Apart from the many platforms emerging that offer money loans, both cash and PayLater, in the marketplace, and every debt must be paid by the debtor, so many people are trapped in debt so that their finances will be difficult to manage and control. The following are several strategies that can be applied to pay off debt as follows:
1. Snowball Strategy
The snowball strategy prioritizes paying the smallest debt first, then paying the larger debt, so to be able to apply the snowball strategy, the debtor must make a list of debts starting from the smallest amount to the largest, then pay off the debt starting from the smallest amount. This strategy will increase the debtor's motivation to pay off all their debts more quickly.
2. Avalanche Strategy
The avalanche strategy is also known as debt stacking. The avalanche strategy is similar to the snowball strategy, but the avalanche strategy focuses more on the highest loan interest which must be repaid first. So debtors must also make a list of debts starting from the highest interest rate to the lowest interest rate. If there is extra money, the debtor can also pay off other small debts. This avalanche method allows the debtor to reduce the amount of interest that must be paid.
3. Debt consolidation strategy
If the debtor finds it difficult to manage debts that have different interest rates and maturities, then the debtor can apply a debt consolidation strategy where all debts are combined into one funded by a third party/creditor (financial institution) so that the debtor only has one debt with one installment. monthly and one interest rate that will be paid to one creditor only. In general, debt consolidation will charge higher fees and interest than bank loans, so debtors must be able to calculate and compare which one is more profitable between using a debt consolidation strategy and other debt repayment strategies. So debtors need to do research on several financial institutions that provide consolidation loans, be they banks or non-bank financial institutions.
1. Snowball Strategy
The snowball strategy prioritizes paying the smallest debt first, then paying the larger debt, so to be able to apply the snowball strategy, the debtor must make a list of debts starting from the smallest amount to the largest, then pay off the debt starting from the smallest amount. This strategy will increase the debtor's motivation to pay off all their debts more quickly.
2. Avalanche Strategy
The avalanche strategy is also known as debt stacking. The avalanche strategy is similar to the snowball strategy, but the avalanche strategy focuses more on the highest loan interest which must be repaid first. So debtors must also make a list of debts starting from the highest interest rate to the lowest interest rate. If there is extra money, the debtor can also pay off other small debts. This avalanche method allows the debtor to reduce the amount of interest that must be paid.
3. Debt consolidation strategy
If the debtor finds it difficult to manage debts that have different interest rates and maturities, then the debtor can apply a debt consolidation strategy where all debts are combined into one funded by a third party/creditor (financial institution) so that the debtor only has one debt with one installment. monthly and one interest rate that will be paid to one creditor only. In general, debt consolidation will charge higher fees and interest than bank loans, so debtors must be able to calculate and compare which one is more profitable between using a debt consolidation strategy and other debt repayment strategies. So debtors need to do research on several financial institutions that provide consolidation loans, be they banks or non-bank financial institutions.
