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3 Ways To Find Financial Freedom Again (And Save Money In The Process)

Jacaranda Team

Jacaranda Team

August 1, 20158 minute read
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Have you ever felt a little overwhelmed when dealing with your finances? You’re not alone. Australia’s personal debt ranks as one of the highest in the world, and it has been steadily rising. Australia’s debt-to-income ratio recently peaked at 212%, which means some Australians are in twice as much debt as what they earn! How’s that for overwhelming? One way to find financial freedom may be by paying off your loans quicker.

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    In 2019, material culture often means that young Australians increasingly want it all; to be a home-owner in a happening suburb, with a slick new ride, wearing the freshest of fresh kicks. Pair that with our penchant for smashed avo and almond milk lattes, and it could equal bad news for our financial freedom.

    So, are you drowning in student debt? Wading through personal loan statements? Barely keeping your head above your mortgage repayments and living expenses? Fear not! There are ways you can find financial freedom again!

    1. Paying off loans quicker than the loan term to save money

    Paying your loan off early is the dream; less interest, less money, less time, less stress. What’s the best way to do it, and what should you consider?

    To pay your loan off quickly, here are some tips:

    • Look out for early exit fees. Depending on the amount, this could easily counteract the extra repayments. Always check this with your lender.
    • Don’t wait for payment reminders. Many financial institutions will charge a late payment fee on top of any interest if you do not pay the monthly minimum by its due date. It may also be a good idea to set up direct debits to miss accidentally forgetting!
    • Transfer any random lump sums to your loan. Even making just one extra payment per year, like your tax refund, will help to shave off time and pay your loan back quicker.
    • Transfer to a lower or no-interest account within your financial institution. Even doing this for your everyday accounts could potentially save you money in fees and interest. Money saved equals money saved, no matter which way you go about it!
    • Pay more than the minimum repayment. Even if it is only marginally more money, it will still contribute to paying off the finance before the end of the loan period. Consider rounding up your payments to the nearest 10, 50 or 100 dollars.
    • Look at your living expenses budget. There is often a way that you can adjust where your income goes. Could you put a little less into your savings, or spend less money on groceries, in order to put more money onto your online loan?
    • Increase your income. Isn’t this everyone’s goal? There are so many apps now that give the average citizen the opportunity to earn a little extra. Think rideshare, accommodation, food delivery and online garage sales. More often than not, you can conduct this extra source of income right from your phone. Every little bit counts!
    • Make your payments fortnightly instead of monthly. Halve your monthly payment and pay this once every two weeks, instead of waiting until the end of the month to pay the whole amount. Alternatively, if you get paid weekly or find having a weekly budget easier, paying four times a month is even better! Paying more frequently ensures interest has less time to accumulate, and it also means you are less likely to forget to make the payment!

    Rule of thumb: If you finish paying off your loan with no credit check early, for example in four years instead of five, you will save money. You won’t pay that last bit of interest. If you took out your loan or credit because of an interest-free period, you also won’t risk rolling into that scary period where interest actually kicks in! Winning!

    2. Consolidation loans – paying off loans with loans

    A debt consolidation loan is essentially where you take out a larger single loan to pay off several smaller loans. It is a form of refinancing. This can be beneficial if you are trying to escape snowballing interest, or if multiple payments are becoming too much for your budget to handle.

    One way that many Australians consolidate their debt is through 0% balance transfers. The catch here is if you don’t make your payments before the interest deadline, you could be hit with inordinate rates of up to 22% on the money you still owe. Ouch!

    To help you decide if debt consolidation is what your financial dreams are made of, we’ve compiled a pros and cons list:


    • One payment is easier to manage and budget for.
    • Having only one loan makes it easy to set up simple repayments and you’ll know exactly when you’ll be debt-free.
    • You’ll only pay interest on one loan, instead of paying interest on multiple loans.
    • One debt that is easy to manage is a simple way to improve your credit rating.
    • Less paperwork – one statement, easier at tax time.
    • Pay less in fees and other charges – you’re only doing this for one loan instead of many.
    • Put the money you’ve saved on interest, fees and charges into your savings account. Better yet, put the extra money straight into your new loan!
    • The satisfaction of cutting up your old card/s!


