In order to get your finances in order and become financially stable, you need to take control of your liabilities. It will not only prepare you for a better future but also help you sleep like a baby at night.
Alright. Let’s have a look at some of the best debt management strategies that you can adopt to get rid of your debt and move towards financial prosperity. Have a look:
Individual Voluntary Arrangement (IVA)
The individual voluntary arrangement, aka IVA, is a legal agreement between you and your creditor that buys you time. It allows you to make debt payments as per your affordability.
Not to mention, IVA is all about your convenience. One of its kinds is lump-sum IVA in which you make a full payment all at once or divide your debt into two to three parts. The other is like paying for a car lease, where you make payment after a month or two at your convenience.
Debt Snowball Method
Ranking second is the debt snowball method. It’s a systematic debt management approach that works well for multiple debts. Yes, if you have multiple debts hanging on your head, you can take on the debt snowball method.
In the debt snowball method, you pay off the smallest debt first and then turn to the second smallest. In this way, this debt management process keeps providing you with instant gratification, keeping you motivated for the future.
For those who are struggling with credit card debt, a balance transfer is a great option. As you know, credit card debt comes with a higher interest rate. It’s precisely why most people cry about it.
In this method, you transfer your remaining credit card balance into another account with a lower interest rate. It’s a pretty smart truck as you pay your credit card debt using another credit card. Though your bank won’t recommend such strategies, it’s something you must look into.
If you’re sick of the interest rate that comes with your debt, one option is debt consolidation. It’s when you take a loan to pay off your existing debt. You pay the lump-sum amount, so the issue of accumulating interest fees remains in control.
Furthermore, the debt consolidation loan itself brings along a minimal interest fee, so you won’t have much trouble paying it off. Not to mention, it will buy you more time as you’ll start paying the loan from the start.
The fourth is debt settlement. It is another thing you can think about. It involves talking to your creditor to settle the debt, once and for all. Either you can talk to the creditor yourself and renegotiate a deal or hire a professional to do so on your behalf.
However, you must be careful when hiring a third party. They are going to charge a lot of money and the goal here is to save money as much as possible. The amount saved can be later directed towards your debt repayment. It goes without saying that every penny counts in such desperate situations.
The Final Word…
Lastly, I would request you not to wait until a financial crisis finally hits you. It’s not easy dealing with a financial crisis; therefore, it’s important that you adopt a debt management strategy at the right time.
Furthermore, in case none of the above-mentioned strategies work, you can move towards bankruptcy. Not to forget, declaring bankruptcy is a major decision. Hence, you must take everything into consideration before you move towards it. I wish you well, my friends!