Note: Post may contain affiliate links.

6 Ideas for Simplifying Your Approach to Debt Repayment

Ever felt like you’re up to your eyeballs in credit card balances, bank statements and receipts? When you’re trying to get a handle on debt, half the battle is getting organized — only then can you figure out how you’re going to systematically pay down what you owe.

Take a deep breath. Here are six ideas for simplifying your approach to debt repayment.

Prioritize Your Debts

Some people swear by the snowball method, a clever title for paying your debts by balance amount from smallest to largest. Others have found success with the debt avalanche in which you start with whichever balance has the highest interest rate, then work down from there.

As long as you’re paying the minimum balance on all your debts every month, it helps to prioritize which one you’ll pay down faster.

Transfer Your Credit Card Balance

The average interest rate on new credit card accounts exceeds 19 percent; it’s closer to 14 percent for existing accounts. But these rates can soar well above 20 percent, too. Trying to pay off your balance plus interest often feels like running on a treadmill toward a far-off destination.

A balance transfer from a high-interest card to a low-interest card, or one with an Annual Percentage Rate (APR) of zero, can help you tackle your principal balance sans accumulating interest. You’ll pay a fee, but this strategy can bring some relief.

Take Out a Debt Consolidation Loan

Juggling multiple debts from multiple creditors? Debt consolidation could make the monthly repayment process easier on you. Here’s how it works: You take out a personal or consolidation loan to pay off all your other outstanding debts. Then you can focus on making a single payment each month until you’ve repaid that loan, often at a lower interest rate.

The success of this strategy hinges on your ability to repay the loan on time, in full — and making sure the interest on the loan doesn’t add up to more than it’d cost in interest to pay off your current handful of debts.

Before Bankruptcy, Explore Debt Settlement

Many consumers find themselves so overwhelmed and frustrated they’re about ready to throw their hands up and declare bankruptcy. But bankruptcy is a final resort. It’s worth exploring all other options before filing.

Some people find debt settlement to be a better alternative to bankruptcy for $7,500 or more in unsecured debts — like credit cards and medical bills. Many debt settlement enrollees who have left Freedom Debt Relief reviews express relief at having a plan in place to pay off major debt, usually over the course of two to four years.

If you’re accepted into a debt settlement program, you’ll deposit a pre-determined amount each month into a special account. When you’ve stockpiled enough professional negotiators will attempt to reach a settlement with your creditors — aiming to get creditors to accept a percentage of what you originally owed.

Use an App to Track Spending

Part of the challenge of debt repayment is making your income stretch enough to cover essentials and make a dent in what you owe. One simple solution is using a budgeting app to track every penny you spend.

This will help you identify areas in which you can cut spending, then apply those “savings” toward ramping up your repayment.

Seek Out Credit Counseling Services

Working with a credit counselor at a not-for-profit agency can help you examine your personal finances with help from a trained eye. You may even be able to get on a debt management plan (DMP) in which you make a single payment every month to the counseling agency and they disseminate it to creditors accordingly. DMPs can earn you lower interest rates, too.

Debt repayment can be challenging, but it doesn’t have to be complicated. Give yourself the best chance of success by simplifying the process.

Sharing is caring!

Speak Your Mind