    • Your situation could worsen if the interest rate or fees in your new loan are more than the loans you consolidated.
    • Some refinancing institutions make unrealistic promises to get you out of debt quickly no matter how much you owe. This can cloud judgment and you may not realise the interest and fees they will actually be charging you.
    • If you can’t meet the repayments on your new loan, it will only end up being a short-term fix and you may need to refinance again down the track.
    • If you are offered more credit through your new loan, it could be easy to fall deeper into debt as you may be tempted to spend more than you need to.
    • You could be up for both an application fee on the new loan, as well as an early exit fee on your old loan/s. This could end up costing you more than the money you will save.

    It goes without saying that it is important to weigh up your options, and decide if the potential savings are worth the costs of consolidating. Be sure to read up on the lender, too.

    3. Consider your options

    What works for one person may not work for the next. Therefore, we think it’s important to do your own research and talk to others about all of your options. This being said, as well as our other suggestions, there are some further things that you should consider when thinking about paying off your loan quicker than the loan term.

    Will a consolidation loan or additional loan work for your situation?

    First of all, do you really need additional debt in the first place? If you already have a loan of any kind, it may be of little benefit to add more repayments to your already full banking schedule. Get into the habit of impulse saving, rather than impulse spending.

    Material culture

    Secondly, don’t buy into the material culture. If you really want to buy something for yourself, sit on it for a period of time. Chances are by this time you’ll have enough of your own money to do so anyway and won’t need to use your credit card.

    You may also consider unsubscribing from marketing emails from your favourite brands. Delete Instagram accounts that make you feel jealous or give you ‘FOMO’. Op shop. Re-use. Remember, every little bit counts (and you could inadvertently help the environment, too. Cool!)

    Costs vs. benefits

    Next, ask yourself whether paying off your loan faster than the loan term is really beneficial. If your current repayments are low and you are managing to meet the monthly minimum, sacrificing other areas of your life may not be worth it. With the cost of living rising every year, it could be difficult for you to make extra payments. It’s probably not worth reducing your standard of living just to knock some time off a loan, particularly if it’s only for a small amount.

    Cutting your losses

    Also, while this may not be your first choice, sometimes it may be better to just cut your losses. Let’s say you have a car loan. Due to interest and fees that have compounded over the last few years, the loan is now worth more than the car. The car is costing you a fortune to run and maintain. The repayments now seem redundant. Even if you love the car, it may be a better option to sell it and payout as much of the debt as you can and purchase something cheaper to run.

    Getting the best deal

    Finally, the best way to save money on finance is to get the best deal going in, and to understand exactly what you can and can’t do once you have the loan. Will you be charged for making extra payments? What’s the early exit penalty? Are there monthly fees? Read the T&Cs and ask your lender questions.

    Ask for help!

    If you do feel overwhelmed in your current situation, it’s okay to ask for help. The Australian Government’s Money Smart website has helpful tips from banking to home loans to super, and you can trust that the information is up-to-date and well-informed. Compare the Market-style websites, like Finder or Canstar, are also valuable resources when making financial decisions.

    At the end of the day, paying off any loan quicker than the loan term can be positive; for your pocket, for your credit rating and for your future. If you do find yourself in a position where you need to borrow money, have this as your goal before you even sign on the dotted line. It’s never too late to save money! Who doesn’t want that, right?

    Copyright © www.jacarandafinance.com.au Jacaranda Finance Pty Ltd ® ABN 53 162 078 195 Australian Credit Licence 456 404, Pawnbroking License Number 4221738. The information on this web-page is general information and does not take into account your objectives, financial situation or needs. Information provided on this website is general in nature and does not constitute financial advice.

    Jacaranda Team
    Jacaranda Team

    Written by Jacaranda Team

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