Debts and loans: how to keep track and pay them off faster
How to record who owes whom, keep an eye on bank loans and choose a repayment strategy: the debt snowball or the avalanche. · 5 min read
Record every debt — yours and other people's
Lent a friend 500 lei until payday, borrowed from your parents for repairs, bought a TV in instalments — these are all debts that are easy to forget. A debt written down with a due date won't get lost and won't sour a relationship with an awkward “do you remember…”.
Note separately who owes whom: you, or someone else to you. That way you see not only how much you owe, but also how much money should come back to you.
A loan is not just an amount — it is interest too
Each bank loan payment has two parts: interest to the bank and repayment of the principal. Early in the term interest usually takes the larger share, so the debt shrinks more slowly than it seems. It is helpful to see the schedule: how much interest you have already paid and how much principal remains.
Paying early reduces the principal and therefore future interest. Even small extra payments noticeably cut the total you overpay.
Two repayment strategies
If you have several debts, decide which to tackle first.
- Snowball: pay off the smallest debt first while paying the minimum on the rest. Quick wins keep you motivated.
- Avalanche: pay off the debt with the highest interest rate first. Mathematically it is cheaper — you overpay the banks less.
- Choose the strategy you will actually stick to. The best plan is not the cheapest on paper but the one you see through to the end.
Avoid missed payments
A missed payment means fines, a damaged credit history and stress. Set reminders a few days before each due date. If you see you won't make it, contact the bank in advance: you can often agree to postpone or restructure, whereas after a missed payment the options narrow.