Tired of piling up debt? It’s time then to consider a debt repayment plan to rid you of the burden of debt. When considering a plan there are two schools of thought to consider. One is to start by paying off debt with highest interest going onto debt with the lowest interest. The other option is snowball: to pay off the small debt while paying minimum amounts to the largest debt. This helps to gain momentum and maintain motivation in the implementation of the payment plan. Whichever option you choose, a solid plan will help you in offsetting the debt list. Let’s consider payment by higher to lower interest rates.
Ironically when struggling with the “common” debt, you might find yourself slapped with other occurring emergency debts. These include court action, bailiff action, disconnection, eviction for mortgage or rent arrears which tend to carry uncomfortably short deadlines of payment with tough penalties if forfeited. Consider other impromptu means to pay off this debt before deadlines to avoid the consequences.
Credit cards notoriously charge the highest interest rates and are considered bad debt. Definitely, you want to pay off the bad debt that is costing you more money. You can find a good debt consolidation company that will consolidate all your credit cards into one low-interest card with a monthly figure agreed upon in advance. You can use the saved interest to boost the repayment of good debt or invest the money to enable you to pay the good debt more easily.
Even though student loans will allow you to defer during hard financial times, these deferrals accrue interest. And although these interests are lower, you definitely don’t want to add to your already mounting debt. Therefore, pay these student loans within the greed upon deadline. The best approach is to pay minimum monthly to this loans and accrued interests.
Money borrowed towards a home is considered good debt because it can help boost your financial position. If you can afford it, simply pay off the mortgage. However, mortgages have low-interest rates and it may be better to put the money in for your retirement or other investments with higher returns instead of paying the entire mortgage at once.
Feeling overwhelmed and considering filing for bankruptcy? You have the last option in credit counseling. This is an in-depth debt training and reduction process tailored to help individuals trapped in consumer debt. A credit counselor evaluates your financial situation, to enable you to embark on a debt elimination process. Equally important, the process entails the combination of budgeting, loan consolidation, renegotiating with creditors, debt settlement and other viable strategies to take away your heavy debt burden and keep you from relapsing into debt.
Regardless of the option of your choice in eliminating the debt baggage, financial success comes with choosing to remain focused to meet the set targets. Paying debt is tough; it takes determination to make tough choices to cut unnecessary expenditure and make an informed spending decision. By the same token, reward yourself for every milestone achieved to keep the candle burning.