Lost all hopes of becoming debt free? Know what you need to do!
Debts never come in small amounts!
They always have to be big fat numbers, sitting and eating up your money.
And, no matter how hard you try to cut down those debt accounts lose, you will only end up sacrificing your savings, with those debts still hanging on comfortably.
Hence, you can get hopeless and frustrated when it comes to paying off debts, and might even give up on becoming debt free permanently.
But, you may not worry much, as here is this post specifically designed for you to help you understand, in what ways can you get out of debt, without compromising your savings, income and financial wellbeing.
There are two ways you can clear your debts. One is on your own, the other is by getting professional help. Let’s get through each of them, and you can check for yourself, which way you want to become debt free, once and for all.
Firstly, you can get rid of debts all by yourself:
Take out a low interest loan for consolidation purposes:
Although there are some loans, marketed as consolidation loans, they are practically personal loans, that are only meant to consolidate existing debt accounts.
Therefore, you can take out a personal loan, and pay off all your debt amounts using this loan. After which, you will be left with only this loan to pay off.
You can always expect to save a lot on interest charges by using this method, as when compared to all types of unsecured consumer debts, personal loans tend to carry the minimum interest rates per annum.
A consolidation loan, will definitely come of great help, if you are having unpaid credit cards, payday loans, and obviously other personal loans. You can easily transfer all those balances, into one such consolidation loan, and grab the opportunity to evade high interest fees.
You can use balance transfer, when having only credit card debt:
For multiple credit card debt, you can opt for a credit card balance transfer procedure, to obtain an averaged out interest rate, for your total existing credit card debt amount.
Suppose, you have more than one credit card, with different balances on each of them, respectively.
When you do a balance transfer, you take out another new credit card, especially termed as a balance transfer card, and pull all your existing credit card debt amounts into this new card. If you get all lucky, then you might even get a balance transfer card, that has a 0% interest rate for a certain period, as an introductory offer or perk.
Once you have successfully done the transfer, your old credit cards get paid, and you can focus on only paying off the balance transfer card.
Follow up a suitable debt payment strategy:
The two most widely used payment methods that you can use are the debt snowball, and debt avalanche.
Different from each other, debt snowball aims to pay off the smallest debt amount first, while debt avalanche is inclined toward clearing the debt, with the highest interest rate, first.
In either case, you will be making accelerated increased payment on your target debt. But, you should continue with the minimum payment required for each of your debt, while eliminating your target debt by making extra payments.
So, if you are snowballing, then arrange your debts as per the ascending order of their amounts. And, if you plan to use avalanche, then arrange your debts in the descending order of their interest rates.
They both are effective, if you can maintain consistency.
Take help of a budget:
Yet, no matter what you do, having a budget with you, is always a big help. With a good budget, you will be able to track all of your expenses and all the places your money is going into. It is important to be calculative in finances, else amidst all the debt payments, daily expenses, and bills, your money can get brutally wasted. Read The Budget Showdown, to know which budget fits you the best.
Secondly, tackle debts with professional help:
Sometimes, working on your own can become lengthy and tiresome. In that case, it’s better you pay off debts professionally.
You can enroll in a debt management program, serviced by a debt relief company, and let the association do all the painstaking jobs.
You can even ask a debt relief company, for a legal debt settlement, and get your debt amounts reduced significantly.
When you are working with professionals, you can hope to see the creditors and banks respond well and prompt. There will be various legal procedures involved, with the experts working out everything for you.
And, in contrast to DIY (Do It Yourself) debt elimination, the success rate of professional debt help is a lot higher.
But, whatever process you choose, you need to remember, that keeping patience and not losing focus, is the key to absolute freedom from debts.