It Is not a bad idea to be stuck in debt. Nobody actually wishes to be so, but sometimes one needs to borrow money. It can be anything, starting from buying a house or a car when you actually need tomorrow some funds from the financial institutions.
However, if you do not plan your loan in the right manner, it can take away your income for a good number of years. It not only prey on your income for years but drains your financial resources as well.
Some good habits and clever planning will actually help you repay your home loan or house renovation loan in a structured manner or you are left paying multiple installments for a year.
Here’s how you can quickly come out of your existing debt.
Take note of all your existing loans
It is important to note the fact that you need to list down all your existing loans if you are to plan the repayment in the right manner.
Do not go for guesswork as you need to get accurate information about all your existing loans. You can take help from your financial advisor or go through all the credit accounts that are still active.
Take a note about all the loans which even include the secured unsecured and credit card bills. Calculate the entire amount that you are going to pay to the financial institution.
Once you have the amount in your mind, it is easy to make the payment.
Pay the Expensive Bills First
It is important to make the payment of expensive loans which have high monthly installments. Keeping affordable loans open is still fine as the monthly EMI amount is low.
However, if you have expensive loans like credit card bills and home loans, you need to pay them off first before anything else.
Therefore, give priority to expensive loans and for the time being keep away the affordable loans that you can manage.
Get Funds for Prepayment
Once you know the total amount of payment that you need to do and all your expensive loans, you need to arrange funds.
It can be done with the help of savings or investments that you have which you can use to repay your loan. Use investments like stocks or mutual funds to cover up your repayment within the right time.
It will actually stop you from it using your income every month.
Wrapping Up:
Priorities your loans on the basis of interest rates and other fines. Once done with this then focus more on costly loan first and keep rest on minimum payment.
