Steps for Establishing a Debt Repayment Strategy
What is a debt repayment plan?
A debt repayment plan is a strategy to help you get out of debt.
People incur debt for different purposes, some incur student loans, some incur debt to buy property, some do it to boost their business or help out in unforeseen circumstances. Acquiring debt to invest is a key strategy used when growing a business. However, payment of debt is necessary for sustainability of that business or brand.
Very big organizations take loans for certain projects even when they have enough funds to finance such projects. It is a core strategy in the financial world. These organizations also have a debt repayment plan in place which makes borrowing the fastest way to facilitate growth in other sectors for them.
If you are in debt, you don’t need to worry any longer.
If you are about to take a loan, once you are certain you have repayment plan, you are good to go.
Getting out of debt can be easier when you plan your strategy. An effective debt repayment plan could help you pay up your debts quicker.
Before getting any loan, consider how easy or tough it will be to repay it in the long run based on income earned.
Do your research on the financial policies that affect the banks around you.
Increase your monthly payment by finding ways to make extra income. After conducting your research, make comparison on the basis of: interest rate and time.
STRATEGIC DEBT PAYMENT PLAN
METHOD ONE:
Make a list of all your debts, then put them in the order that you’d prefer to pay them off. Then you pay down your debts one by one until they’re all crossed off the list.
Start by writing down all your debts manually or using a spreadsheet to list it out. You either choose to pay off your debt in order from the highest interstate rate to the lowest one or you pay off the lowest interest rate to the highest. This often gives the feeling of accomplishment.
METHOD TWO:
Another method is to consolidate your debts by transferring them all to a single loan or credit card. Then you have just one debt payment to make each month until you’ve paid down your debts.
If you feel overwhelmed by the number of payment you have to make each month, you may want to consider this option. Consolidating all your debts or transferring them to a single account means you pay off all debt at once and in full.
This method makes paying off debt less stressful and confusing.
METHOD THREE:
Balance transfer to your credit card. You can transfer all debt to your credit card and take advantage of the no interest policy for 12-24months. Then you pay off the loan every month without any interest.
•However, you must be credit worthy before the transaction goes through.
•You should consider if there are any balance transfer fees that can increase the amount you owe.
MORE STRATEGIES
•Find another source of income so you can increase the amount being paid back to cover the loan.
•You can decide to add any extra cash you get to cover up the loan e.g cash gifts.
•You can also get out of debt faster by reducing your spending. For instance, you could cut back on food expenses by shopping in bulk at the grocery store. Or you could pay less in rent by downsizing to a more affordable apartment. Every dollar you save with these changes can be used to help you get out of debt.
About The Author
