The Best Ways to Pay off Your Debt

The average American has around $93,492 in debt, including credit cards, student loans, and mortgage balances. Whether you have more or less debt than average, it can be challenging to manage.

Even if you are having a hard time placing a dent in the outstanding balance and staying afloat financially, several options and strategies can give you relief.

  1. Sell Your Structured Settlement

Structured settlements and other types of annuity payments are helpful financial products. With these, you may spread your income through a series of repeating payment.

Structured settlements enable most individuals to balance their finances and guarantee their financial stability in the long run.

But at times, the unexpected happens in people’s lives. When an accident happens, and you need to pay bills or settle debts, you can sell a structured settlement.

  1. Negotiate Lower Interest Rates

Give your creditor a call to negotiate lower interest rates. Depending on your account standing and payment history, you’d be surprised at how many of your creditors will minimize your interest rate.

If you’ve maintained a healthy relationship with your creditors for the past several years, you may be in a better position to qualify for lower interest rates.

This may help you save some cash on your interest payments as you settle those debts.

  1. Get More Income

Making more cash can help you accomplish two different goals. First, you won’t have to depend on your credit card anymore to make ends meet. Second, you may have more cash available to clear your debts. 

You may increase your income by:

  • Making cash from your hobbies
  • Starting small businesses
  • Doing odd jobs
  • Finding a second job
  • Doing freelance projects
  • Selling some things on Craigslist or eBay.
  1. Review How Your Spend

Begin by categorizing all your monthly expenditures, including entertainment, housing, transportation, and groceries.

Your credit card statement can be a helpful tool here. But, you should also look for other aread to cut back on. Afterward, take the cash you have freed up and set it aside to pay off your debts.

  1. Have a Good Plan for Repayment

Basically, there are two major strategies for repaying your debts. This includes debt avalanche and debt snowball.

Rather than concentrating on debts with a small balance, debt avalanches focus on first paying your debts with the highest interest rates. Afterward, you may concentrate on debts with the second-highest interest rates, and repeat until you clear all your debts.

On the other hand, debt snowball concentrates on starting to pay off small debts first and maintaining a monthly payment on all your debts. As you pay off your debts, the cash used for previous debts is snowballed to settle the next small debt. You will have to repeat the process until all debts are settled.

Celebrate the Success!

At times, debt can help you establish credit scores and achieve your goals, like buying a new home, which can be difficult to do without loans.

However, too many debts may add to your interest rate and weigh down your credit score, making it important to celebrate every time you clear a debt.