Debt – it is something that, most of the times, comes unexpectedly because it can occur after solving some economic problems, health issues or unforeseen accidents. Solving these problems means you having to get a loan or using your credit card.
In the following paragraphs, we will show you how to get out of debt in 5 simple steps. These ways will cover credit card debts and not only. We also advise you to get informed and do research on your situation, so you will come up with the best strategy to remove the issue that is debt out of your life.
1. Snowballing Payments – Smallest Balance and Highest Interest
This way to get out of debt is one of the best as well as one of the fastest, and it also works with any type of debt.
Basically, if you choose the “smallest balance” way, you have to make the minimum payments on all of your debts first. After that, use as much money as you can to pay off the debt with the smallest balance. After finishing the payment of the debt with the smallest balance, move on to the next debt like this and repeat the process until you’re done.
If you choose the “high interest” way, which also is a mean of saving money in the long term, you have to focus on paying off the balance with the highest interest rate. Being the largest amount you have to pay per month, getting rid of the one with the highest interest will lower that bill. It is not as fast as the “smallest balance” way, but it is a way to make sure that you can apply even more money to the next balance.
2. Balance Transfer – Credit Cards
This is a method of getting out credit card debt. Balance transfer cards are types of cards with low-interest rates and which usually come with a period with zero interest. What you have to do is transfer to balance of your other cards on the balance transfer card.
It is a quick way to get out of debt. Because of the low-interest rate, more of your payment will go straight to the balance on the card. You can also pay off the balance before the zero interest period ends, which basically means free money. One thing to remember is to stop using the old card as you will just build up more debt – and you want to get out of it!
3. Student Loan Consolidation
If you find yourself having a student loan debt, one of your options is a student consolidation loan. This means you should get only one loan, instead of paying back multiple student loans – which are probably at different interest rates.
Because this loan can have a lower interest rate than the student loans, this means you will be able to pay your debt at a faster rate.
4. Getting out of Payday Loan Debt
If you have been successfully tempted by one of these payday loans – which are a big no-no by the way – the first thing you should do is to consolidate your debt with another lender. Because banks offer you better interest rates, you will be able to get out of debt while spending less money on interest.
5. Getting out of Business Debt
In order to avoid the shutdown of your business, the first thing you should take into consideration is a business loan. In this case, you should choose a loan that comes at a lower interest rate than the other one. This type of loan works pretty much like a consolidation loan. You have to pay off your larger debts and consolidate them into one payment.