In an ideal world, you would be earning more than you are spending, and you would also be able to put away a sizeable amount for a rainy day. However, we inhabit a world that is far from perfect, and therefore, the balance of income and expenditure often gets skewed, and we have no other option but to avail a loan. In some cases, even after taking a loan, there are ways to get financial freedom quickly and avoid getting buried under more loans. Let us see what they are.

Hustling for additional income

Outside a day job, there are several freelance opportunities which you can do from your home to make some extra income. This must be something you like doing so that you can find the energy to do it after a regular workday. A teacher could do some home tuitions on weekends, a person with some musical talent could help the local club band on weekends, and an engineer could help homeowners with making their renovation plans and so on.

Reducing expenses where possible

When you are already in debt, all your efforts should be focused towards repaying it as fast as possible. That would only be possible when the expenses are cut down, and any savings that resulted were plowed back into repayment of the loan. Just because you have had to obtain a loan, it does not mean that you can continue your earlier lifestyle as it was. Instead, your focus should be on modifying your expenses so that the current loan can be repaid quickly, and no additional loans are required.

Tracking expenses

The way to reduce expenses is to keep track of where your money is going. Many people maintain a simple spreadsheet of costs – both regular as well as unplanned – to see how much of the spending is discretionary and can be curtailed. If having a spreadsheet seems cumbersome, you can avoid withdrawing cash from your account and mandatorily spend all your money through internet banking or the debit card. That way, every two weeks or so you just need to take a statement from your bank account’s internet banking portal and save it as an excel file. As soon as that is done, instances of needless spending will begin to show up, on which you can work on later to avoid.

Debt settlement 

Creditors are sometimes willing to accept a lump sum payment from the borrower to close the loan entirely. Say you owe $100 which would be paid in 10 monthly installments of $10. Some lenders may agree to take $80 upfront and close the loan. There are a few issues to be considered here. First, you can go for such a settlement only if you come into a substantial sum of money. Second, this settlement would not be suitable for your credit rating because it would be considered as a write off instead of full repayment of the loan. Third, it is not mandatory for all banks or lenders to be interested in a settlement, and you can refer to debt settlement reviews to check which banks go for it.

If you have availed a loan, you need to make an effort to pay it as soon as possible. These four ways mentioned above can help. Maintaining caution and practicing discipline are the best ways to stay away from the habit of taking loans after loans.

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In an ideal world, you would be earning more than you are spending, and you would also be able to put away a sizeable amount for a rainy day. However, we inhabit a world that is far from perfect, and therefore, the balance of income and expenditure often gets...