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Clear your debts

The Smartest Way To Repay A Loan

Author:NeuroGym Team

What if we told you that we know how to repay loans easily?

We aren’t promising that our strategies will work for everyone, but it could probably make a big difference to your financial standing.

During Spring 2021, American debt was at a record amount of $14,6 trillion! It equates to about $90,460 for the average American.

How does your debt weigh up to that average?

Many of us stress about our finances but there are ways to get our money matters under control.

Strategies to Repay Loans Easily

There are many ways to sort out your debts but you have to find the ones that work for you. For most people, that means a combination of financial management techniques, as a single one, just won’t cut it.

Here are some proven ways to help you manage your debts.

Change Your Lifestyle

We all know that to repay debts, you have to save money from other areas or make more money. In the absence of the latter, you could cut down on luxuries like meals out or going to the movies.

For some of us, even that is something that’s already been done.

When you look at your budget, you may think there’s no room for improvement. A closer inspection could reveal something different.

Inspect your bank statements and your receipts from shopping. Highlight any items that aren’t necessities (like chocolates, a cute notebook, or an extra drink at the pub) and tally them together.

You could find it to be a sizable amount. Commit to using that money to repay your debts instead of on little things.

Prioritize High-Interest Debts

Even if you are making monthly repayments, it could seem as if your debts never become less. The maths doesn’t seem to add up.

This happens when the loan is subject to high-interest rates. Some financial institutions charge as much as 35% interest annually so no wonder you aren’t getting anywhere.

Check the information for all the loans, credit cards, or other debts you have to find out their interest rates. Then, work on making higher payments to the account with the highest interest rate first.

Doing so allows the outstanding balance to become smaller which results in lower interest charges.

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Increase Repayments as Possible

Making larger repayments on loans and credit cards can help to pay them off faster and at a lower cost as the monthly interest decreases.

If your income increases at all, then keep your normal living costs at their previous levels and put the extra money toward your debts.

Sometimes, you might happen onto a side hustle or get a cash bonus. Using that money for loan repayments also helps.

A word of caution: Check the fine print for your loan accounts.

Some of them stipulate that early repayment of the loan may result in a penalty. It’s best to avoid these types of accounts and only go for ones that are free of prepayment penalties.

Ask for Equated Monthly Installments (EMI)

Life happens, and sometimes, you cannot keep up with your monthly repayments on credit cards or overdrafts. Debts that rollover from one month to the next may be hit with even higher interest rates.

It’s a snowball effect you cannot afford.

When this happens, it is best to ask the lender to convert your debt into an EMI. This way, your debts become a type of loan that you repay monthly at a set interest rate.

Turn to Investments

If you are in the unlucky position that your financial situation has gotten entirely out of hand, then you need to take more drastic measures.

Although it’s not ideal, you can turn to your investments to bail you out of financial problems.

Use any interest received on investments to help with repayments. If necessary, find out whether you can cash out part of the capital amount on your investment and put that toward your debts.

It’s not an ideal situation and you will probably pay some kind of early withdrawal penalty, but it might be the best option rather than ruining your credit score.

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Change Your Mind About Money

Every financial decision you make starts in your mind.

You have to choose whether to buy the luxury product or the more affordable one serving the same purpose. You have to choose whether to spend more on your credit card or to hold back.

It all starts with a choice and how you think about your financial future.

When you change your thinking about money, you gain the power to change your financial reality.

Find out more by signing up for the Brain-A-Thon.

The Neuroscience of Money 

Knowing that financial decision-making happens in the brain is one thing, but how it affects you is entirely different. Let’s see how your brain affects your savings and debt.

Immediate Gratification

Many of us have good financial goals: Saving, investing, sticking to a budget, and repaying debts. If this is the case, why do we make so many financial mistakes?

It comes down to your mind. When you are shopping, your brain is getting a bunch of stimuli—chocolates, jackets, watches, and so much more.

Your brain knows that if you were to put one of those items in your shopping cart, it will get a hit of feel-good hormones. It’s instant gratification that is driving your decision and not logical reasoning.

During that moment, your brain wants you to make the purchase. Regret only sets in later when you aren’t emotionally chard and start thinking logically.

Knowing this shows us that we have to pay more attention to our minds while spending money and be wary of letting our emotions take over.

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Assistance with Financial Decisions

The brain loves guidelines rather than too many choices. It’s why your brain prefers a smaller menu at a restaurant rather than one with a plethora of meal options. Your brain wants guidance.

A study by neuroscientist, Sam Barnett, explored this idea some more. Barnett did an experiment where two groups had to make financial decisions.

The first group were left to their own devices when it came to decisions. The second group were given some basic financial guidelines for proper money usage.

Barnett found that participants in the first group used more mental power to make decisions. The second group was more relaxed, made better decisions, and understood the implications of their choices.

Guidelines for Your Brain

Our brain may seem like something that you don’t quite understand but you need to learn more about it.

The more you know about your brain, the easier it is to do things that help it function better.

At the Brain-A-Thon, top brain experts reveal the secrets to changing your thinking for a better life. Reserve your space today!

Clear Your Debts with Good Financial Habits

As much as we don’t want to think about our finances, we have to; burying our heads in the sand won’t get you anywhere. Your brain craves assistance so give it the help it needs by establishing good financial habits that will help you clear your debts.

Think Differently About Money

Before you can make any changes in your finances, you have to resolve to change the way you think about money.

It has to stop being a means of comfort and instant gratification; instead, money has to become a means to get what you need while you repay debts.

You have to make a conscious effort to stop spending the way you do so that you can get where you want to be. A good way to do this is through visualization which helps solidify your dreams in your mind.

Create Financial Goals

Be clear about what you want from your finances by turning them into goals.

Write down how much you want to save, how much debt you need to pay off, and so on.

Be precise with your goals and determine a realistic timeline for making them happen.

Once you finalize your goals, place them somewhere you can see them frequently to ensure they stay top of mind when it comes to your finances.

Set Some Ground Rules

To achieve any goal, you have to put in the effort. It could mean revising your budget, seeing a debt counsellor, or working extra hours to increase your income.

Small guidelines can also help your brain to understand finances better so create some ground rules for spending money.

For example, you could say that you will only buy what is written on your shopping list; anything else can wait. Alternatively, you might decide to only purchase clothing items when a current item is worn through or tears.

Audit Regularly

Audits are usually done by businesses to ensure their finances were used as planned. You can adopt this same strategy at home.

Instead of only reviewing your budget and finances annually, decide to check them monthly until you get your debt under control. This allows you to identify unnecessary spending or higher expenses faster.

Change Your Income

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So many times people say the best way to repay loans is to get a better paying job. This may seem impossible to you but the reality is that your financial situation can change.

The mere fact that you believe it isn’t possible to earn more already shows there is room for mental improvement.

We are inviting you to change your brain, your income, and your life. Get started by attending the Brain-A-Thon.

About The Author

NeuroGym Team

NeuroGym Team: NeuroGym’s Team of experts consists of neuroscientists, researchers, and staff who are enthusiasts in their fields. The team is committed to making a difference in the lives of others by sharing the latest scientific findings to help you change your life by understanding and using the mindset, skill set and action set to change your brain.

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