At some point in life, everyone needed to borrow to tide them over time, for instance, school. Loans are a normal part of life, and this is especially true for student loans and mortgage loans. Now, a loan can get you out of a sticky situation, and at the same time plunge, you head first into quicksand.
That said, the secret to getting loans is the necessity. In other words, understand when you need a loan and when you can do without one. Ask yourself questions like, how dire is your situation, what’s your plan for paying back the loan? Is getting a loan the only way out?
Even as you bask in the ease of solving financial situations through loans, keep in mind that a loan is a bad idea if you don’t have a plan to pay it back within the stipulated time.
Therefore, let’s look at tips to help you pay your loans.
1. Set up a budget
A budget doesn’t sound like a very appealing idea to most people because it means doing away with luxuries. However, a budget is your best bet at paying your loans within the time allocated.
A budget helps you track your expenses. Drawing up a budget helps you set aside money towards your loan payments. The catch here is, you have to be realistic with your budget.
2. Work out a payment plan
A debt payment plan is a great place to start when you need to clear your loans on time. If you find yourself paying off two or more loans at the same time, a payment plan will come in handy.
It helps you first of all figure your finances. Second and most importantly, you can prioritize
loan payments depending on each of their timelines and interest rates.
3. Income-based repayment plan and Pay As You Earn
An income-based repayment plan is perhaps the most pragmatic way to ease loan repayment stress; but first, you need to apply for the program. It is an annual program that derives your monthly payment towards loans from your income and the size of your family.
Since the income-based program is mostly applicable to student loans, the Pay As You Earn plan caters for other types of credit. Simply put, apply for a program that helps you make on-time payments based on your overall income.
4. Find extra money
Now, this sounds easy to say and very hard to accomplish, but it is possible. If you can pull this off, you’re well on your way to being debt-free. How do you find extra money? Extra money is not so forthcoming especially since there is no time left for a part-time job after a hard day at work.
However, have you thought that you might be sitting on cash that could help pay your loans? Look around your house and sort through what is essential and what you can do without at the moment.
You’ll be surprised how much you can make by selling those items and putting the money towards your loan payment.
On that note, you could open an e commerce, which will mean that you can ease payment for clients by using reliable high risk payment processors.
5. Loan forgiveness programs
Yes, these are a real thing where you can get pardoned and forget about your loan. Don’t overlook anything. The loan forgiveness programs mostly benefit teachers, non-profit and government workers.
It never hurts to try, therefore, check whether there are loan forgiveness programs that you can apply for at your current job.
Don’t give loans the power to cripple you, be smart about it and find every loophole you can exploit. The tips above barely scrape the surface as there are many other tips to help you pay your loans.
Locate the ones that best work for your situation and be a step closer to embracing freedom from debt.