How to Pay Off Your Personal Loan in 2022
Here's how to shed that loan balance.
- While carrying a personal loan may not hurt your credit, you may want to eliminate those monthly payments.
- These tips could help you pay off your loan balance in the course of a year.
There are plenty of good reasons to take out a personal loan, whether it's to cover a string of unplanned bills or finance home renovations. The good thing about personal loans is that they won't hurt your credit score the same way too high a credit card balance might. In fact, if you make your personal loan payments on time every month, doing so could actually help your credit score improve.
Still, there may come a point when you're really ready to shed your personal loan debt. If you're tired of having those payments hanging over your head, here's how you can rid yourself of them in 2022.
1. Get on a tighter budget
You may have certain expenses you spend money on that you can technically do without. Depriving yourself of those indulgences completely could make you miserable. But cutting back modestly and spending more judiciously could free up cash you can use to chip away at your personal loan balance.
Take a look at your budget and review your different expense categories. You may find that a few smaller changes add up to a decent chunk of cash that can go toward your outstanding loan.
2. Boost your earnings with a side job
You may only have a handful of small items to cut back on in your budget. Or, frankly, you may not want to cut back on those things too much because they bring you ongoing joy (your store-bought coffee may give you more energy to take on the day than your cheaper home-brewed counterpart). If that's the case, a nice burst of extra cash could be just the thing that makes your personal loan go away in the new year. You can earn that cash by taking on a second job.
There are numerous options at your disposal these days for getting a side hustle. If you like interacting with people, you could pick up shifts at a local restaurant or retailer, or otherwise put your car to work and start driving for a ride-hailing company. And if you'd rather do that side job from home, you could look into data entry, web design, or blogging for pay.
3. Use bonus cash to chip away at your loan balance
You may come into some extra money at some point in 2022, whether it's a tax refund or an incentive bonus at work. Putting that cash toward your loan balance is a good way to whittle it down so it disappears by the end of the year.
How hard should you push to pay off your personal loan?
If you have a relatively low interest rate on your personal loan, and accelerating your repayment schedule causes a hardship for you (say, having to work a second job when you're really maxed out for time), then you may want to stick to your current repayment plan, even if it means carrying your loan beyond 2022. But if you're tired of having that loan hanging over your head, then these tricks could be your ticket to shedding it once and for all.
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