If we had three wishes, one of them would definitely be living without debts. We’d all love to win the Lottery or to possibly inherit a huge sum of money from some distant relative that we’ve never even heard of, just to take care of all those debts.
But real life doesn’t have quick-fixes. As much as we want to be rescued from debts, we all need to dig ourselves out of these financial sinkholes. Aside from coming up with the money to repay the debts, you need to find the most effective method that works best for you. Two of the most effective methods are Debt Consolidation and the Snowball Method.
The Snowball Method
This Snowball Method involves taking care of the smallest debts first and then moving onto larger ones. This method gives people a sense of positive progressive momentum when dealing with multiple debts. It also encourages you to keep paying off the debts one after another, starting from the smallest ones to the biggest ones. The downfall of this method is that it can take longer to pay off all the debts and the longer you wait to pay off the bigger debts, the larger the amount of interest will be.
With this method, you don’t need to worry about missing any of your payments. It works best when you have multiple creditors on different dates and different amounts. When you consolidate your debts, they are all rolled into one debt and it makes it easier for you to pay off. Additionally, debt consolidation can reduce the total amount of interest that you would be paying on all the debts.
Hence the latter method is more favourable than the Snowball Method because it’s easier to maintain and keep track of. You only need to make a minimum repayment every month and it allows for you to pay off the principal. You can also get rid of your credit card debts with this method whereas with the Snowball Method, the credit card facilities will still be open since it’s one of the biggest debts and the interest will just accumulate and make the debt bigger.
So when it comes to getting rid of multiple debts, debt consolidation to one easy repayment is more ideal in tackling them all at the same time with a lower interest rate. If you need a more substantial plan to get started on your getting rid of your debts, it will be best to seek financial advice from experts who specialise in debt consolidation to make sure that you’re on the right path. Contact Australian Lending Centre for a free consultation about consolidating your debts or you can enquire online today to find out more.