Facing bankruptcy and crippling revolving debt can seem like a slippery slope, and even when you pay your debt collectors, it can feel impossible to get ahead enough to put money into savings. Most seeking debt help first look to a debt consolidation loan or cash loan. However, the bad credit loans often have hidden strings and steep interests rates in the fine print.
In today’s financial landscape, the youngest generation can work for years paycheck-to-paycheck, covering bills but not saving a dime. So what is the best method for debt management in a way that can generate savings on a regular basis? Here are some real-life solutions to get the ball rolling.
Consumer Credit Counseling
A credit card counseling program allows you to stay current on your credit card payments. Your creditors will reduce the interest rates, resulting in you getting out of debt faster (Debt free in approximately 4.5 years). You are responsible for only making one monthly payment to the consumer credit counseling company each month and they will pay your creditors out of that payment. Be sure to create a spreadsheet of your monthly financial commitments as a comparison to income to make sure this is the best course of action for your debt relief.
Debt Consolidation Loan
Loans of this nature are best for those that have high debt but also recently started receiving a higher and more secure income. Debt consolidation loans tend to come with higher than average interest rates, but you will receive the funds immediately, and similar to credit card counseling, you will only need to make one singular payment to pay back the loan. Use the funds to pay credit card bills, other loans, mortgage payments, etc. The funds are up to your discretional use, but beware! The temptation to use these immediate funds for non-necessities can lead to further financial trouble.
Debt Snowball Method
According to Golden Financial Services, “The debt snowball method of paying off debt is when you pay minimum payments on all of your accounts besides for the one with the smallest balance. You’re going to aggressively attack that smallest debt first, by putting every dollar that you can get your hands on towards paying it off. Just like how a snowball accumulates snow and grows in size as you roll it, your monthly available cash-flow will also grow in size after every time you pay off a debt. This method works by using psychological principles. When a person achieves a goal, like paying off that first credit card debt – the brain releases dopamine, and it feels good. Another benefit of the debt snowball method is that your credit utilization ratio and credit score simultaneously improve each time a credit card balance gets paid in full.”
A necessary step in advance of using this debt snowball approach is to create a budget analysis worksheet, which you can easily do by using this new budget tool here.
After completing your budget analysis with our new tool, you will be directed to the debt snowball calculator which can also be accessed by going directly to it here.
According to academic research, the debt snowball method has proven to be the most effective route to achieving credit card debt relief.
An Offer from Golden Financial Services
Golden Financial Services offers consumer credit counseling, debt settlement, and debt validation. Debt relief programs will save you more than what a loan can save because instead of paying the entire loan back, you only end up paying a fraction of the debt back. We can lower all unsecured debt, now making it easier to pay auto loan and home equity line of credit!
Let’s see what the experts can do to help you! You can speak with an IAPDA Certified debt relief counselor at 858-605-6196 for free.
Additionally, we offer a free debt relief calculator so you know where you stand before you call!
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