How to pay off your debt
Everyone keeps preaching that you should pay your debts – but no one ever explains how to do it. Well, here are the most common debt payment methods – if your debt is affordable, you are not skipping payments and you are not taking from Peter to pay Paul.
Snowball method:
Here, you pay your smaller debts first. Psychologically, this method works well – because there is a real sense of achievement when you can square up an account, close it and move onto the next one.
Avalanche method:
With this method, you pay down debt with the highest interest rate first. You’ll save money in the long run by keeping interest charges under control.
- First pay the minimum payment on all of your debts.
- Secondly, put any additional money toward the account with the highest interest rate. Then continue to do this until the high-interest account is paid off.
- Thereafter, take the minimum payment you were paying on the first debt, as well as any additional cash, and put that toward the account with the next-highest interest.
If you are skipping payments and feeling overwhelmed by your debt, then the best thing to do, would be to contact a registered debt counsellor who can:
- Lower the interest rates on your outstanding debt.
- Lengthen your repayment term.
- Consolidate your debt repayments to one lowered monthly payment.
- Free up money in your budget so that you have more money left for necessities.
- Protect you from harassment by debt collectors.
- Secure your assets against repossession.
- Give you peace of mind.
Everyone is struggling. No household has been immune to the effects of Covid and lockdown.
If you are feeling uneasy about your financial situation – then please contact us for a free debt assessment to determine if you are over-indebted.
