Debt Repayment

Paying Off Debt:

“Interests on Debt grow without rain” – Yiddish Proverb

Are you swimming in debt? Don’t worry your not alone and we are here to help you pay off your debts.  If you haven’t made a budget yet I would advise visiting our budget page and doing one up as this will help you figure out how much extra money you have to pay off your debt.

Credit Card Debt – If you only have credit card debt look for a no interest credit card. Carry the debt over and pay it off within the year if possible. You really need to tackle this as quick as possible as credit cards usually have a higher interest rate than most loans.

If its a personal loan you can shop around for a lower interest rate, If you can afford to pay off extra this always help minimise the effect of interest.

“Change will not come if we wait for some other person or some other time. We are the ones we’ve been waiting for. We are the change that we seek” – Barak Obama

The problem with debt is you can only pay it off as fast as your income allows so its important you know what debts you have, The amounts you owe, The repayments, The interest rates and the time period you are paying it over.

Draw up a table:

Loan Amount Interest Rate Payments weekly
Credit Card $2000 17% $15
Car Loan $18 000 8% $110
Personal Loan $4000 11% $100
Total $24 000 12% $225

 

Now sometimes with larger amounts of multiple debts its easier to consolidate your debts into one loan at a lower interest rate. This makes it easier for some people to manage as you only have one debt to pay. Always try to make extra or larger repayments to pay it off quicker. I will leave the link for debt consolidation below:

Just remember if you keep using your credit card the balance is only going to get bigger. Are you really happy to pay an extra 17% just to have it now? Try not to over spend. To find out ways on how to save money and trim the fat visit our savings page.

Now if debt consolidation is not for you we need to create a strategy and stick to it. Now there is to ways to pay off your debt there is the snowball method or paying off the highest interest loan first. I will go through both with you.

With the snowball method you make your regular weekly repayments to your loans but you also make larger repayments to your smallest loan. You try to pay this one off the fastest. Once you have finished paying off this debt you have had your first small victory, You should be proud. Close this account and now take the money you were using to pay this debt off and focus it on your next smallest debt and continue. This creates a snowball effect and smashes your debt down whilst making you feel like you have achieved something along the way as you slowly close down accounts.

Next is paying the highest interest rate loan first. You are still going to make your regular weekly repayments but instead of focusing on your smallest debt  you will be focusing on your loan with the highest interest rate and making larger repayments to this loan as it will cost you the most over the long run. Once this loan is repaid you cancel the account and focus the money on your next highest interest rate loan. What ever method you choose, Create a plan, Stick to it and be motivated.

“You’re life does not get better by chance, It gets better by change” Jim Rohn

If you want to find a lower interest rate loan I will post the link below: