Whether you have one loan or more, anything that will help you pay it off quicker has to be a good thing.
I have 20+ years in banking and along with handing out mortgages and personal loans, I have helped people manage debt.
Whether you live in New Zealand where I am, or another country, it is more than likely that all finance companies, credit card companies have similar policies.
Interest rates are high and you never seem to be going anywhere.
Sound familiar? A lot of companies work on the policy that the interest owed on your debt is paid first.
How else do the companies get their money back? Makes sense if you are lending the money out, but for us individuals that have borrowed the money it is a different story.
Know the interest rate you are paying when taking out a loan.
Find out how your payment is made up.
How much of it is interest and how much is principal.
Are there penalties for paying more than you are required? Look at all your debts together.
Scary but needed.
Write down what interest rates you are paying on them and how much and the length of them.
Look to pay one off faster rather than more on each of them.
Look to pay the one that has the highest interest rate, not necessarily the one with the most owing.
Paying the debt with the highest interest rate off first makes better sense as this is the one that is costing you the most.
The faster you can pay back the interest owed on your debt, the faster you will start to repay the whole loan.
Do not be sucked in to letters or phones calls from the company telling you how great you are doing, now here is some more money for you!! Ignore the opportunity to stretch the term out another year or so.
That is just more interest to be paid to them.
Take ownership of your debt, don't let the debt take you over.
Start watching your statement.
Don't just throw the envelope away without even looking at it.
Be proud of the fact that you have paid back x amount this month.
Whether that amount is $10 or $100 doesn't matter.
You have achieved a reduction in your debt, celebrate that fact.
Try to increase the amount you pay back for next month.
Challenge yourself to pay an extra $10 a week.
You will be surprised how much little extras off your principal can make to your total overall.
Even if you may not see much difference in your overall balance, take note of the term left and how much has come off that.
One month off your term is one month of interest that THEY don't get.
So now aim for two months off your debt.
Always move the goal posts once you reach them.
Don't have the goal post too far away to start with that you think you will never get there.
Start with a small goal, a little extra each week, each fortnight.
Then once you have achieved that extra and kept it up for a few weeks, increase that little extra to a little more.
You have already done it once, can you add another few dollars to that extra.
Small amounts add up.
Keep your own record as you slowly increase it and watch how much faster that debt goes.
I am talking from personal experience in my own situation here.
I had a fairly large overdraft and credit card bill that wasn't moving down at all.
Until I took responsibility of my own debt and knuckled down into paying off the overdraft.
Once I finally got my account back into a credit figure and not a debit figure, I cancelled the overdraft and never took up the offers of pre approved overdrafts again.
Then I started on my credit card debt.
People called me McScrooge when I said I couldn't go out for coffee because I was saving up my pennies for my bill that wasn't due till next week.
All my extra cash went on that bill, regardless when it was due, so when the bill came in each month, I had paid so much more off than I needed to.
I felt proud of myself and slowly saw the inroads I was taking to reduce my debt.
Now I could walk the walk and talk the talk.
Celebrate that.
Enjoy the feeling of taking control of your debt.