One of the major concerns for most people these days is repaying their loans, the crippling debt. Not to mention, the domestic debt of the US has nearly tripled post-Covid-19 pandemic. It’s because many people have lost their jobs, the recession has increased, inflation is at its all-time high, and as of now, many Americans are living with debt.
If you’re going through the same, you don’t have to worry anymore. In this article today, I’m going to introduce you to two of the most effective debt plans. We’re going to talk about the debt snowball method and debt consolidation. Both have their pros as well as cons, so let’s have a look and check them out in detail:
The Debt Snowball Method
One of the most efficient debt plans is the debt snowball method. It is highly recommended to people who have multiple debts hanging on their heads. It involves hitting one debt at a time. In the debt snowball method, you usually cater to the smallest debt first and gradually move on to the second smallest. In this way, this method keeps you motivated throughout the process.
When you get done with one of your debts, you feel a sense of achievement, a motivation to move on. However, it totally neglects the interest rate on your debt as you pick the debt with the smallest amount, not the one with the highest interest rate. Thus, if you have credit card debts that usually come with a high-interest rate, this method isn’t for you.
Debt Consolidation
The second method for today is debt consolidation. It refers to the debt consolidation loan. If you’re unable to make monthly debt payments, it’s a great method for you. In this method, you apply for a consolidation loan and pay off all your debt at once or in two parts if that works for you. I’m sure you’re worried about paying off another loan.
Well, you don’t have to worry about it. Debt consolidation loans come with a minimal interest fee and their deadlines are somewhat stretchable; thus, you won’t have an issue repaying one. However, there’s one thing that you need to secure a low-interest debt consolidation loan, it’s a good credit score. In case of having a good credit history, you’ll be able to secure a consolidation loan easily.
The Final Word…
Both debt plans mentioned above have their pros and cons. What I want you to know is that without having a debt plan, it’s going to be a bumpy ride. Thus, to smoothen things, you must go with a debt management plan. Not only will it help you pay off your debt easily, but it will also help you achieve the financial freedom you crave by bringing financial discipline to your life. I hope it helps you out the way it helped me. Here’s wishing you a wonderful day ahead, my friends!