The 7 strategies that will help you to get out of debt
The 7 Strategies That Will Help You to Get Out of Debt
Debt is always a problematic affair for Americans. We all know that after the pandemic phase of 2020, the debt-related matters have turned towards worse. But you can get rid of your debts if you have that kind of determination within you.
Indeed, escaping from the clutch of debt is not easy but if you adopt the right kind of strategies, it can help you to get out of debt quickly in 2021.
A small data on debt-ridden Americans in 2021
The Experian’s data from 2020 says on average Americans carry a $92,727 debt. The credit card outstanding balance, auto loan, student loan, mortgage; all are included in it.
Unfortunately, the Bureau of Labor Statistics’ 2020 data says the average salary of Americans is $52,000.
It is clear from the data that currently the average debt amount of Americans is more than the average income of them.
So, you have to find out a strategy to pay back your creditors quickly and become debt-free in 2021.
Now, you can have a brief look at the 7 strategies that will help you to get out of debt
- You can negotiate with your creditors for a reduced interest rate.
2. You can try out either the debt snowball method or the debt avalanche method.
3. You can ask for a balance transfer card from the creditors.
4. You can create a frugal monthly budget for yourself.
5. You can take out a debt consolidation loan.
6. You may start a side gig or part-time job.
7. You can consult a credit counselor regarding debt management plans.
After reading the 7 points, you may have realized these 7 strategies may be effective for you to deal with your debts.
Now, you can read these points in detail.
1. You can negotiate with your creditors for a reduced interest rate
You can easily negotiate with your creditors for a reduced interest rate if you have a good payment history.
A cordial relationship with your creditors can also be helpful for you. Maybe, you will be able to work out a reduced interest rate after discussing it with your creditors.
2. You can try out either the debt snowball method or debt avalanche method
The debt snowball method and the debt avalanche method are the two sides of the same coin.
With the debt snowball method, your focus will be on paying off the small balance first. But don’t ignore the rest of the debts. You have to repay at least the minimum amount of the rest of your debts.
You have to repeat this debt snowball strategy again and again till you repay your entire debt amount from small to large.
The debt avalanche method is just the opposite of the debt snowball method. Here, your focus should be on paying off the APR (Annual Percentage Rate) from highest to lowest.
The debt avalanche method focuses on the highest interest rate first. Along with making payments to the debt with the highest interest rate, you have to make at least the minimum payment for the rest of the debts.
You have to repeat the debt avalanche strategy again and again till you finish repaying all your debts.
3. You can ask for a balance transfer card from the creditors
When you have a good credit score and you want to pay off your credit card debt quickly, the good option for you is a balance transfer card.
With the benefit of a minimum 0% interest rate, you can pay off the credit card balance within a promotional period of 6 to 18 months.
You have to transfer your outstanding balance from your credit card or cards to the new balance transfer card. Then you can avail the benefit of debt repayment with a 0% interest rate.
The balance transfer card is one of the good strategies to pay off your debts quickly in 2021.
4. You can create a frugal monthly budget for yourself
The new year has just begun. It is the ideal time for you to create a frugal monthly budget. You will be able to pay off a large amount of your debt if you can maintain a frugal-budget in 2021.
Leading a budget-life means you will be able to put a restriction on your unnecessary spendings. Thus your saved-amount will grow gradually.
With the saved-amount, you will be able to pay off your debts in a shorter period.
You can use several budget apps to make the budget calculation easy.
5. You can take out a debt consolidation loan
Like the balance transfer card, the debt consolidation loan also requires a good credit score so the terms and conditions can be favorable from your perspective.
The special feature of the debt consolidation loan is the interest rate of the new loan will be less than all your previous loans.
So, you can take out the debt consolidation loan and repay all your loans with a lower interest rate.
Thus, with the debt consolidation loan, you can merge all your debts into a single monthly payment as well as you can save money on the interest rate.
6. You may start a side gig or part-time job
You can follow the traditional debt payment methods like debt snowball, debt avalanche, balance transfer method, etc to pay off your debts. Along with these methods, you can also start a side gig or part-time job to earn some extra money.
You can choose any freelancing or online jobs that you can do on weekends or a part-time basis.
Your extra earnings can help you out to pay off your debt quickly in 2021.
7. You can consult a credit counselor regarding debt management plans
When you are confused about how to pay off the huge debt amount in 2021, the right option for you may be to consult a nonprofit credit counseling agency.
The financial counselor with the customized debt management plan that will be created after overseeing your financial conditions, can make you debt-free within this year.
By following the financial chart created by the credit counselor, you can get rid of your debts without any stress.
These are the 7 strategies you can follow to get out of debt quickly and that too within this year.
Apart from these 7 strategies, you can take out the help of a debt-expert for a further more specific approach and guidance that will particularly suit your situation. The expert can guide you about the right way to pay off your debt.
Final words
The first two months of 2021 have already passed. You should quickly make decisions regarding the best debt payment strategies for you.
Check out these 7 strategies and choose what is the correct debt payment method for you in 2021.
An Adam Smith quote on debt may be ideal to conclude the article:
“What can be added to the happiness of a man who is in health, and out of debt?”
