Are you looking for a suitable way to pay off debt? Well, then you have come to the right article because over here we will discuss how professional methods or DIY options to pay off debts can be helpful to you.
Different people. Different approaches to debt.
Under the umbrella of the Do It Yourself debt repayment option, a debtor through his own will and efforts tries to pay off the debt.
If you decide to seek professional help, there are a few professional strategies that can resolve your debt issues.
Get to know about the types of Do It Yourself options to pay off debt and professional debt payoff strategies and then decide which one works best for you.
Types of DIY debt payoff strategies
Are you the type who likes to work independently in solving financial issues? Then the DIY debt payoff strategy will be suitable for you. Before you sit to prepare the budget and so on, have a brief understanding of the types of debt paying off methods.
1. Debt Consolidation Loan
The sole purpose of the debt consolidation loan is to combine all your loans into one. The loans may be offered by major banks or non-profit debt consolidation companies.
However, be cautious about using a debt consolidation loan. These loans may include extra fees, thus increasing the cost of the loan to a higher number.
It is advisable that you seek a low-interest loan from a bank or a credit union for better terms and conditions and be certain that you are not being scammed.
2. Home equity loan
In this type of professional help, the borrower utilizes the equity of his/her home to pay off debt. The loan amount is determined according to the collateral used.
This provides the debtors with an opportunity to have access to a large sum of money.
It is much easier to qualify for such a loan than other types of loans because the former is secured by your home.
There are many benefits of a home equity loan as it is attractive to both borrowers and lenders. Key benefits include low interest-rate, easy approval even in the case of bad credit, and borrowers can demand a large sum of the loan and they get to enjoy tax benefits.
With your home as collateral, the loan is secured and it’s a safe deal for lenders.
3. Credit card balance transfer
This move can only be made when one of your credit cards has enough credit limits. A low credit limit shouldn’t refrain you from transferring your balance. What the average person can also do is transfer just one or two of the highest interest rate credit card balances to ease some of the debt.
One thing to keep in mind when you consolidate debt with a balance transfer is to ensure that you are going to save money with the transfer. Otherwise, there is no point in consolidating debts as you get to pay more.
4. Debt snowball method
First of all, you have to list your debts from the smallest outstanding balance to the highest one.
The debt snowball method allows the debtor to make minimum payments on each debt, barring the smallest one, which should be at the topmost priority. Now pay the smallest debt as quickly as possible.
Once you get rid of the smallest one, your focus shifts to the next debt account in your list. It saves you the money you would have paid every month to make the minimum payments.
Once you get into the habit of repeating the process of paying debts from smallest to the largest, the second debt will also get cleared.
Hence, this is how a debtor utilizes the debt snowball method to his best advantage.
5. Debt avalanche method
In this method, the debtor lists debts from the highest interest rate to the lowest one. In the debt avalanche method, the debtor makes minimum payments on all the debts.
As already said, the debts are arranged according to their interest rates and not by their balances. You begin by paying off the highest interest rate debt and then you slowly move to clear the lowest interest rate debt on the list. By doing so, you save a significant amount.
Are you finding DIY options to pay off debt too difficult? Do you want to avoid taking risks? There’s another way out. Check out the types of professional debt relief options that most debtors use to get themselves out of debt.
Types of professional payoff strategies
Don’t shy away from discussing your financial matters with a professional in case you find it too challenging to do it on your own. The advantage is that we’re just a phone call away. If you have a half-hearted knowledge of the types of professional help that’s available to you, here’s a brief look.
1.Debt Management Plan
With a debt management plan, financial experts work closely with you and your creditors to create a realistic monthly payment plan, minimize fees, stop collection calls, and assist you in paying the debt more efficiently. It is a simple and effective debt relief option to get your work done clearly and precisely.
2. Credit Card Counseling
The job of credit card counselors is to advise you on managing your money and debts. They assist you in preparing a budget and offer free workshops and educational materials related to the debts. The counselors are very well experienced and are trained to guide you in budgeting, consumer credit, debt management, and other money-related issues.
3. Consolidation program
Many consumers make up the mess of having multiple bills to pay to multiple creditors over different payment deadlines. In such a situation, debt consolidation fits well as a debt relief option.
What it does is that it combines all the bills into a single payment.
It provides the benefit of making a one-time payment, that too, at a reduced rate. Debt consolidation is also known as bill consolidation or credit consolidation. Consumers can wish to consolidate with or without the help of a debt consolidation loan.
There are numerous businesses helping out people to choose a suitable debt consolidation program. Ask around, research, and read reviews online and then select a trustworthy debt consolidation company.
This strategy simplifies the debt payment process. The debt consolidation company in this process pays creditors on a timely basis, while working to secure reduced interest rates, lower charges, and puts an end to late fee payments.
4. Debt Settlement Program
A debt settlement program can be a good option for people who are heavily debt-ridden. Before you enroll yourself in a debt settlement program, it’s important to get some settlement advice from an expert financial professional or a counselor. This is because many debt settlement services are not exactly what they appear to be.
Instead of paying money to the creditors, you choose to pay to the debt settlement company.
The company negotiates with the creditors on your behalf to reduce the burden of debt.
5. Bankruptcy
Are you in deep soup? Wondering how to get out of debt quickly? Filing for bankruptcy may be a suitable option for you if there’s no way out.
Many people do not want to opt for this option as they feel there’s a stigma attached, but it’s a wise decision taken to reset the financial life and finally put things to an end.
In order to achieve something, we have to compromise a bit, and to get out of debt, filing for bankruptcy can be a good option.
It is not an easy life if you are ridden with debts. But getting out of it, as fast as you can, is the only way out. In such a situation, you either opt for a do it yourself debt relief option to repay debts or you prefer seeking the help of a professional. Whichever option suits you, remember the more time you save in paying the debt, the better it is for you to feel financially secure.
Many people do not want to opt for this option as they feel there’s a stigma attached, but it’s a wise decision taken to reset the financial life and finally put things to an end.