I’ve been seriously in debt so I know how it feels, which is awful. There are few things in life worse than waking up in the morning knowing that you will be receiving phone calls from irate creditors or debt collectors. The stress of being in debt can even result in physical symptoms such as an irregular heartbeat, ulcers and insomnia.
If this is you
If all this sounds familiar, don’t despair. There are software tools and apps available that could help you get out of debt. One of my favorites is called Debt Tracker. It’s available for the iPhone and could help you manage or pay off all your debts. It will even enable you to figure out when you would be debt-free. It’s based on the debt snowball method and is said to be very easy to use. (Note: There is also an app for Android phones named Pay Off Debt that works much like Debt Tracker.)
What one user said
Here’s an example of how useful Debt Tracker can be. One user said, “Have tried this app. It’s simple to setup and use. The calculator is really a useful tool. It also has the ability to track payments and provide reports that will put me on the right track”.
What is the debt snowball method?
As noted above, Debt Tracker is built around the debt snowball method for paying off debts. The way this works is that you order your debts by balances owed and interest rates. You then do everything possible to pay off the debt with the highest interest rate, while still making the minimum monthly payments on your other debts. Once you have paid off the debt with the highest interest rate, you will have extra money you can use to start paying off the debt with the next highest interest rate, and on and on until you have paid off all your debts, Alternately, you could choose to pay off the debt with the lowest balance first as you would see some immediate benefits that would help you stay motivated.
The downside of snowballing your debts
Debt Tracker and debt snowballing could help you become debt free but it does come with a downside, which is that it will take you a very long time to pay off those debts. You will have to be very careful to not take on any new debt during that time and you will need to be better money manager. It was probably poor money management that got you into trouble in the first place. You will have to learn to become a better personal finance manager for this to work and this might not be easy.
There are other ways to pay off debt without using the snowball technique. For example, you might be able to borrow enough money to pay off all of your debts, which would leave you with just one monthly payment. Or you could go for consumer credit counseling where you would get a debt management plan (DMP) that could help you become debt free in maybe five years. Thirdly, you could contract with us to settle your debts, which is essentially the only way to get debts reduced short of filing for bankruptcy.
How debt settlement works
The way this works is relatively simple. We contact those of your lenders where you have unsecured debts and negotiate settlements for less than you actually owe. You then pay us monthly until you complete your program, which generally takes 24 to 48 months.
It’s not for everybody
Debt settlement is not for everyone because for it to work you must have not made any payments to your creditors for at least six months. And it will effect your credit score. But if you’re seriously in debt and either can’t or don’t want to borrow more money, debt settlement could be a very good option.