February 4, 2020
Smart tips to clear an existing loan
Debt can creep up on everybody in some shape or size, whether it’s an outstanding mortgage balance on a loan, paying off credit card debt, an outstanding student loan or you are just about to obtain your first mortgage.
This can cause a lot of stress, so we have put together 5 tips to save money and reduce debt along with some tips by John Lowe the money doctor.
1. Track your bills
Analyse your current bills for the year, are all of them necessary? Of course, rent, electricity and Netflix (for some) are bills you need to pay, but what about any additional subscriptions like YouTube, dating apps, Spotify etc. Do you need to subscribe to them all?
Once you analyse your current bills, plan and keep a designated monthly budget for these bills, that way you have them covered for the next 12 months.
2. Check your bank charges
It commonly goes unnoticed how much the banks overcharge us with fees. Always remember how much you are being charged and compare it to other financial institutions, the money doctor John Lowe recommends operating with online bank accounts due to better deals, however our best recommendation is to join the Credit Union, we have no banking fees!
3. Save for a rainy day
Money can be kept aside for various things, for example an emergency fund in case your car breaks down or in extreme cases you lose your job, an emergency fund can support you until you bounce back. Saving doesn’t just have to be for emergencies, you can have a special fund to treat yourself after a solid month of cutting down on leisure spending.
4. Check your loan interest rates
Some people invest a lot of time on getting approved for a loan, but have you thought about the long term effects? This is most common when applying for a mortgage, what might look like an attractive rate at the beginning of the mortgage, could be very unattractive at the end, particularly with a variable rate. This is also common in PCP finance, people are roped into 0% finance car deals and are left with the famous balloon payment at the end.
Moral of the story: always check the fine print before you follow through with a loan or check with your existing loan, you might be able to find a better interest rate and switch to another financial institution.
5. Debt Consolidation Loan
If you have numerous outstanding loans, credit card debts, an outstanding mortgage etc. you might be able to merge them all into one easy manageable loan. You could also pay less and clear your debt faster, however this is not guaranteed!
Talk to us about a debt consolidation loan today!