You have already made a smart financial decision by obtaining a debt consolidation loan, but now the sticky wicket … you have to get out of your debt consolidation loan in an efficient and timely fashion. The biggest obstacle to getting out of your debt consolidation loan is the amortization period. The lower interest rate and tidy payment schedule were enticing, but paying off this albatross that is strangling you is of the utmost importance.
The best way to get out of your debt consolidation loan is to figure out how to attack the principal amount, and to increase both your payment amount, and the frequency with which you make payments. As you know, if you are simply paying a small amount on your loan, it is covering the interest, and a tiny portion of the principal. This can be rather detrimental to your pocketbook. You must go after the principal, and pay this debt consolidation loan off in a short period of time.
Considering that the debt consolidation loan has given you a drastically reduced interest rate, there should be more money left over in your account each month. This amount needs to be utilized to the best of its ability, and this can be done by dropping it directly onto the principal amount owing. Also, since you only have one payment to worry about now, and you should have set it up via electronic bill payment, you know exactly how much money comes out each month for this loan. Here is where you can make some beneficial adjustments. First, increase the amount you are paying. It does not have to be by much, but enough that you can afford it, and enough to make a difference. Even a few dollars extra can neutralize your debt consolidation loan much more quickly. Next, increase the frequency of your payments. This can be done by making a payment either twice per month, or weekly.
Making one payment per month gives you a total of twelve payments per year. If you pay bi-weekly (half the amount each), this will give you a total of twenty six payments, as opposed to the equivalent of twenty four. Now, if you pay weekly, you can make fifty two payments, as opposed to forty-eight. These additional payments will help you to pay off your debt consolidation loan as quickly as possible.
Another efficient way to get out of a debt consolidation loan is to take on another job. The money accrued from this extra endeavour can allow you to make many more payments, thus helping you out of debt much more rapidly. This option is not always feasible, due to other commitments, but if it is possible, it should be considered.
Taking out a second mortgage is ill-advised, since this can have negative repercussions on your overall standing with the credit bureau. While it is a way to get out of a debt consolidation loan, it is unwise, especially considering that you have proved to be poor with your money management skills in the past. The best bet is to simply make your payments, and add a little bit extra each month, and you will find that your total amount owing begins to shrink quicker now that you are paying more attention to this massive debt shackled to your wallet.