Saving money is difficult, especially if you have additional loans you’re chipping away at. Retirement, family, education, vacation – we have so many things in life that we save for that it makes it difficult to use what you have to enjoy life right now.
That is why many turn to installment loans. Because you can access installment loans online, it’s easier than ever to access quick cash whenever you need it. Unfortunately, if not done carefully, using these loans can lead you down a slippery slope of debt.
If you’re desperate for cash and need something quick, installment loans are an excellent option for those emergencies. With companies like Personal Money Network’s installment loans online, they make it easier and more affordable to utilize this service. However, there is always the chance that more loans can quickly drown someone in debt.
As with every loan, you need to pay it back in full. The longer you take, though, the more you end up paying in interest. If you have multiple loans and not a lot of money coming in, it makes it challenging to pay them off in the least amount of time possible.
With a bit of planning and dedication, it is possible. Here are a few strategies that will help you pay off your installment loans to balance your finances.
First, Learn About Your Money
Before diving into anything, you need to have some money skills. Without them, what’s stopping you from falling back into the same situation?
Everyone can benefit from having money skills like budgeting, building credit, investing, and balancing your checking account. Take a bit of time learning the ropes of some of these skills. Read through some of the best finance blogs out there to get started. Then, you can move forward in tackling any debt to help reach financial freedom.
Set Up a Detailed Budget
Even the most basic budget is better than having nothing because your budget provides a snapshot of your financial situation[Kailey Th1] . It will tell you how much you spend each month, what you spend on, and how much income you bring in.
Not only that, but your budget is also an excellent tool to keep you on track for paying off your installment loans, or any loan for that matter. If you’re tracking what you spend each day and have detailed categories for everything, you’ll be able to prioritize your spending so you can put more money towards the loans.
Start an Emergency Fund
Think about how you got into the situation of needing additional loans to make ends meet. If it was careless spending, that could get adjusted with your budget. However, if it was due to circumstances beyond your control, having an emergency fund could cover some of the unexpected costs.
Recent surveys found that about 41 percent of Americans could handle an unexpected bill of $1,000. Except the problem is that the average emergency bill is well over $1,000. That is when families turn to credit cards, loans, or borrowing from someone else.
Having an emergency find could make any unexpected bill more manageable and take away the additional stress of the situation. Start with setting aside a small percentage of each paycheque and add more as you become more financially stable.
Set Yourself a Goal
Goals are an excellent way to keep you on track and to stay motivated throughout the journey. The downside of goals, however, is we often set unrealistic ones about our finances. You want your plan to set you up for success, not control your life and end up causing disappointment.
When creating goals for paying off your installment loans, set a realistic timeframe. If it’s a small loan, maybe it’s possible to pay it off in a couple of weeks. For larger loans, it may take a bit longer. Either way, though, that goal of paying your loan off within a specific timeframe is more likely to keep you motivated.
Stay Within Your Means
If you’re paying off loans, your spending should reflect that. That means cutting out the frivolous expenses you may do if you have a few extra bucks in your pocket (and your budget will help with that).
Think about it from this perspective: spending two dollars twice a week on coffee doesn’t seem like much at the start, except it adds up quickly. That additional money you’re spending on items that you likely don’t need could get put towards your loan, emergency fund, or maybe an investment.
The point is, take a moment to think about your purchases. Are they a necessity right now, or could you live without it? What is more important – that purchase or getting out of debt?
Pay More Than the Minimum Amount
One of the worst things you can do when paying back a loan is only to pay the minimum amount. Realistically, all you’re doing is paying the interest with only a fraction going towards the principal amount (the original loan). That is how many find themselves drowning in debt. The interest increases the price of the loan.
It’s tempting only to pay the minimum, so you can keep saving. Instead, though, put down more than what it asks. You’ll be able to pay off the loan faster without spending more on the interest. It’s better off long-term.
Don’t Miss a Payment
This is a tough one because if you have a month where funds are tight, holding off on a payment will help. Except it will hurt you more with late fees. You already have to pay more on the interest. Don’t add more to your loan by adding late fees to it.
Many of our points come back to one central theme – your budget. If you set up a detailed budget and follow it, you’ll have a better chance of having the money to make your monthly payments.
Don’t let loans drown you. Taking control of them and being smart with your payment plan will allow you to pay off the loans quickly. The longer you take, the more it will cost.
Remember, installment loans online are a quick and easy way to get cash when you need it the most. Make sure you’re using the money for legitimate reasons because you’ll have to pay it back at some point.
