How A Debt Repayment Plan Works
If you’re in the process of tackling your debt, you’ve already taken the most important step to financial security. Now all you have to do is figure out a debt repayment plan that works for you. With the right approach, you can pay down your debt over a set amount of time easily and responsibly. The result? Living debt-free. Read on to find out how this result can be achieved.
Here’s A Look At How A Debt Repayment Plan Can Work For You
Different Debt, Different Plans
In general, a debt repayment plan is a personal approach to paying down your debt until it is eliminated. Typically, you’re looking for a plan to get you out of debt quickly and take advantage of the lowest interest rate charges.
If you have credit card debt, tax debt, or student loan debt, you may use different types of repayment plans that are tailored for each form of debt and your specific situation. A credit card debt repayment plan is usually created by the debt holder, but there are assisted plans available created by a credit counseling agency. Other forms of debt have different plan options.
Debt Repayment Plan Steps
Credit card debt is the most common form of debt — Americans carry on average around $6,500 in credit card debt — and should be the first one to target since it often comes with a high-interest rate. As you pay down your debt, that high-interest rate will go down to something more manageable.
The first step is to organize your debt, taking a thorough and honest look at what you owe. If it’s a credit card debt repayment plan, you’ll need to outline the amount owed to the creditor, the interest rate (APR) debt, and your current balance.
Give your creditor a call and see if they can accommodate your debt repayment plan in a way that adjusts the schedule of repayment that works with your budget and long-term debt elimination plan.
Depending on your plan and relationship with your creditors, they may agree to pause current payments without giving you penalties, which is called forbearance. You’ll still make minimum payments, but you’ll be doing so while putting more cash toward your overall debt elimination.
Which Debt To Tackle First
There are two main approaches to a debt repayment plan: paying off the highest debt first or starting with the lowest debt and working your way up. Many find the highest-debt first approach to be beneficial since your highest debt total is usually the one with the highest APR. Starting with this debt and moving down to the next most expensive and so on is called the avalanche method.
Alternatively, those going with the snowball method to debt repayment start with the lowest debt amount and then work up to paying off the highest total. Paying off your smallest debt quickly can be a big motivation to move on to your next-smallest debt until your plan is complete.
Getting Help From Professionals
While there are debt repayment plans tailored to different forms of debt, it doesn’t mean the plans will be easy. There’s nothing wrong with trying a plan you created on your own and realizing that it just isn’t working. And it’s OK to not know the best solution for you. That’s where professionals can come in. A credit counselor will review your financial situation and discuss different debt management or repayment options, as well as other ways to improve your finances.
In many cases, the counselor does the hard work for you. They may contact your credit company to see if there’s a possibility of a lower monthly payment and lower interest rates. The downside is you’ll likely have to pay a credit counseling enrollment fee and monthly fees as your plan goes on.
Consider Title Loans For Assistance
Debt repayment can be easily derailed if you are hit with a financial emergency. A needed home or car repair, a hospital bill, or not being able to pay your rent or mortgage can be a significant roadblock as you work toward debt elimination. A Georgia title loan may help.
Title loans (also known as title pawns) use your vehicle’s title as collateral in exchange for a loan that is paid off over time. With a title pawn, you can address financial emergencies quickly and get back to your debt repayment plan.
At Georgia Auto Pawn, Inc., you may qualify for a pawn of up to $15,000 in as little as 30 minutes. Just start on our homepage. Fill out the short title pawn form and we’ll give you a call to guide you through the rest of the title pawn process.
Get Started Today
A debt repayment plan is a significant step toward financial security and freedom. A title pawn can help you stick to your plan by coping with financial emergencies quickly and easily. And the good news is that with Georgia Auto Pawn, Inc., you can get a title pawn online. Start today on our homepage, give us a call, or visit a Georgia Auto Pawn, Inc. location near you.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.