How to Manage Multiple Loans
by David Sung
According to recent reports, the average American debt is shrinking. But, there are still millions of Americans feeling the pressure of debt. Many people are juggling multiple loans for their houses, educations, cars, and even cash advances. While every situation is different, there are ways to effectively manage your debt without dipping into your savings or taking out another loan.
Take Inventory of Your Debt
Debt easily piles up when people aren’t sure what they owe and take risks on letting notices go by without taking action. The first thing that you need to do is sit down, with your spouse if you have one, and make a detailed account of what you owe and answer the following questions for each loan:
- What is loan for?
- How much is the loan?
- What is the interest on the loan?
- How much do I currently owe?
- What is the term of the loan?
- What is the minimum balance?
- Can I consolidate the debt into a lump sum?
- Does the lender allow for debt forgiveness or any other special considerations?
You may have to spend some time researching the facts about your loan to answer these questions. The important thing is to create a complete picture of just how much you owe.
Talk to a Lender about Your Options
Lenders want you to pay back your loan, and in many cases they will work with you to develop a plan that will make it easier for you. This may include refinancing to make the payments smaller or bundling them together so you’re paying down more than one loan at a time. Consolidation is a common option for school loans.
Prioritize Doesn’t Mean Ignore
If you’re still not sure which loan to pay off first, try speaking to a financial advisor. Some religious organizations and non-profits will offer free or low-cost financial workshops where you can receive professional instruction on how to prioritize your debts and manage your finances.
Pay it Down
Once you’ve created a plan – communicate with the members of your family how important it is that you stick to the goal. You may need to visualize this commitment in the form of sticky notes, or set up alerts through Mint or another budget app on your phone. In some cases, people will take out loans to pay on their loans – putting them in an endless cycle of debt. Some short term lenders even allow you to take out more than one loan at a time. This isn’t a Cash Store practice, however. We only allow one loan per customer, so going this route is not something we recommend. Managing your loans shouldn’t result in adding more debt to your account. You may have to sacrifice trips to your favorite restaurants, or the 3D experience of the latest action film, but the satisfaction of paying off a loan will last much longer.
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