Strategies for Settling Down Debts
If you’ve ever been in debt, you know it can feel like running on a treadmill. Every month you settle a little to this loan, a little to that card, and eventually, you feel like you’ve gotten well nowhere. But it doesn’t have to be that way, not if you have a bill reimbursement technique in place. One that helps you map out a plan that’s realistic enough to follow. The only thing you have to do is stick to the project, and before you know it, you’ll be moving in the right direction chipping away at your bill.
So without further ado, what are these techniques that you can use in clearing out your debts
Techniques for settling down bills
While there are many ways you can attack your bill, there are two schools of thought(procedures) in particular that we’ll discuss here.
Small Balance Technique
This technique is when you settle off your bills by what is left, the least first. In this technique, create a plan list of all of your credit card unpaid debts from least amount to biggest. If two scales are similar, prioritize the card with the bigger interest cost. When you settle your monthly bills, ensure that the least settlement is due for all of your bills. Then, take any extra cash you have available and put it toward the bill with the least unpaid debt.
Do this each month until you’ve paid off your least bill. When you settle it off, don’t use that account again until your bill is cleared up. Whether you have to hide the card in a drawer, freeze the map in a block of ice or close the account, the point is to stop increasing your bill. The next step is to take the cash you are settling toward that bill, and apply it to the future least unsettled bill on your plan list. And as you continue moving down your plan list, the amount you’re able to settle to each balance continues to grow and grow. You might be amazed how quickly that can happen.
High Rate Technique
Again, create a list of all your bills but this time, arrange them according to their interest cost, with the biggest interest cost coming first. Using this technique, you’ll also settle the least amount due across the board; then you’d focus on sending as much as you can afford to the account with the biggest interest cost. Keep doing that until it’s paid off. Once your unpaid debt is zero, concentrate on the card with the next biggest price on your list and so on.
In summary, either of these techniques can be a great way to get yourself out of bill. And while both techniques have their advocates, it’s really up to you to decide what works best for you. Those who support the small balance technique say that you’ll feel a boost each time you settle off an account, and those small victories will keep you motivated to reach your goal.
On the other hand, supporters of the high rate technique will tell you that over time, you’ll save much more cash and get out of bill sooner by settling off your bigger interest cost bills first. So, what’s right for you? Well, it’s a personal choice, but if you want to get out of debt settlement as little as possible, it’s probably a right decision to use the high rate technique because you’ll get rid of your costliest bill sooner, and settle on the lesser ones in the long-run. However, if you’re the type of person who has trouble sticking to a plan or if you need constant motivation, then, the small balance technique might be a better fit for you.