Destroying Loans, The Secret

Have you ever sat and wondered why it takes so long to get out of Loans that you get yourself into?  The con is that most commercial loans are designed to keep the debtor in debt and paying a hefty sum of interest over the life of the loan.  This is great as a profit method and for shareholders pocketbooks, but can hinder most borrowers’ financial advancement.  It’s not in a bank or loan institution’s interest to show you the correct way of using a loan as leverage but also to minimize interest over the life of the loan.  That’s exactly where you need to differ from anyone else.  You need to become a savvy financial advisor to yourself.  Who better to take financial advice from?

By arming yourself with sound financial advice is the best way to get out of debts such as loans or credit card debt.  You must also know the prime reason that may have got you into these debts in the first place.  Did your thinking at the time allow you to rush into a loan or debt?  Was it a sound financial purchase that got you into this loan?  Was it a matter of keeping up with the Jones’ or because you wanted the latest new toy.  You must destroy this type of thinking in order to rid yourself of unnecessary debt.  If you can’t pay cash for it and dignify if it’s a necessary purchase, then you should definitely question whether you really want to take out any debt for that purchase.  It’s possibly not a very good idea.

Another way of getting rid of pre-existing loans is to take a personal finance class if you haven’t already.  This will help you to become a better steward with your money.  The financial advice in these courses is usually gold and you will just about always be able to take away some nugget of gold from this.  Educate yourself on building wealth rather than debt and you will always have a strong foundation to stand on.

The next secret to getting rid of loans and debt is to pay a little more than your scheduled payment.  Example, if your loan payment is $300 per month, put a little more than you can afford on it like $30 – $50 more or as much as you can afford.  Also, forgo some other little luxury and build up a lump sum payment to apply to your debt.  Even if it’s spare change, you need to build at least a lump sum to apply each and every month.  Some people think you need hundreds or even thousands in order to make to a lump sum payment.  This simply is not true.  Anything over $50 is game.  If you can, apply this payment in the middle of your loan cycle – like the middle of the month or early.  Here is the show stopper, tell the loan officer or specify that this payment must go towards the Principal or Unscheduled payments and not towards your normal loan payment.

By sticking with this behavior, you will cut down significantly on the life the loan as well save yourself a lot of money on interest payments.  Another less known method of destroying loans is to slip in the equivalent of one months loan payment into the life of the loan annually (if the loan is longer than a year).  This will allow you to effectively make 13 ‘normal’, scheduled loan payments instead of the usual 12 payments for the year.  Remember these methods are cumulative and should be combined to really cut down on your debt.

I hope by reading this post that it will really teach you the methods that I have used myself to rid of unnecessary debt in my own life.  If you really liked this post, you should subscribe to my RSS feed.  Also, if you haven’t yet obtained my FREE report of Golden Nuggets, 25 Absolute steps to Financial Freedom, you can grab a copy by clicking the ‘Get Report’ button below.  Look forward to your comments on this post as well.

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