DebtPersonal Finance

5 Effective Ways To Pay Your Debts

Couple Worrying About Debt

We can all agree that every individual would want to live a comfortable life. However, life isn’t always that easy. A lot of people are not born with a golden spoon or a fortune to inherit. Usually, most individuals would need to work their arms off to live more than the normal lifestyle.

While living our lives, for numerous reasons, there are many times when we need a large sum of money, but we’re not able to gain easy access to it. This is where debts come into play, no matter how much we want to avoid it.

Methods to Pay Off Debt

What is debt, anyway? It is anything that you owe to someone. The most common one is money. There are a lot of ways that we accumulate debt. Student loans, car loans, taxes, insurance, bills, and the list goes on.

Below are some of your options in paying off your debts.

Snowball Method

Women rolling snowball

The snowball method is a good process for those who have a handful of small debts to settle. This solution can be great for people who have outstanding obligations on numerous credit cards yet are unable to open a new low-interest personal loan or balance transfer credit card to accumulate your circulating debt.

When using this method, the order in which you pay off your debt is from smallest to largest. A lot of people prefer this method, for it entails a string of small-scale successes during the start.

Avalanche Method

This strategy to get rid of debt is also recognised as debt stacking, wherein you’ll settle your obligations based on the debt with the highest interest rate until the lowest. This method will enable you to pay less interest so that you can get rid of your debt swiftly. It would also be satisfying every time you see the debts with the most significant interest rates vanish.

Debt Consolidation

There are instances when you might find yourself having too much debt, that you are not able to afford to pay it off, even when using the snowball or avalanche method. In this case, you might need to consider an alternative approach.

Another solution to consider would be debt consolidating. It is used when you take out a loan to pay off a number of debts all together. In instances where you have numerous outstanding debts on different cards or statements with varying due dates, settling them all at once using a low-rate personal loan could be an ideal method.

With that said, getting a loan to settle credit card debts has its responsibilities and worries too, as you would need to comply with the terms of your loan agreement, otherwise, you’ll be facing further financial issue.

Debt Settlement

Women on mobile phone and using laptop

This type of debt repayment method would require you to negotiate with a creditor, like a collections agency or a credit card company, to arrange with them to agree to pay a percentage of the amount owed, so as to settle your debt on your credit cards rather than paying the whole balance.

This method typically works for the benefit of the following:

  • (a) people who have already passed the due date of their credit card payments, and
  • (b) people who are able to make huge one-time debt payments.

You are eligible to opt for debt settlement if you have undergone difficult circumstances such as divorce, unemployment, or medical problems. If you get fortunate enough, some creditors also consider allowing you to pay off your debts in part even without the occurrence of extenuating conditions.


In case you have already exhausted all your options, and you are left with no other alternatives, bankruptcy can provide you with a fresh start. Remember if you take this route to consider it carefully as this option adversely affects your credit rating. Declaring bankruptcy is a long and expensive procedure, which you should not take lightly. As such, before signing up for bankruptcy, it is vital to seek counselling on your credit.


The truth is, not everyone has access to an extensive reservoir of money. Most live from pay cheque to pay cheque. And find that unfortunately debt is inevitable.

However, we shouldn’t be daunted by the mere existence of debts, as there are many ways to tackle it and charities like Step Change and Citizens Advice to help work through your options.


About author

Poppy loves personal finance almost as much as she loves her two cats, Tif and Taz.
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