Credit card. Personal loan. Salary loan. Housing loan. Car loan. 5-6. Whatever you want to call it, one way or another, you owe someone some money and you need to pay them ASAP. Since you are earning in dollars, it will be easier for you to pay off your family’s loans – or not.
If you happen to be swimming in debt or prevent yourself from taking a dip in the pool of loans and monthly amortizations, this one is for you. Check out these tips on how to repay your loan without being broke:
1) Start with a payment plan.
Before anything else, you need to plan on how you will repay your debts. To do this, write down the lenders and the corresponding amount and interest rate you owe them. List the due dates as well to help you keep track of what loan needs to be prioritized.
Through listing, you will be able to determine what loan needs your attention and immediate payment. It could be the loan with the earliest deadline or the one with the higher interest rate. If you have the more than one loan under the same lender, consider consolidating them if possible to save on interest charges. You may also start paying the loan with the smallest amount since it will be easier to pay off it off, plus it’s one loan off your list.
2) Identify unnecessary expenses.
Do you really need to buy a new pair of shoes for your son or send a balikbayan box full of goodies for your family back home even if you just sent one two months ago? Think about the money you can use to pay off your loan instead of spending it on things that won’t last.
To repay your loan, it is compulsory that you remove unnecessary expenses. The money you are able to save can be used to minimize your loan and save yourself from a massive headache. It’s a small sacrifice that is worth it.
3) Don’t think about savings – yet.
How can you save if you have debts to pay?
At this point, you need to prioritize loan repayment and getting out of debt first. You won’t be able to grow your money and maximize your earnings if there are lenders going after you every month. Use the money for savings to reduce your loan and once you are able to pay off most of them, that’s the time you can start with your savings.
4) Borrowing money to pay off your borrowed money is a big NO-NO.
Admit it. You are tempted to go to loan sharks just to pay off your loans (and eventually avoid a stain on your credit score). Unfortunately, this won’t do you any good.
Regardless if it’s a loan shark, friends who agreed to lend you money, or another legitimate lender, borrowing money to pay your debts is a big no-no. It will only add another loan on your list and you’re not doing yourself any favors as well.
5) Get a sideline.
In a previous post, we shared about the different business ideas you can try even while working abroad. Why not try it and who knows, it could be a success.
It doesn’t matter how small the amount you will get from your sideline. The good news is you can use this additional income to help you pay your loans without borrowing money from other people. You’ll never know, but this could be a good start for something bigger too.
6) If you can pay bigger, then pay bigger.
Lenders will give you a payment schedule showing the amount of payment you should make every month. Don’t just settle with the amount set forth on the plan. If possible, pay more. You will not only be able to reduce the interest rate charged on your loan but also it could make loan repayment faster.
At the end of the day, what matters most is you acknowledge your debts and you do something to repay them as soon as you can. Repaying your debt won’t happen overnight, but if you are consistent with your payment, you won’t notice that you are now down to the last centavo.
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