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paying off debt fast
While speed is a typical goal, paying off debt fast may not be possible depending on circumstance. Paying off debt fast is often idealistic when a debtor has no means to access monies without further borrowing. Fast help begins here. Before we summarize the basic options, let's define what paying off debt can mean in the broadest sense:
1. Paying off balances owed completely and immediately - ending the debt entirely
Towards entire payoff:
2. Paying off creditors - by shifting the debt to another creditor and - ending the original creditor obligation (debt consolidation LOANS)
3. Paying existing creditors under improved terms (debt management PLAN/PROGRAM / SETTLEMENT)
4. Paying existing creditors more efficiently - by actioning a repayment strategy
#. Budget Overhaul - to both reduce expenditure and lower cost (bills)
You'll notice we emphasized the words Loans, Plan/Program and Settlement. These are the THREE core types of Debt Consolidation approaches potentially relevant to consumer debt.
Consolidation of debt is a common undertaking as part of a wider strategy to get debt paid off in the most efficient manner. Consolidation therefore refers to approaches that help one better manage the situation towards entire payoff of the debt balance owed in the future.
1. Paying Off Debt Balance/Creditor Immediately
The only way of paying off debt fast or immediately (without new borrowing debt) is to introduce funds available now or released from elsewhere. Examples include:
- Cash out savings (non-retirement)
- Liquidate investments
- Liquidate IRA
- Sell belongings or personal property of value
- Earn more
Other approaches towards the goal of the entire debt paid off take time; how much time depends on the type and amount of debt, your financial circumstances and the strategy followed.
2. Paying Off Creditors
You can pay off the debt you have with a company (creditor) using monies borrowed from elsewhere. Proceeds from a loan may be used to pay off the original creditor and obligation to them.
There are many potential types of loans that can be used for paying off debts. These include both the specific lending product known as a Debt Consolidation LOAN and Other LOANS that may be used to achieve the same result. The result or goal of a consolidation process that involves a new loan or existing borrowing is to shift the original debt balance to a different creditor under what is a more favorable arrangement.
A lower interest rate is the primary motivation or prerequisite for consolidation. The idea is that the original debt shifted to a different creditor allows you to achieve your repayment goal. It is important to read and understand the dynamics of loans. For example, you may enjoy a substantially reduced monthly outgoing, but at the potential expense of an increase in the total cost of the debt. See our loan article for pros, cons, loan companies and best practice.
3. Paying Creditors Under Improved Terms
It may be possible for the person in debt to negotiate directly with their creditor/s for better terms. A simple example is requesting a card company to 'please lower my interest rate or I must use another card'.
In many cases, securing improved terms yourself is not possible. However, people whose major problem is credit card debt have the option of enrolling in either a Debt Management PLAN/PROGRAM or Debt SETTLEMENT
These are two different types of consolidation service offered by various organizations. Often they are not appropriate for the debtor's situation and both these alternatives should be clearly understood by following our articles. Although these two types of service are commonly referred to as debt consolidation, they do in fact help consolidate repayments against, but not the debt itself. Only a loan has the effect of paying off debt creditors.
4. Paying Creditors More Efficiently
Are you paying off debt balances with two or more creditors involved? For example two or three credit cards? What's your repayment strategy; in other words, who get how much each month? There is only so much money available to make repayments each month.
There are two basic (and opposing) strategies for how you might go about making repayments on multiple credit card balances. These are known as the Snowball and Avalanche repayment approach. Which might help get your debt paid off most quickly depends on you. Read about multi-creditor Debt Repayments Solution
Help Paying Off Debt Fast
Find resources for paying off debt under the preferred approach. It is essential to understand all your options and alternatives and to set a strategy and timeline for achievement of your goal. Outside service help paying debt may or may not be necessary or appropriate. Regardless of whether you pursue debt consolidation in any form or decide to manage and address the effects of debt yourself, success typically requires steps to deal with the cause of the debt. Although debt can arise for many reasons including crisis and emergencies, very often the root cause lies in a problem of income and expenditure. Put simply, this means spending more than you can afford to. Budget overhaul is the process of examining all current expenditure and costs of living for the purpose of improving the monthly budget situation. Spending may be cut back and other bills reduced. Follow the link to our article about budget overhaul; the goal is to spend less such that more money is available each month to put towards paying off debt faster through increased repayment amounts. Another dimension typically required for success is putting an end to further borrowing; not to be confused with a consolidation loan that moves debt, we are talking about incurring entirely new debt on top. This means not adding further to principal card balances. There is no government help or grants for paying off debt incurred through consumer expenditure. Find help and resources here online to help you better manage things today.