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A Few Things to Know About Loans

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The current life standards have forced many people to think about the option of getting a loan whenever they want to buy something or enjoy a good holiday abroad. Even though people are paid much better than 20 or 30 years ago, the standards have risen to a point where you need to apply for loans several times throughout your life.

This is not something that we should be ashamed of. After all, those are things that we have to get used to. Some research has shown that more than 60% of the people in the world are living in some kind of debt. There are many things to know about loans and paying them off, but we wanted to share a few interesting facts about them which are highly informative.

Debt Consolidation

When you get a loan, it’s important to have a plan on how to pay it off. If you don’t have a plan, you might end up not being able to keep up with the monthly payments which can lead to a lot of trouble. One way to manage to overcome a problem like this is debt consolidation.

Debt consolidation is a form of refinancing in which you take a loan which will pay off all other loans. There are many advantages to it, like lower interest rates, fresh start on monthly payments, etc. But, these advantages come only if you get this type of loan form a good and credible company. So, it’s extremely important to choose a good company which will help you deal with your financial difficulties.

The overall lower interest rate is what makes debt consolidation loans so popular and handy for anyone who is having trouble paying off their debts. With this type of loan, the repayments can spread over to a larger period.

They Are Available Online

As we all know, there are plenty of advantages that came with the rise of the Internet. Many services have been made available online. Such is the case with online loans. Many online lenders hand out loans to people all around the world and they became extremely popular lately. The reason for that is that they are very easy to deal with.

Online lenders are flexible with their clients. To make things even better, their approval rates are much higher than the ones of the banks. Online lenders have a 70-75% approval rate, whereas the banks have around 55-60%. The applying process is also much faster – all you need to do is fill out an application and wait a few days for feedback.

Countries With Low Interest Rates

The top 3 countries with the lowest interest rates in the world are Switzerland, Denmark, and Japan. The good economic state, as well as the politics of the countries, have been huge contributors in making them stable and ‘affordable’ to the people. Feel free to check out the top 5 list here.

Side Jobs Can Help You Pay Loans

This may sound a bit funny, but many people around the world take up some side jobs as a way to help them pay off their debts. And they can extremely helpful, a lot more than you would think. There are plenty of easy profit-making side jobs that can better your financial status and ease your worries when thinking if you are able to pay off your debt. Going online to make money is also a good idea.

What is the Best Debt Advice?

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debt advice

People are pretty much always willing to offer up advice, even when you haven’t asked for it. Throughout my debt freedom journey, I’ve received advice from a number of individuals, but how do you decipher what advice is good and what you should let go “in one ear and out the other?” Here’s how to determine if the debt advice you’re receiving is something to consider or not.

What is the Best Debt Advice?

So, there’s no best advice when it comes to paying off debt. Everyone’s finances are different, therefore, their approach will need to be different. However, there are certain pieces of debt advice that have consistently helped people.

  1. Make a budget and stick to it. Believe it or not, budgeting for repaying your debt makes it easier to stay on track. Not to mention, having a solid budget will keep you from overspending, which is what causes most people to go into debt in the first place.
  2. Avoid taking on any new/additional debt. If you have become accustomed to swiping your credit card for things, this can be difficult. Consider hiding it or even cutting it up. Additionally, you shouldn’t take out any loans to consolidate your debt. It will almost always prevent you from making significant progress towards your goal.
  3. Set realistic goals for yourself. Many people fail at making realistic goals when it comes to their finances. If you stretch yourself too thin, you’ll cave under stress. Be sure to budget money for fun things and set realistic time frames for debt and savings goals based on that.
  4. Contact your lenders if you’re having trouble paying. We’ve all had issues making payments at some point. The best thing you can do if you’re struggling to repay a lender is to give them a call. Most will work with you on repayment and some will even give you a break on late fees, etc.
  5. If you can’t pay cash, you can’t afford it. Cash is king. If you don’t have the money in the bank, or you haven’t budgeted for the purchase, you can’t afford it. It’s that simple.

While these five pieces of debt advice are solid, not everything everyone tells you is going to help you pay off your debt. Here are a few things to consider.

How to Determine What Advice is Good

Be wary of anyone telling you there’s a “cure-all” to your debt problem. No single approach is good for everyone. You’ll need to cater your debt freedom journey to your personal needs. It may be worth looking into certain approaches if what you are doing isn’t working, but what works for someone else won’t always necessarily work for you.

Additionally, don’t listen to anyone telling you that taking out more debt to consolidate or further your progress is a good idea. You will only be hindering your ultimate goal of being debt-free. Instead, consider ways you can cut spending or earn more to help pay off your debts.

The Best Piece of Advice I’ve Ever Received

Since starting my own debt-free journey, I’ve received all kinds of advice from several different people. Some individuals have suggested consolidation loans, others have said to use all of my savings to pay off my debt, and one person even told me that I didn’t have to pay certain debts off (seriously).

The best piece of debt advice I’ve ever received, however, was this: be patient with yourself. There is no roadmap to debt freedom. The journey looks different for everyone and we all have to feel our way through things. For us, we’ve had to learn to live on one income, hide the credit cards, and focus on living a cash-only lifestyle. That may not work for everyone, especially for families with children.

It is easy to get frustrated when you aren’t seeing progress and it is even easier to simply give up. Finding patience for your journey and yourself is key to becoming debt-free.

Readers, what is the best piece of debt advice you’ve ever received? 

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