to your debt snowball! Repeat this process until each debt is paid in full, going up and up in size.

The key of the debt snowball method is behavior modification and the driving force behind it is hope. Yes, you can make it out of debt! Once you have paid off the first debt, then the second debt and so on and so forth until it’s all gone.

This does not mean the debt snowball method is an easy process, nor does it mean there won’t be lifestyle changes and sacrifices to make. But once you have made your way out of debt, you will be able to breathe easier and have a level of financial freedom that you never deemed possible.

Image source: Mike Lawrence.

Filed Under: Debt Tagged With:
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