Nothing is better than starting the new year with a clean slate. With a blank calendar, in a new place of residence or in a new home. I love to start the year with an empty to-do list. Although it quickly floods with fun new projects, I always enjoy those first days. If you have a loan, paying off your loan may be one of the goals for 2015. A good intention to close the year and start the new year with fresh courage.
Borrowing consumer money
Although there is still a taboo on borrowing money, 25% of Dutch people have a consumer loan. Think of a Personal Loan or Continuous Credit, but also credit cards, purchase on installation or standing in red. All loan forms are that consumers can live a little more generously.
A loan is not something that anyone should be ashamed of. On the contrary, it is good to make it negotiable. That way we can help each other to make wise choices. But borrowing money naturally costs money. So only borrow if it is really needed. Do you have a financial windfall? Then paying off your loan is a smart move.
Repay loan costs
Repaying a loan early or in the meantime is not always free of charge. Do you have a loan with a fixed term and interest? Then you often have to pay penalty interest if you want to repay the loan early. The bank takes into account the interest income during the term of your loan. If you repay the loan earlier, the bank will miss out on income. For this they charge a fee in the form of penalty interest.
However, the penalty interest is never higher than 1% of the amount you repay early. At many banks it is usually also possible to repay part of the loan without penalty. If that is an option, I recommend that you use it. This way you pay less interest and you are debt-free faster.
Repay credit with savings
If you borrow and save money at the same time, you cut yourself twice. The interest that you pay for your loan is a lot higher than the interest that you get on your savings account.
Paying off your loan with savings is therefore always wise. Make sure you have a financial buffer. It would be annoying if you then have to take out another loan if your washing machine breaks down.
Save money in 2015: Avoid being in the red
I want to end with an important tip: avoid being in the red. People often don’t see Roodstand as a loan, but it’s just a form of borrowing money. And also a very expensive one.
The interest for standing in red is a lot higher than a normal loan. Sometimes the bank even charges 14% interest! So do you want to save money in 2015? Avoid redness.