Living with debt is not easy. You keep juggling your finances and struggle to make the ends meet. Either it takes a toll on your monthly expenses or the debt keeps crippling and you start losing your sleep over it.
As desperate as such situations are, they can be avoided if you plan things strategically. Yes, you need to have a proper debt plan when dealing with debt. To help you out, here I’m going to list down some of the most effective debt plans. They’ll help you dig your way out of debt. Have a look:
The Debt Avalanche
In the debt avalanche method, you make minimum payments to all your debts and direct the remaining amount to the debt with the highest interest rate. It’s a pretty effective debt plan; however, you need to have a considerable amount of money in your account for this.
That’s right, guys. If you don’t have the required amount in your account every month, the debt avalanche method would fail. Also, it requires consistency, so make sure to be consistent when following this method.
The Debt Snowball
Another renowned debt management plan that works well for multiple debts is the debt snowball method. In this method, you hit the debt with the smallest payable amount first and once you get done with it, you move to the next one.
The best thing about the debt snowball method is that it keeps you motivated along the way. It provides you with instant gratification as you get done with one debt after another.
Debt Consolidation
Ranking third is debt consolidation. Often opted by states and different non-state entities around the world, debt consolidation is a quite effective debt plan. In this method, you take a consolidation loan to pay off your debt.
I reckon that it’s not easy taking a consolidation loan when you already have debt hanging over your head, it’s the best option for people who are unable to make their monthly debt payments.
Bankruptcy
Bankruptcy is an incredible idea for those who cannot afford to pay their debt and those who have minimal to nothing in their savings account. Although it’s usually a preferred option when it comes to corporate debt, it can also be used for domestic debt.
In case you have lost your job or you know that you have a hundred other expenses that come before your debt payments, you can go for bankruptcy. Declaring bankruptcy will wipe the slate clean, giving you a fresh start.
Balance Transfer
Last but not least, there’s an option of balance transfer, too. It’s only applicable to credit card debt. In this method, you transfer your outstanding balance to another card with a lower interest rate.
After that, you continue making the monthly debt payments, only this time with a less interest fee. It’s a pretty smart trick for people who are struggling to make their debt payments. After all, credit card loans are the hardest to pay off, given the high-interest fee.
All these debt plans are effective in their own way. Make sure to thoroughly check them out before you opt for one. Best of luck!
