Debt is something that can bring down your total financial worth by a considerable amount.
Here are a couple of debt repayment strategies that you can employ to pay off all your dues and also some vital things you need to undertake in order to pay off all debts on time.
Snowball technique The snowball technique is one where you repay your debts by paying the starting with the smallest and then moving towards the biggest.
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For this, you have to with the smallest and then moving towards the biggest. For this, you have to make a list of all the small debts that you have and start repaying them one by one.
This is a great technique as you have the chance to start repaying as soon as you come into a little money.
It will also have a great psychological impact on you, as you will develop the confidence to repay all your debts and be done with it in no time.
However, the larger debts will keep looming and collecting interest and you will have to pay a lot more than what you had signed up for.
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Avalanche technique The avalanche technique is the opposite of the snowball technique.
Here, you start by repaying the highest debt and then move towards the lowest.
For this,you have to find the debt that has the highest value and also commands the biggest rate of interest.
You have to have enough money saved up to repay it and start repaying it at the earliest.
Many people struggle to come into such high amounts of money and fail to repay the highest debt in full.
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However, money experts suggest that it is best to use this technique, as people will have the chance to not pay in excess and save on a lot of money.Credit report Remember to always have your credit reported checked from time to time.
You have to get your free copy and inspect it to check whether the entries in it are correct or some erroneous entries are present.
If you do spot erroneous entries then, you have to realize that these are causing you to have a bad credit score.
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You have to send it for corrections immediately in order to correct your scores.Even if it is a small error like an error in your name then you must have it corrected immediately.
Using cash Make sure you use cash and not your credit cards. Credit cards will further ruin your credit score, especially if you have maxed out on it. Consider surrendering them and having just one card.
Just make sure this is the oldest card that you have and not any new card that you recently bought. Have two purses with you where one contains just cash and another one just the card.
Use the cash wallet as much as possible and have the card wallet as a last resort and not your main wallet.
Waiting If you wish to purchase any big-ticket items such as a television or washing machine, then wait for it until all your debt has been repaid.
Don’t jump into it when you still have a lot of debt to repay. If it is an emergency, then don’t use your credit card and try and buy it using just cash.
If this is not possible then your credit card and try and buy it using just cash. If this’s not possible, then don’t buy it until all your debt is paid for and you have enough money saved up that will not just help you buy the product but also be left with a surplus after your purchase.
Unifying It is always a good idea to unify all your debts.
This means that you borrow money from just one source and repay all the other debtors. This way, you will only have to repay to one source and not many sources.
By unifying, you can also successfully cut down on the amount of interest that you pay.
Day for example you owe $10,000 at 12% and $5,000 at 10%. By borrowing $15,000 from say a friend, a relative or a credit union, at 10%, you have the chance to save on a lot of money and need not rush to have all of them repaid and have a little leeway.