Struggling with debt? These offbeat tactics might help
What's the story
Managing debt can feel daunting, especially when conventional methods fail to deliver.
Unconventional repayment strategies offer a fresh perspective and a route to financial security.
These creative tactics address different financial situations, enabling people to select methods that suit them best.
By familiarizing oneself with these alternatives, one can manage debt efficiently and possibly achieve financial freedom sooner than expected.
Strategy comparison
Snowball vs. Avalanche method
The snowball method is to pay off the smallest debts first while making minimum payments on larger ones. This gives you quick wins and boosts your motivation.
The opposite is the avalanche method, where you pay off debts with the highest interest rates first. It can save you money in the long run by reducing overall interest payments.
Both strategies have their merits, and choosing between them depends on personal preferences and financial goals.
Loan consolidation
Debt consolidation loans
Debt consolidation loans allow you to merge several debts into one with a lower interest rate.
This simplifies monthly payments and can help reduce overall interest costs if done right.
However, make sure that the new loan terms are better than your existing debts before going ahead with the consolidation.
This strategy demands discipline not to pile up new debts while repaying the consolidated loan.
Credit transfers
Balance transfer credit cards
Balance transfer credit cards provide a chance to transfer high-interest credit card balances to a card with a lower or 0% introductory interest rate for a limited time.
This can greatly cut down interest expenses if used sensibly during the promotion period.
It's important to pay off as much of the transferred balance as possible before the regular interest rate applies after the intro period ends.
Additional earnings
Side hustles for extra income
Working on side hustles or part-time jobs can give you extra income dedicated solely to paying off debts.
This additional cash flow helps reduce debts faster without impacting your day-to-day expenses or savings goals.
Common side hustles can be freelance work, online tutoring, or selling handmade crafts online, each providing flexibility with respect to time and the amount of money to be earned.
Rate negotiation
Negotiating lower interest rates
One of the best ways to manage debt more efficiently is to contact your creditors directly and negotiate lower interest rates.
Most creditors would be open to requests from customers with a good payment history or those facing temporary financial hardships.
Successfully negotiating lower rates reduces your monthly payments and the total amount you will need to repay over time.