Avalanche, Snowball, Desperate Measures, or Intervention?
It is difficult to pay off your debt when the bills keep coming at you faster than you can make payments on them, especially when you live paycheck to paycheck. It is even worse when you rely on the gig economy as your main source of income, and you never know how much you will earn in the next pay period. You might be able to pay down your debts over time, using the debt avalanche method or the debt snowball method of which personal finance blogs are so fond, but only if you have time to take a few deep breaths and assess your situation. It may turn out that all you need to do is stay the course, or it may turn out that you need a bigger intervention, such as a debt consolidation loan or debt settlement. Thinking clearly about the situation is only the first step. The next step to finding your way out of your debt problems is to contact a Philadelphia debt relief lawyer.
Find Out What You Owe Before You Decide How to Pay It
Being honest with yourself about how deeply in debt you are is not a pleasant experience, but it is the first step to getting out of debt. Add up the remaining balances on your debts, but do not stop there. Interest will continue to accrue, even as you make payments. Instead, multiply your monthly payment by the number of months left until the loan matures. For credit cards, the statement will probably tell you the total amount you will pay and how long it will take you to pay it if you continue making only the minimum payments.
Are You Financially Stable Enough to Attempt the Debt Avalanche or Debt Snowball?
The next step is to make a budget. Is there any money to put toward paying more than the minimum payments on your debts? If yes, which debt do you want to tackle first? Economists would advise you to start with the debt with the highest interest rate. This is called the debt avalanche, and if you follow this method, you will pay less interest over time. People who are faced with debt in their daily lives prefer the snowball method, though. This is where you start with the debt with the lowest outstanding balance. The debt snowball enables you to see results quickly.
Are Band-Aid Solutions Enough?
You can only make progress with the debt avalanche method or the debt snowball method if your income is sufficient. If you are experiencing a temporary reduction in income, and you are sure that it is temporary, you might be able to get by with buy now pay later (BNPL) or peer to peer loans. If not, you may need a debt consolidation loan, or you might need to settle your debts directly with the creditors.
Contact CONSUMERLAWPA.com About Getting Out of Your Debt
A Philadelphia consumer law attorney can help if you are so deeply in debt that just continuing to make the minimum payments will not work. Contact CONSUMERLAWPA.com to set up a free, confidential consultation.
Source:
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