Nearly everyone has to deal with debt in their lives, some of it from day-to-day life such as mortgages, some from circumstances beyond their control like job loss and illness, and some from less-than-perfect decisions, like uncontrolled spending. How people deal with debt effectively largely depends on their financial savvy, but the good news is that anyone can learn to manage and pay off debt, with a willingness to study methods and apply some determination.
Snowball Method
The Snowball Method was first popularized by financial guru Dave Ramsey. It involves incrementally paying down either the smallest debt or the debt with the highest interest, then applying those payments to the next smallest debt along with the minimum payments, and repeating the process unless all debts are paid.
Debt Management
Sometimes it makes more sense to make one large payment than fifteen or twenty smaller payments. Companies such as Rescue One Financial provide customers who have multiple high-interest debts a way to negotiate with creditors and consolidate their payments into one plan that makes sense for them.
Negotiating Interest
If someone has a few large debts with high interest, it’s probably that interest that prevents the debts from being paid quickly. Most consumers don’t realize that they can call their credit card companies and ask for an interest reduction, and as long as they have a good repayment record, the credit holders will likely grant their request. This saves money for both the consumer and the creditor, as the creditor wants to make sure they get repaid and most people can’t afford to pay the exorbitant interest rates on credit cards these days.
These are just some of the effective ways to handle debt. But if a person is willing to apply themselves, they can get out of the cycle and be debt-free in a relatively short amount of time.
