One of the biggest mistakes people make when paying off their debts is that they choose to walk alone. Yes, they start paying off their debt on their own without seeking professional help or without a debt plan.
Not seeking professional help because you cannot afford it is one thing, but not having a debt plan is a whole new issue. It is something that can eventually hinder your debt repayment process, leaving you all confused and frustrated.
To help you out, here I’m going to highlight three of the best debt management plans. Each is effective in its own way, so let’s have a look:
Debt Consolidation
If you cannot avoid paying your debt or in case you’ve lost your job and now you don’t have enough to make your debt payments, debt consolidation can help you. In this process, you take a consolidation loan to pay off your existing debt.
Well, you don’t have to worry as consolidation loans come with a minimal interest fee. Thus, returning your debt consolidation loan won’t be an issue. It is precisely why states and other non-state entities usually go with the consolidation loan whenever paying off their debts.
The only downside of this method is that it gives you anxiety about another loan. When you have debt hanging on your head, the last you want is another loan. In this way, the debt consolidation plan surely brings along some anxiety.
Debt Snowball Method
The debt snowball method is quite beneficial when it comes to paying off multiple debts. In the debt snowball method, you hit the smallest debt first and gradually move towards the bigger one. If anything, this method brings along lots of instant gratification for you.
When you get done with one of your debts even if it’s a small one, it provides you with a sense of achievement and keeps you motivated for the future. However, one issue that it leaves unaddressed is the interest fee.
As you hit the smallest debt first, you totally ignore the one with a higher interest rate and the interest fee keeps on accumulating, which eventually doubles the amount. Plus, it’s a time-taking process as you start with the smallest and gradually move towards the biggest.
Balance Transfer
A balance transfer is the best way to effectively eliminate credit card debt. Needless to say, credit card debt comes with the highest interest rate, so it naturally becomes
a sting in your life. Also, you cannot avoid using credit cards and the risk remains with you.
In this method, you transfer the remaining available balance of your existing credit card to another card with a lower interest rate. This way, you pay your credit card debt using another card, without having to pay anything out of your pocket at the very moment. Pretty smart, eh?
There’s no apartment downside of this method; however, many people forget about the fact that they still have to pay the credit card bill. It isn’t something that you can
forget and chill or else, you’ll be caught into the web of debt once again and things will only get worse.
Take all these things into consideration before you choose a debt plan. Rest assured, a debt plan will make the entire process easier and more effective. Good luck!
