The fact is that, many Australians are inherently sinking in numerous long term debts that live them financially broken. Financial illiteracy often prompts others to continue piling up the debts that include cars, retail accounts and home loans. Some of these debts are not necessary since they are for items that depreciate in value so you cannot map out your future assets on them. Home loan is arguably the best investment since it appreciates in value.
If you find yourself drowning in debts, it is time to devise strategies on how to escape the hook and live a debt free life. To pay off your loan amount in half the time starts with how you manage your debt effectively. It is possible to achieve that when you implement strict money savings tips. We will help you with some tips below on how you can pay off in half the time.
Effective Ways to Settle Loan in Half the Time
Reduce Unnecessary Debts
Say you have a huge debt of a car or home loan that costs $500 000 and you want to pay it in less than 20 years instead of 30 years, but then you do not achieve that because of miscellaneous debts you have aside, isn’t it better to cut off such debts first? Some small debts and retail debts can amount to a huge financial blow to you monthly. It’s possible to pay bond in half the time if you plan well.
Let’s say you close down a retail account that costs $50 a month, you will have saved $600 in a year that you can pay extra to your huge debt. That monthly spending of around $100 on fast foods can also save you a lot of money in a year. So work out on your spending so that you can enough money to save and to pay extra in an attempt to pay off huge debts in half the time.
Learn to save money monthly to negate the need to have minor and numerous loans that will jeopardize your plan to pay huge loans in half the time. Then you will have enough to pay your other debts frequently.
Pay Extra Amount and Frequently
By paying your bond frequently, say weekly or fortnightly instead of monthly, you will be saving thousands of dollars in interest rates on a yearly basis. That will help you to cut the repayment terms by half in an effort to return to a financial freedom or focus on accumulating more assets not other liabilities.
The other option is to pay little extra every month on your bond or other huge debts. You would be surprised with the huge savings you will have on an annual basis as well as the number of repaying the debt. The strategy of paying extra or doubling your principal can be viable in the beginning years to cut the burden in a long term.
In actual sense, the mortgage can also be used as savings instead of focusing on reducing the repayment terms. The opportunity is that the extra money you pay on your bond can be deducted later on should any emergency emerge. This option works the same way as the common savings account. The advantage with the bond savings is that the money will not be taxed. At the same time, it will be saving you thousands of dollars of interests.
Moreover, when planning to have a home, make sure that you save more deposit because it can reduce the interest rates for you. In this case, you will be able to pay the loan in half the time instead of the normal time you would had you not saved the deposit.
Others can relate to the difficulty of achieving the strategies we mentioned here because of the lack of financial discipline or rather say a clear plan on how to. Well, finding the best mortgage broker can help you expedite the loan payments and even cut to the interest rate of 2%. Find out more here to see how Crown Money Management is well-equipped in mortgage broking and debt management for thousands of Australians already.
If you are striving to live a debt free lifestyle, consider implementing these strategies we elaborated. If you struggle to implement them on your own, consider the Crown Money Management solutions as renowned mortgage brokers in Perth.
