Almost everyone carries some amount of debt to their name. For a growing number of Americans, starting out life with a massive amount of student loan debt is a difficult reality.
However, there are two basic methods used to reduce or eliminate debt. They aren’t always easy, but they do usually work!
Debt consolidation definitely isn’t for everyone. For example, if you only have one or two types of debt (even if they’re in larger total amounts) you probably won’t want to consolidate your debts.
But if you have many different types of debts, each with different levels of high interest rates tacked onto the amount that you owe, then debt consolidation might be a good choice for you. For example, if you have a high interest credit card debt, a debt from title loans in Florida, a high interest auto loan debt, and high interest student loan debt in addition to several lower interest debts, then consolidating all those debts into one payment with a potentially lower interest rate would likely be beneficial to you.
Debt consolidation is something that you should consult a financial counselor or advisor about before committing to using it as your primary way to reduce or eliminate debt. They’ll help you figure out if debt consolidation is a good option for you, and they can help you create a debt consolidation plan that’ll keep you on track to get rid of your debt.
Consolidating your debt is helpful if you struggle to keep track with all the different payments on your debts that you owe, and if you’re being choked by high interest rates. You can combine that debt so there’s less chance of forgetting a payment, and you could be able to consolidate down into a lower interest rate on those payments, too.
Slow and Steady
This sounds simple, but it’s definitely not. This is the most effective way to reduce or eliminate debt, but it can be the most frustrating.
The “slow and steady” approach to chipping away at debt is exactly what it sounds like: you establish a percentage of your income to go towards repaying your debts, and you do it as aggressively as you can afford to. Over time, those debts will continue to fall away, and you’ll be able to budget around the payments without having to sit around and calculate how much to give to each debt for each individual payment.
Settling on a generous percentage instead of a dollar amount each month also helps factor in your income. For example, if you were out sick for a week this month and you weren’t paid, then the percentage will compensate for that rather than you having to cut back on your debt payment.
The key to the slow and steady method to reduce or eliminate debt in your life is to start with the debt with the interest rate first, and then work your way down your debts until you end with the one with the lowest interest. That way, every time you successfully repay a debt, paying off the next one will be that much easier!