Advice on How to Pay Off Debt Faster
May 26, 2018
Debt can ruin your life, destroy credit score, and force you to sell your house and worse. But almost everyone at some point in their life will borrow money from an institution or via other channels. Accidents, disasters, and sickness can come unannounced and leave you in a debt trap, this is a reality we cannot escape.
What we can do is make informed decisions and pay off the debt faster. Let’s see how.
- Pay off more than the minimum limit amount
Paying the minimum loan amount is a trap. Banks do not have this option to lend you a helping hand. You will pay an average of 15% APR. Let’s say you have borrowed $10000, with 15% APR and minimum payment amount at 4% it will take you 147 months or 12.3 years to pay off the debt and the total amount you will pay is $14,452.
If possible, make prepayments after confirming your bank does not charge a penalty for that.
- Sell what you won’t need
An average household sits on hundreds of dollars’ worth of things that they never use. Take itinerary, list it at the decreasing order of your need and start selling them off on eBay or other websites dealing in second-hand stuff. Pay off your debt.
- Snowball method
Simply list the debts you have in increasing order. Now make the largest deposit on your smallest loan while you pay the minimum on the bigger ones. Close off your smaller debts and you will have a manageable deficit.
- Apply to a trust fund
If you live in Scotland, you’re in luck. Applying to a trust deed Scotland, a debtor will be granted a trust deed where their estate will be transferred to a neutral trustee to the benefit of the creditors. Many who enter this program are able to keep their assets.