No person wants to be in debt. Whether they owe $100 or $100,000, the feeling that they owe a person or an entity is never comfortable. At times, the debt can become so overwhelming they don’t know what to do. Fortunately, debtors have many options when it comes to paying off what they owe. The following are a few of the available methods to achieve this goal.
Debt Consolidation Loans
Don’t give up when you’re in debt. A better financial future is possible. Many people achieve this future with the help of a debt consolidation loan. Obtaining a loan to pay off existing debt comes with many benefits.
First, the interest rate of a debt consolidation loan is often lower than what one is paying in interest on credit cards. Furthermore, there is only one payment they must make each month, which means they are less likely to miss the payment. One missed payment can significantly add to a person’s debt once any fees and penalties are assessed. A debt consolidation loan helps to eliminate this concern.
The Debt Snowball Method
Another way many people dig their way out of debt is with the help of the debt snowball method. The individual lists their debts from smallest to largest, ignoring the interest rate of each debt when doing so. They then take any extra money they have each month and apply it to the smallest debt in addition to paying the minimum payment on that debt. Once the smallest debt is paid off, they move to the next one on the list until all debts are paid in full.
Use Extra Money to Pay Off Debt
A person might find they have extra money at some point. This could be birthday money from a family member, a bonus at work, or money for an item they sold. This extra money should go to paying off debt. Although it would be more fun to spend the money, as it wasn’t anticipated, paying off the debt makes more sense.
The sooner the debt is gone, the sooner the person will have extra money each month to spend as they please. Keep this in mind when using the funds for this purpose, as it makes it easier to do so without feeling resentful.
Balance Transfer Cards
Consider getting a balance transfer card and transferring high-interest debt to this card. Continue paying the monthly payment that was required for the original card. When this amount is paid toward the balance transfer card account, more of the payment will be going to pay off the debt, as the interest rate has been reduced. This allows the borrower to pay off the debt in less time.
However, don’t transfer the existing debt to a new card and run up additional debt on the card with the new lower balance. Doing so will only cause more financial issues in the future.
Negotiate a Lower Interest Rate
Talk to the credit card providers and see if they will lower the interest rate on the existing debt. They may be willing to do so if they feel the debtor will not be able to meet all obligations. They would rather get some money than none at all, so it never hurts to ask.
Getting out of debt is possible. Take it one step at a time and don’t let a setback derail the process. By constantly working at this goal, a person will find they can achieve a better financial future, often sooner than they anticipated. When this day arrives, they will have a feeling of freedom they never thought possible.