Ways to pay off any loan faster

Last week, I shared that even though debt is not a bad thing, living with it can be expensive and stressful.

The majority of us spend more than we earn every month so having debt is a way of life hence it’s easy to see how many people are struggling with debt.

Therefore, it is very important to keep track of your debt to ensure that it doesn’t get out of hand for you. But managing your debt is not enough if you want to be financially independent, you have to pay off your debt faster.

You might ask yourself, why should I pay off my debt faster than it is required? Paying off your debt will put you in a strong financial position since the money that you have been paying towards your debt becomes available for you to use for other stuff.

Also, I shared that it has been proved by many prominent psychologists that eliminating debt can be rewarding and reduce stress which leads to living a happy life. You can’t put a price on happiness; it’s priceless so why not pay off your debt faster? But again you might ask yourself how can I do that?

I shared two tips last week on how to pay your debt faster: by submitting your loan payments twice in a month (bi-weekly) instead of once per month which will make you accumulate fewer interest charges hence reducing your loan amount, and by making one extra payment whenever you can (preferably once per year) when you have extra money unexpectedly. This week, I will share one more tip on how to pay off your debt faster.

Refinance your loan

There are plenty of times when refinancing a loan would be a smart move. Refinancing your loan either by getting a better deal from your current lender or switching your loan to a new lender is one of the easiest ways to lower your payment, save interest and pay off your loan faster.

This process involves taking out a new loan and using the proceeds to pay off your old loan. Before choosing this option, make sure that your current lender or new lender does not charge you extra fees for refinancing your loan. Then, you’ll need to shop around to find the best lender to refinance your old loan.

Remember to compare loan rates, loan lengths and any applicable fees to ensure it is beneficial to you. You can refinance your loan to reduce your loan tenure hence reducing your monthly repayments which will result in paying your debt faster.

In conclusion, we have seen that paying down your debt faster feels good and there are lots of benefits.

The main one is less stress and less risk because you won’t be a slave to the lender anymore. Debts are good if used wisely so I recommend you look at all the options carefully before taking any debt to ensure you don’t spend more than you need to on interest or take longer to pay off your debt than you perhaps need to.

Furthermore, before deciding to pay off a loan, always remember to make sure you have enough money saved for emergencies.

Three to six months of your monthly expenses should be ideal as your emergency fund. This would cover you and help you float in the event of losing your job or becoming ill or any number of other emergencies. Lastly, no matter what type of debt you have, it’s important to know that there is always a way to pay off your debt.

The tips that I shared for the last two weeks will help you pay off your debt faster and put you in a path of becoming financially independent.