Game of loans. Less exciting but more rewarding

By Kimberley Bailey

Game of Loans - How to pay off your loans ASAP, get ready, GO.

So you’ve taken out a loan or run up debt and now you need to pay it back - or at least start to-But where do you start?

Well, providing you feel motivated to be rid of it then there are some practical things you need to banish this financial weight once and for all. You can do this!


First off, you have to budget. Sounds simple and obvious... And it is. It’ll be tough to pay off your loan if you continue to spend exactly as you are right now so calculate exactly what money you have coming in each month and exactly how much you pay out each month on inflexible expenses such as rent, bills, car insurance and so on. With the remaining value decide, realistically, what portion of it will go on things you need in each area of your life (clothes, food, hobbies etc.), and set up a monthly direct debit to your loan account for the rest, that way it won’t be sitting in your current account available for you to spend it.

This is also part of planning your repayments. Bruce Lee once said “a goal is not always meant to be reached, if often serves simply as something to aim at”. But he didn’t know what he was talking about; the aim here is to plan exactly how much you will repay and when, and be strict with yourself about it. This is why a direct debit is a great idea.

In addition to this, if you get a nice surprise (refund from your tax return or a little something from grandma) then put this straight into your loan account, no questions asked. You should also endeavour to make more than the minimum repayment if you can. Even if it’s just a few quid here and there, if it’s at your disposal then wire it into your loan account. This can also reduce the damage to your credit score because you won’t be in debt for as long.

If you’ve got more than a single loan or debt then it’s a good idea to make a list of the amount (as painful as it might be) and the interest rate, then order them highest interest rate to lowest and pay them off in that order. This is called the Stack Method.

Paying off your debts...

It’s crucial to pay off the debts which carry the highest interest as quickly as possible and put them as a priority. As you probably know already high interest adds a significant amount more on to the total of your loan and the amount you have to pay back.

If it’s credit cards which you owe money on then keep your wits about you when it comes to their APR (the annual rate you’re charged for borrowing). Some card companies decide to boost their APR and this is a well-known fact, but what might be less well-known is that after they’ve informed you of the increase of the interest rate you actually have 60 days to get in touch with them and let them know that you reject the rate increase. The catch is that you can’t use this card for any more spending (but if you’re trying to pay off your debt this is probably a good thing anyway), but it does mean that you can pay off the debt on your card at the lower, original rate. Win.

Again, if it’s credit card debt specifically which is plaguing you something you could consider is switching the balance of that card to a 0% balance transfer card. At the moment you can find deals that offer as much as 37 months interest-free and essentially what they allow you to do is transfer your outstanding debts to this card and pay no interest on that debt. A few things to note: you must pay off your debt in the interest-free window provided, and you will need to pay a transfer fee when you pop your debt onto one of these cards. Also, avoid getting caught up in the temptation of using these interest-free card to buy more stuff... You’re trying to pay off your debt, remember!

Key takeaway

Finally, it’s important to remember that while you have to make some lifestyle changes in order to get rid of that debt, you shouldn’t allow yourself to be consumed by it. It’s all about balance, not about being miserable and worried 24/7.


By Kimberley Bailey

Kimberley is a freelance journalist investigating the world of personal finance for giffgaff money, while exploring and trekking through Asia. She adores Prince, Louis Theroux and Persian rugs.

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