How to pay off debts faster
Debt is an unwelcome presence in anybody’s life, and the quicker you can get rid of your debts, the better. Not all debts can be paid off rapidly, but if you’re able to write yours off fast, it may be wise to do so.
Let’s look at how to clear debt fast and what you can do to facilitate debt payments.
How can I clear my debt fast?
Before aiming to write your debts off quickly, you need to take a good look at your finances and gauge just how safely you can actually pay everything off.
The numbers may work out on paper, but it might be unwise to simply channel all of your money into paying off debt. Doing so could leave you without any way to pay for essentials, and can possibly generate new debts if you render yourself unable to pay bills that occur after paying off existing debts.
One way to clear debt fast might be to find ways to consolidate your debt, either into a single lump sum or by consolidating multiple debts across multiple creditors, giving you fewer sums of money to remember and keep track of.
Clearing debt faster may hinge on having more money to clear those debts, and in certain situations you may consider taking out a loan to help pay your debts off. This should be done with the utmost caution.
While the money from a loan may seem the answer to how to pay off debt fast, failure to pay back a loan can only constitute brand-new debt. This is especially true given that debt repayments often accrue interest, meaning your repayments could grow to overtake what your original debt was in the first place.
How can I get out of debt immediately?
If you’re struggling with debts, then there is no secret cure that will suddenly clear it all. The only way to get out of debt immediately is to pay that debt, and if you don’t have your own money to do that—excluding any form of borrowing—then you cannot simply clear debt immediately.
However, you can clear your debts faster overall by having a ‘plan of attack’ to tackle your debts with.
What are the three best strategies for paying down debt?
There are two main strategies in debt repayment described as ‘snowball’ and ‘avalanche’. These can give you a good idea of how to navigate your debt and can even be a strong answer to how to pay off debt fast on a low income.
The snowball approach
This approach is named for the concept of snowballing, wherein something builds momentum as it goes. Accordingly, this strategy aims to pay off the smallest debts first, with minimum amounts being paid on all other debts so that they don’t default.
Debts are paid from smallest to largest, freeing up more cash as you go and ‘snowballing’ into larger debts with this greater capital and built momentum. Not only does it help you focus your cash on debts in a structured way, but it’s a great way to experience progress as you make your way through your debts.
The avalanche approach
Similar to the snowball approach, the avalanche strategy arranges debts by their interest rates rather than their amounts—highest to lowest.
The highest-interest rate debt is paid off first, while other debts again have their minimum amounts paid to avoid trouble arising in the meantime. This prevents debts from getting much further ahead and accruing interest in large amounts while you’re paying the overall smaller debts.
It could be a more attractive approach for some when compared with the snowball strategy, especially if mounting interest is the greatest concern you have surrounding your debts. Additionally, paying off a larger debt can be a healthy confidence boost.
Debt consolidation may be a good way to simplify multiple debts into a single repayment, preferably with lower interest.
Debt consolidation is typically achieved with a debt consolidation loan, or could be done with a balance-transfer credit card. Either way, it doesn’t erase debts and simply combines them. Be aware that there will still be plenty of money to pay.
However, simplifying your loans into a single payment that you can focus on completely can make the process of getting debt-free much shorter.
Irwin Insolvency for debts
Our expert debt management services are designed to help individuals and business owners effectively manage financial problems and offer you a way out of debt.
From tailored debt advice to more comprehensive solutions such as debt management plans and debt relief orders – if you need help understanding debt, need advice on how to pay off debt quickly, or simply need an insolvency practitioner to guide you through financial difficulties, contact Irwin Insolvency today.