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Wednesday, December 2, 2015

Small steps can have a big impact on removing debt

personal debt management
"Snowballing" pays high rate balances off first to reduce cost of debt
By Andrew Reilly

When it comes to getting out of debt or paying off loans, it is easy to see why much of the focus falls on big gestures and taking massive strides to getting out of debt. Considering the levels of debt that some people have, there may be a need to take action quickly and in an effective manner. However, it is best to take positive steps than no steps at all, and if you are able to make small improvements every month, over time, you will find that your finances improve. If you are not in a position where you can drastically reduce your debt, make sure that you are at least taking steps to lower your debt.

If you are struggling to make your monthly payment as it is, you may find the idea of making a payment every two weeks to be a silly idea, but there a number of benefits to be gained from making a payment every fortnight. With the vast majority of loan providers offering online accounts and the chance to pay online, you can do so with ease from the comfort of your own home.

One of the key benefits from making payments in this manner comes with the fact that you will accumulate less interest. This has to be seen as a positive thing as anything which lowers the amount of money that you eventually have to pay is of good news. Another benefit comes with the fact that if you manage to maintain this habit over the course of a year, you will make an additional payment, which will help you to pay off your debt quickly. Even if you are only able to do this a few months a year, it will provide you with an opportunity to move forward and lower your debt.

It is important to check with your lender that you are in a position to do this and that there will be no punishment from paying your loan off early. In the modern climate, most loan providers are happy to encourage paying a loan off early but always make sure that you are in a position to do so. There is no point in working hard to pay a loan off early if you are going to be punished for doing so.

Another simple way to have a positive impact on your loan is to round up the payments

If you have an automatic payment set for a certain amount, why don’t you just round it up. Even if you are moving a payment from £174.00 up to £200 a month, it will have a positive impact on the amount of money that you have to pay off. No matter what type of loan that you have, if you focus your energy and cash on paying the loan off, you will find that you receive the benefits in the short and long term.

Of course, there will be people who tell you that the most effective way to get out of debt is to earn more money and then use this cash to make additional payments to your loan provider. This makes sense, and although it is sometimes easier said than done, it is definitely something that you should be looking into. Whether you are interested in getting a part-time job or you sell some of your old items on eBay or through MusicMagpie, if you can bring in additional funds you will find that it is much easier to pay off any debts or existing loans that you have.

It can be all too easy to let debt spiral out of control and you will find that some people decide to bury their head in the sand when it comes to their finances. This isn’t a sensible move and there will always be support and help available for people looking to get out of debt. There is also an option to take out a guarantor loan and work towards debt consolidation. This is an option that many people across the country are calling on, and if you want to make positive steps towards improving your finances, this is definitely going to be the way that works for you.

About the author: Andrew Reilly is a freelance writer with a focus on news stories and consumer interest articles. He has been writing professionally for 9 years but has been writing for as long as he can care to remember. When Andrew isn't sat behind a laptop or researching a story, he will be found watching a gig or a game of football.

Image: Images Money/Flickr; "Wipe Our Debt"; CC BY-SA 2.0