Uncertainty does happen in the time we least expect it. That’s why having insurance is a must. However, not all people were able to save funds to pay for insurance. Some people are earning just to sustain their daily needs and there’s no extra money left. So if something happens we tend to apply for a loan. Aside from emergencies, people also get in debt because of impulsive buying. So if you’re one of the people who are having a hard time paying off debts, here are some strategies to pay off debt that might help you.
Here’s the List of Helpful Strategies to Pay Off Debt:
Strategies to Pay Off Debt : Avalanche Method
The Avalanche method is a helpful method when paying off debts. In this type of method, you will pay your debt in order. From higher to lower. You must pay the minimum payment on all your account but put more money if possible in the account that has the highest debt interest rate. Once you’re done paying the debt that has the highest interest rate, start paying the second-highest until you finish all of your debts.
- Here’s how to use it:
- Order your debts starting from highest to lowest
- Pay for the required payment for all your debts monthly
- Put extra money into your debt that has the highest interest
- Once you’re done paying the highest interest rate, pay off the second-highest with an extra additional money
- After you finished the second-highest, move to the third-highest, and so on
- Just continue until you finish paying off all your debts
Strategies to Pay Off Debt: Snowball Method
The Snowball method is just like the Avalanche method but it goes the other way. Meaning, you will pay off debt from lowest to highest. This type of method will show early progress because you will start by paying off small debt which is kind of easy rather than paying off a high amount of debt. This method will start easy but it gets hard as you reach the highest amount you need to pay.
- Here’s how to use it:
- Order your debts starting from lowest to highest
- Pay for the required payment for all your debts monthly
- Put extra money into your debt that has the lowest interest
- Once you’re done paying the lowest interest rate, pay off the next one to it with an extra additional money
- After you finished that second one, move to the third one, and so on
- Just continue until you finish paying off all your debts
Debt Settlement
Debt Settlement is an option for people who have debt that is already past due. In this method, you will be negotiating with creditors to reduce overall debts in exchange for a lump-sum payment. However, this method can take some time, since you need to talk to your creditor first if they will approve your debt settlement offer. In addition, there is a professional debt settlement company that offers their service to handle the process for you, but it’s not necessary.
- Here’s how to use it:
- Check all your debts
- Determine your ability to pay off debts
- Contact your creditor, inform them that you’re willing to settle your debt
- Bargain with your creditor, start your first offer with a low amount
- Once you both agreed, pay off your debt
Personal Loan
If you have so many loans, applying for a Personal Loan can be an option. But of course, you must find a loan provider that has a loan interest rate. Find a loan that has a lower rate than you’re paying now. Once you get approved, use the money you got from the loan to pay for debts. Afterward, once you paid all your debts, focus on paying your personal loan.
READ: Available Cash Loan Without Bank Account
As a final point, whichever option you prefer, what important is that you’re willing and trying your best to pay your debt. Once you paid all your debt, you should consider applying for insurance or having an emergency fund, so that you’ll avoid drowning in debts again.
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