3 Steps to Pay Off Your Personal Loan by the End of the Year

It may seem impossible, but it can be done.

A personal loan can be a reasonably affordable way to borrow money when you need to. And if you locked yours in a while back, before borrowing rates started rising on the heels of the Federal Reserve's interest rate hikes, then you may be looking at a pretty competitive interest rate on the sum you owe.

But still, being in debt can be troubling. And you may be really eager to start off 2023 without any debt to your name. 

Now if you're sitting on a $10,000 personal loan balance, it's a little unlikely you'll be able to get it paid off in the next few weeks unless you happen to come into a major windfall. But if you owe $1,000 or less on a personal loan, then paying it off by the end of the year may be doable. If that's a goal of yours, here are some key steps to take in the coming weeks. 

Step 1: Figure out how much money you have coming in from work

Between now and the end of the year, you may have more than just your regular paycheck to look forward to. You might also be getting a year-end bonus for a job well done that boosts your pay by several hundred dollars or more. All told, the income you receive by or before Dec. 31 could be enough to mostly, or even fully, get your personal loan paid off, so crunch the numbers to see if that's the case.

Step 2: Cut your spending as much as you can

The idea of reducing your spending during the holiday season may seem laughable. But if you really want to get your personal loan paid off in time for the new year, then it could pay to make some sacrifices over the next few weeks. That might mean skipping dinners out with friends or even canceling some holiday travel plans.

Step 3: Get a seasonal side hustle

Even though we're already deep into the holiday season, many businesses still have a need for temporary help -- especially retailers that tend to see a lot of foot traffic in December. So it's not too late to pick up a seasonal side hustle that boosts your income nicely. And if you're willing to put in a large number of hours, you could earn enough to whittle your personal loan balance down to $0. 

Another thing to keep in mind is that schools are generally closed between Christmas and New Year's Day, and some parents (namely, those who have to work) may be desperate for childcare during that time. If you're off work, that's one temporary side gig worth exploring. 

Given that we're already well into December, you might assume that paying off your personal loan ahead of 2023 is a lost cause. But actually, you just might manage to get that debt eliminated before the current year wraps up. And that way, you can kick off the new year without having a loan balance hanging over your head.