What Resources & Tools Are Available To Manage & Eliminate Debt?
It’s not uncommon for young adults to have trouble managing their finances and making headway in eliminating their debt. Fortunately, there are lots of resources available to help tackle this problem, from budgeting apps to debt consolidation programs. Here are some of the resources people can use to help manage and eliminate their debts.
Credit Counseling Services
Credit counseling services can provide assistance in managing and eliminating debt while also educating people on proper financial planning practices. These services are typically offered by nonprofits and focus on helping individuals get a grip on their current financial standing and develop a repayment plan that meets their individual needs.
Debt Management Programs
Debt management programs are designed to help individuals who are having difficulty managing their debt. These programs usually require people to make a single (often lower) monthly payment to the organization, which then distributes the money to each creditor. The organization will also negotiate with the creditors on behalf of the individual in order to reduce or eliminate interest rates, waive late fees, and reduce overall debt balances.
Debt Consolidation Loans
Debt consolidation loans are loans specifically taken out to pay off multiple smaller loans at once. These loans allow individuals to pay off multiple debts in one shot, which can make it easier to manage and eliminate the overall debt. These loans are typically secured by collateral and offer lower interest rates than most consumer credit cards.
Debt Settlement Services
Debt settlement services work with creditors to negotiate lower balances on outstanding debts. These services typically charge an upfront fee and a percentage of the balance you’ll be able to eliminate. Generally, these services are only a good option for individuals who have a high amount of debt and can’t pay it back in full.
Budgeting Apps & Websites
In addition to services and loans, there are a variety of budgeting apps and websites available to help individuals manage and monitor their spending habits. These apps and websites make it possible to check your balances and transactions in real time, as well as set budgets and track spending against them. Some of the most popular budgeting apps and websites include Mint, Tiller Money, and You Need a Budget.
Next Steps
If you’re struggling to manage and eliminate debt, it can be helpful to start by reviewing your current financial situation and gaining a better understanding of your expenses, debt levels, and income. This will help you get an idea of where you stand in terms of your debt and begin to devise a plan for tackling it. You may also want to reach out to a credit counseling agency or financial advisor to discuss your options, as they can provide valuable advice on how to proceed. Finally, if you decide to pursue one of the options mentioned above, be sure to do your research and thoroughly analyze your options before committing to any program or loan.
Resources
- What is Credit Counseling? – Consumer Financial Protection Bureau
- Debt Management Programs: What They Are and How They Work – NerdWallet
- Debt Consolidation Loans Explained – DDS Mortgage
- Debt Settlement vs. Consolidation – Bankrate
- Budgeting 101: How to Create a Budget & Make It Stick – Becoming Minimalist
What tips and strategies can I use to pay off debt?
1. Set a budget and create a debt repayment plan.
2. Increase your income. Take on a second job or apply for freelancing opportunities.
3. Prioritize or take a “snowball” approach to debt repayment. Start with smaller debts and work your way up to the larger ones.
4. Cut expenses and make sacrifices by eating out less, reducing your cable package or cutting out non-essential purchases like clothing and entertainment.
5. Make lump-sum payments when possible. Make larger payments when you receive a windfall, such as an inheritance, tax refund or bonus.
6. Take advantage of balance transfer offers. Most credit cards offer these promotional zero-interest balance transfers, allowing you to pay off debt faster.
7. Consolidate your debt. Consider a debt consolidation loan to combine multiple debts into one lower-interest loan.
8. Seek advice from a credit counselor. They can help you create a payment plan to reduce debt and teach you money management tips.
What is the best strategy to pay off multiple debts efficiently?
The best strategy for paying off multiple debts efficiently is to focus on paying off the debt with the highest interest rate first. This method, called the “debt avalanche” approach, helps minimize the amount of interest you will pay over the life of the debt. Additionally, making multiple payments each month can also help speed up the process. Once the debt with the highest interest rate is paid off, you can then move onto the debt with the next highest interest rate.
By following this strategy, you can efficiently pay off your debts and save yourself from paying high interest charges.