You’ve probably clicked on this article with an answer in mind. Maybe you’re here looking for confirmation to what you already believe in, or you want someone else’s opinion to convince you otherwise. Whichever the case is, I’m sure you’ve come here to gain more clarity as to what refinancing is and if it’s something you’re prepared to dabble with.
If you’re here, chances are, you’re probably torn about the idea of taking on new debt to resolve old debt. After all, you can’t fire with fire so it doesn’t make sense to fix a problem with the same thing that caused it. Like you, we’ve been in that limbo too. I’m sure many people have. However, once you really get to understand how refinancing works, you also see that it is unlike any other type of loan out there.
The biggest difference lies in the purpose of refinancing as a loan. Most loan offers are created with the purpose of “acquiring” something. Whether it’s a house, a car, a new phone, groceries or whatnot, people take on debt to acquire things that they are unable to pay in cash up front.
Refinancing is different in a way that its purpose is not to acquire but to resolve (check this out). It’s a loan offer created to help people climb out of debt, not go further into it. So in essence, a refinance loan should be regarded as a solution and not the instigator of another problem.
In fact, the existence of this type of loan in itself tells us that there is great demand for it. Whenever there’s demand, it means many people are experiencing the same problem. It’s not just you or me, people from everywhere are struggling with debt issues and are constantly looking for ways to resolve them. So instead of looking at refinancing as just another debt to add to your burden, shift your perspective and look at it as a solution.
How can you leverage a refinance loan to achieve your goal of a debt-free life? Let’s find out.
Slow & Steady Wins The Race
Many of us get a little impatient when it comes to achieving a debt-free life — and it’s totally understandable. Who wouldn’t want to get rid of the dreadful deadlines? Who wouldn’t want to take back their peace of mind? But it’s exactly because we know where you’re coming from that we can say that rushing things won’t lead to a very good ending. In our experience, and those of many others, slow and steady always wins the race.
If you rush into paying your accumulated debt, the more unlikely you’ll be able to do it. You’ll end up making rash decisions such as taking on another risky loan or engaging in “quick money” schemes in hopes that it will be the solution to your problem. Case in point, you are most vulnerable when you are in a rush to get things done.
Instead of rushing, look for ways to make your outstanding debt more manageable — refinancing being one of them. When you refinance existing loans, you are still subject to new loan terms with a corresponding interest rate. However, compared to high interest loans (such as credit card debt), the interest rates on refinance loans are much more manageable as the primary purpose of the loan is to help the creditor settle old debt.
Also, when you refinance, you start a new loan which consolidates all your previous debts. This helps you start over in a new account without fear of having to pay everything at once because you’ve already missed a couple payments. You start on a clean slate and only need to keep up with monthly installments of the new loan. You can even negotiate for a longer repayment term to make the installment amount more attainable based on your current budget.
Consolidate Old Debts In One Place & Avoid Late Charges
As mentioned above, you can consolidate multiple outstanding balances with one refinance loan with companies like beste refinansiering. What this does is make things simpler for you – especially where due dates are concerned. I’m sure that I’m not the only one struggling with multiple due dates. On top of having to come up with the money to pay monthly installments off, the mental stress of having to think about all the payment due dates can really take a toll on you. Missing a due date can have very expensive consequences due to the steep penalty fees most banks have.
By refinancing multiple loans into one, you also say goodbye to multiple due dates. There’s no need to keep reminders on your phone, no need to start the week listing out all the things you have to pay in the next 7 days. You simplify your life by only paying one loan and looking out for one payment due date. Late payment fees can easily set you back by a few hundred krone whenever you fail to pay a loan on time. Avoid such charges easily by opting to refinance.
Refinancing Can Put Your Spending Habits Into Perspective
Coming to a point where you have to refinance multiple debts will really get you to think about things – how you’ve been living your life up until recently, the items you spend on, the decisions you make. You begin to wonder whether these purchases that you went out of your way to borrow money just to acquire are really worth all the mental and financial stress that you are experiencing.
Refinancing is not without cost; it’s also subject to corresponding interest rates (albeit lower than what you would’ve paid for your high interest debts in installments and penalties). It also addresses the elephant in the room, aka your spending habits, as it brings to light all your outstanding loans and credit balances. By refinancing, you get to put your spending habits into perspective – and hopefully, learn from your financial errors going forward.
More Opportunities To Add New Income Streams
If you weren’t so busy thinking about the multiple due dates that you have and the overdue balances that are hovering over you, what could you be doing right now? Let me give you an idea: you could be finding new ways to generate income instead of making minimum payments that frankly, wouldn’t help you climb out of the pit of debt you dug yourself into.
When you refinance, you can negotiate for longer repayment terms and lower monthly installments. You are able to confront your staggering debt at a slow and steady pace, without overwhelming your capacity to earn. This also means that you can free up some space in your finances for other things, like investments and business opportunities.
In order to achieve a debt-free life, apart from looking for ways to make your debt easier to pay off, you also need to supplement your income so that you can generate money faster. When it comes to adding new income streams though, start with conservative investments. In other words, don’t go splurging your money on high-risk investments even if they promise high returns.
Instead, start with smaller ventures with a high probability of returns and work your way up using the profit you generate. This way, you won’t have to reach into your own pocket to fund riskier investments that could potentially generate bigger income.
Renewed Financial Confidence Can Lead To Better Productivity
If you feel down in the dumps lately and dread having to come to work every day, it’s likely because you’re not seeing the point of your efforts. If you’ve been working nonstop just to make minimum payments and see your loans pretty much still intact because all you do is chip away from the monthly added interests, then I can see why you’re starting to feel withdrawn about everything.
You’re not seeing, let alone enjoying the fruit of your hard labor. You’re stuck in a cycle of paying minimum amount dues in fear of penalties or ruining your credit standing. You’re unable to buy yourself things, eat where you want, or go on vacation. All because you are putting your debt first.
You might think that this is just something you should accept, the new normal perhaps. After all, this is the undoing of your own decisions, and all bad decisions have consequences. However, lowered productivity can affect your ability to generate good income and that will just put you in a worse position. Refinancing can help lessen the immediate burden of your outstanding loans and give you back some of the freedom, peace, and routine you once had before you started struggling with debt.