Most people make the mistake of not going with a debt management plan. It is something that hurts their finances in the long-term as they move on a path with no direction. Yes, a debt management plan can provide you with the direction you need to pay off your debt.
It can make the process of paying off your debt easier and smoother and that too, without hurting your finances. The following are a few ways to pay off your debt easily:
The Debt Avalanche
First and foremost, we have the debt avalanche method. It is a must try for anyone who has a debt with a high interest rate. As you know, paying off debts with high interest rates is harder than anything else.
The reason being, the interest rate nearly doubles the amount you need to pay off. In the debt avalanche method, you make the highest payment on the debt with a high interest rate, which helps in settling it easily and in less than no time.
An Individual Voluntary Arrangement
For those who are sick and tired of their creditor harassing them to make quick debt payments, an individual voluntary arrangement aka an IVA can save the day. It’s a binding agreement between you and your creditor that buys you time and saves you from harassment.
Since it’s a legal agreement, your creditor cannot violate its terms or else, there’s always a penalty clause included in the document. Hence, you can easily pay off your debt without anyone pressurizing you to make the payments.
The Debt Snowball
The debt snowball method is very effective for those who have multiple debts hanging on their heads. It works by targeting the debt with the smallest amount first. Once you get done with it, you move on to the second smallest.
This way, it keeps providing you instant gratification. You remain motivated throughout the process and that makes paying off your debt easier. Not to forget, it adds discipline to your life as you become more careful with your finances.
The Debt Settlement
If you’re unable to pay off the full amount in the given time, it’s time you get some of the debt settled or at least a part of it waived off. Many people get the interest fee waived off, which makes repaying the debt easier for them.
For this, you need to hire a financial expert or an attorney as s/he is going to negotiate with your creditor on your behalf. It’s always better to take professional help when it comes to serious issues like debt settlement. They’re skilled people who can efficiently handle the situation for you.
In case you’re badly struggling with your finances and your savings are already drying, declaring bankruptcy is one solution. It can provide you with a fresh start by removing all your debts; however, it’s the last resort you shall seek.
When declaring bankruptcy, you may have to lose some of your luxury possessions. Although the bankruptcy laws are different in every state, giving up on your house and cars remains the same for most.
That’s all, folks! Do your research and go for a debt management plan that best suits your needs. I wish you well!