Debt jargon can be overwhelming - but understanding it is key to getting ahead financially. Whether you're tackling multiple loans, high-interest repayments, or Buy Now, Pay Later (BNPL) balances, knowing the right terms can help you make smarter money choices and take control.
“I was earning well, but my debt kept growing. I had no idea how much of my income was going toward repayments -until I saw it in black and white. Facing it was hard, but it was the best decision I made.”
Let’s break it down in simple terms:
1. Interest vs. Repayment
- Interest: The cost of borrowing money (a percentage of your loan).
- Repayment: The total amount you pay back, including the loan amount (principal) and interest.
- Why it matters: The higher the interest, the longer it takes to pay off debt. A Money Sweetspot Financial Reset loan can help lower interest so more of your money goes toward clearing debt faster.
“Thanks to a Financial Reset, my repayments were reduced by nearly half. It wasn’t just a financial change - it was a mental shift. I finally felt in control.”
2. Principal vs. Balance
- Principal: The original loan amount.
- Balance: What you still owe at a particular date, including any interest.
- Why it matters: Paying off the principal faster reduces interest and speeds up your journey to being debt-free.
3. Debt-Free Date
- Your debt-free date is when you’ll be completely debt-free if you stick to your repayment plan.
- Why it matters: Having a clear goal keeps you focused and motivated. Money Sweetspot’s financial wellbeing portal helps you track progress and stick to your plan.
“The day I made my last payment, I felt lighter than I’ve ever felt. Debt no longer owns me.”
4. Good Debt vs. Bad Debt
- Good Debt: Helps build wealth (e.g. a mortgage or student loan).
- Bad Debt: High-interest loans with no long-term benefit (e.g. BNPL, payday loans).
- Why it matters: Not all debt is bad, but knowing the difference helps you prioritise repayments and avoid debt traps.
“I thought BNPL was helping me, but when I saw the full amount I owed, I felt sick. I knew I had to change my habits to break free.”
5. Arrears & Penalty Payments
- Arrears: Missed loan repayments.
- Penalty Payments: Fees charged for missed payments.
- Why it matters: Missed payments can damage your credit score and lead to extra fees. Money Sweetspot charges no late fees, giving you breathing room to stay on track.
6. Fast Cash Loans
- These are quick, high-interest loans designed for short-term relief—but they often create long-term financial pain.
- Why it matters: Fast cash loans can trap you in a debt cycle. Consolidating them into one lower-interest loan can help you break free.
How Money Sweetspot Helps
- Consolidate multiple debts into one simple loan, often at a lower interest rate.
- No late fees for minor delays, no account fees.
- Earn Sweetspot Points for repayments - which can reduce your loan balance or grow your savings.
- Access to free financial education so you stay out of debt for good.
Ready to reset your finances?
Find out more about our Financial Reset, debt consolidation loan and how it can help you get our of debt and on with life!
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