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Financial Health Check: The Best Loan Repayment Strategies in Meridian, ID
October 29, 2024
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Inflation is pushing prices of everyday items out of reach. Savings and emergency funds are depleting. Vacations and other luxuries? Don’t even think about it–we’re struggling to afford groceries. We’re all feeling it, so what is the answer? How do we maintain financial health in this crushing economy?
In Meridian, Idaho specifically, we’ve seen huge growth in the housing market, driving up home and rent prices, and the overall cost of living. At Idaho Finance we’ve observed these local economic trends lead to a higher demand for loans, resulting in debt accumulation.
Our purpose is to help you out of tricky financial situations, not to trap you in one. When you find yourself approaching a debt spiral, pause and consider the following loan repayment strategies to improve your financial health, despite the frustrating financial climate.
In Meridian, Idaho specifically, we’ve seen huge growth in the housing market, driving up home and rent prices, and the overall cost of living. At Idaho Finance we’ve observed these local economic trends lead to a higher demand for loans, resulting in debt accumulation.
Our purpose is to help you out of tricky financial situations, not to trap you in one. When you find yourself approaching a debt spiral, pause and consider the following loan repayment strategies to improve your financial health, despite the frustrating financial climate.
Assess Your Current Financial Health
The first step is to take a good, hard look at your situation. It can be painful to face reality, but ask those difficult questions to get an accurate assessment of your cash flow. How much money do you have coming in, and where are you spending it? How much debt do you have, and what are your interest rates? Think about absolute priorities versus where you can afford to cut back. This information will help you as you:
These steps aren't one-and-done. It's important to follow up at least monthly, and in the beginning, daily to weekly to stick to your plan. It may take some practice and adjustments to get it right, but every effort gets you closer to financial health.
- Create a Budget: Using your actual income and expenses, make a financial plan. There are many free or paid online tools available including apps, and spreadsheets.
- Analyze Your Debts: List every single loan. Don’t forget student loans, mortgages, auto loans, credit cards, installment loans, or the cash your brother-in-law’s- mother spotted you. Categorize them by interest rate and remaining balance.
- Check Your Credit Score: Use your credit score as a baseline to measure your progress. As you implement loan repayment strategies, you can watch it improve.
These steps aren't one-and-done. It's important to follow up at least monthly, and in the beginning, daily to weekly to stick to your plan. It may take some practice and adjustments to get it right, but every effort gets you closer to financial health.
Prioritize High-Interest Debt
Once you've analyzed your debts and know how much money is coming in and out, you can apply this knowledge to paying off your debt. The best game plan is to tackle high-interest debt first because it's costing you the most to maintain. The interest accrual impacts your long-term financial health.
There are two main schools of thought on how to approach loan repayment:
1.Avalanche Method: Paying off the highest interest loans first.
2. Snowball Method: Paying off smaller loans first for a psychological win.
This is a marathon, not a sprint. You still need to eat, and emergencies will still come up. Don't get discouraged when setbacks occur; just get right back to your plan as soon as possible. Sticking to it will help you keep chipping away at the financial burden a little bit every month.
- What is High-Interest Debt?: Payday loans and credit cards will be your highest-interest debts.
- Why Pay These Off First?: Paying these off will help you stop the cycle of spending your money on money. We want to get you to the point of instead spending that money on needs and wants.
There are two main schools of thought on how to approach loan repayment:
1.Avalanche Method: Paying off the highest interest loans first.
2. Snowball Method: Paying off smaller loans first for a psychological win.
This is a marathon, not a sprint. You still need to eat, and emergencies will still come up. Don't get discouraged when setbacks occur; just get right back to your plan as soon as possible. Sticking to it will help you keep chipping away at the financial burden a little bit every month.
Consider Loan Consolidation or Refinancing
Maybe you have several outstanding loans with similar interest rates and impossibly high balances. Where can you even start? There are a couple of options:
1. Loan Consolidation: Merging multiple loans into one for simplified payments.
2. Refinancing: Replacing a current loan with a new one at a lower interest rate.
Interest rates are currently extremely high, but what goes up [usually] comes down. Even if refinancing isn't the best option right now, watch those rates and stay in contact with financial institutions to jump on the chance when conditions are right.
1. Loan Consolidation: Merging multiple loans into one for simplified payments.
- Pros: Consolidation can potentially lower your interest rates, leaving the remaining loan as a singular lower overall payment that is easier to manage.
- Cons: This prevents you from experiencing the psychological wins of using the snowball method, and could significantly extend the repayment period.
2. Refinancing: Replacing a current loan with a new one at a lower interest rate.
- When interest rates come down, this is ideal for mortgages, auto loans, or personal loans.
- Check with local Meridian banks or credit unions offering refinancing options.
Interest rates are currently extremely high, but what goes up [usually] comes down. Even if refinancing isn't the best option right now, watch those rates and stay in contact with financial institutions to jump on the chance when conditions are right.
Utilize Local Financial Resources
If your financial situation seems despairingly bleak, please hang in there—you are not alone. These financial tools can help you out of seemingly impossible situations:
Credit Counseling Services: Look for Meridian-based non-profits that offer free or low-cost credit counseling to guide you through money management, budgeting, and debt management. Credit counselors can also work directly with your creditors to negotiate your interest rates or payments.
Please ensure you are not taken advantage of by checking the company’s Better Business Bureau profile and avoiding high or percentage-based fees.
Loan Assistance Programs: If you are struggling to repay loans due to unemployment or financial hardship, there are assistance programs like findhelp.org to guide you to solutions.
Financial Advisors: Seeking credentialed professional advice can help in structuring a better loan repayment plan to get debt under control, leaving room for making other, more exciting financial goals.
Automate Payments to Avoid Missed Deadlines
Late fees are possibly the most frustrating, especially if the money was there, but your mind was somewhere else. Now, not only are you behind on payments but you're penalized for being so busy that you forgot to pay on time. One of the easiest ways to avoid these unnecessary fees is to automate with free technology:
- Set Up Automatic Payments: Most banks and creditors offer easy automatic payment setups to help you stay on track. This will help you avoid those late fees and improve your credit score.
- Meridian-specific Tools: Check with your local bank or credit union, or your local utility companies for automation options.
Consider Side Hustles or Increasing Income
Once you’ve pared down your expenses, finding ways to increase your income can help you pay off debt faster. Check out freelance work, part-time jobs, or local opportunities in Meridian.
Ensure that the extra income goes straight to debt repayment (or preventing you from taking on more debt). Lump-sum payments will help bring those balances down quickly and provide big wins that keep you excited about reaching your goal of financial freedom.
Remember These Six Top Strategies for Loan Repayment:
1.Assess the Situation
2. Prioritize by Interest Rate
3. Consider Refinancing
4. Use Local Resources
5. Automate Payments
6. Hustle (Increase Income)
The most important thing you can do is get started. Begin by reaching out to Idaho Finance in Meridian, Idaho for more resources and information about choosing a repayment strategy that will suit your goals. We are your low-interest personal installment loan specialists.