Here’s why Suze Orman says you should pay off your personal loans as soon as possible.

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It’s worth heeding her advice.

Key Point

• Personal loans are an affordable means of borrowing.
• Eliminating that debt can have an amazing effect on your outlook – and that’s what matters.

Whenever you owe money, whether it’s a car loan, a credit card balance, or a personal loan, you sign up to pay interest. In some cases, the amount of interest charged is more moderate. For example, personal loans tend to charge reasonable interest rates, but credit cards may charge you double, triple, or even quadruple interest to carry forward your balance.

But while personal loans can be an affordable borrowing option, the advice of finance guru Suze Oman is to pay them off as soon as possible. Not just because you can.

Debt can affect your prospects

Personal loans often allow you to expedite your payment schedule without penalty. You may also save money on interest by paying off your personal loan early.

But Orman says saving money is only part of the equation. Rather, she says, the simple fact of being in debt can hurt your self-esteem and keep you from working. And that, she says, is reason enough to quickly reduce her debt, even if it’s affordable.

Being in debt can make you feel helpless, Orman says. After all, you’re the lender’s benefactor and you’re pressed for monthly payments. And that can limit your ability to make money.

Let’s say you’re interviewing for a higher paying job in hopes of getting a high enough salary to pay off your debt. In that scenario, you may be really desperate to be hired. It can come out in an interview, and it can hurt your chances of getting the opportunities you seek, Orman warns.

Debt stress can also affect your job performance. Poor performance can also jeopardize your chances of a raise or promotion.

Orman, on the other hand, says that once you’re debt free, your confidence levels can skyrocket. There is a possibility.

How to pay off your personal loan faster

You may not have the cash on hand to pay off your personal loan (if you did, you wouldn’t have had to borrow the money in the first place). However, if you keep an eye on your spending, you may be able to earn extra money each month to throw the balance off.

Getting a second job is another avenue worth exploring. With the gig economy booming these days, there are plenty of opportunities to start a side hustle. And since the money from that gig won’t be allocated to your existing bills, you have a chance to use the earnings to reduce your debt until it’s gone.

Personal loans may come with reasonable interest rates. But that doesn’t mean you should drag out your stuff. Paying off your loan early can dramatically improve your prospects and improve your financial situation.