Managing debts, whether in small or large quantities, is difficult. It is a burden that others try so hard to avoid, but with proper financial management, knowing how to pay off debt will become easier.
Debt is the money owed from a friend to a loan from the bank with the idea that the person borrowing agrees to repay. Student loans and credit card purchases are some of their examples.
What are the kinds of debts?
The knowledge of the different kinds of debt is learned to prevent owing debt that will put the finances at risk—a reminder though, that some obligations are described in more than one classification.
1. Secured Debt
The essential item in a secured debt is the ‘collateral.’ A tangible asset backs any amount borrowed from the creditor. The lenders check the borrower’s credit history and calculate their interest rate or the money charged for the act of borrowing.
Collateral is any physical item equal to or more than the money borrowed; losing this item is the consequence of failing to repay the debt.
Lenders are less at risk of these types of debt as they claim ownership of the collateral in the process of lending. The borrower could also be under favorable terms and rates as the approval of this kind of debt is less strict in some cases.
2. Unsecured Debt
This type of debt has higher interest rates than secured debt, as the lender is at a higher risk. Unsecured debt is credit cards, personal loans, student loans, and more.
Lenders consider the borrower’s payment and loan history, debts that are still unpaid, and credit reports. Improving credit score is the first step if the borrower needs to loan.
Paying for unsecured debt must be a priority as it increases rapidly with its interest piling up. This is not highly recommended for people with an unstable income as it could lead to significant debt issues
3. Revolving Debt
Credit cards are what best describe this kind of debt. The infinite cycle of borrowing and paying is opened if the borrower can pay for what is owed under the credit limit.
The credit limit is a certain amount that the borrower could use. Credit card users could choose whether to pay for the minimum payment or the total balance. Avoiding paying the entire balance could risk the borrowers into debt as the interest could increase the total amount owed. To avoid living from paycheck to paycheck, cash is highly advisable than using credit cards.
4. Nonrevolving debt or installment debts
Installment loans are secured as this kind of debt is close-ended; unlike revolving debt, there is no cycle of continuous borrowing and lending. This is ideal for people who do not have considerable savings to buy but have a secured income or who only need money for a specific time.
The debt of this kind is paid in installments before the due date, with interest added every time the borrower pays. This debt could be ideal for some, but if the installments are added, sometimes the borrower pays for the good, which is almost half the purchase price.
How to pay off debt?
Financial decision-making is a life skill, and debt prevents people from being free of financial burdens. The following are the easy ways for you to strategize your finances and in paying off debt fast.
1. Create the plan for the budget.
Track your debt, income, and expenses, and manage your savings. There is no one way of budgeting, so choose to analyze your salary, expenditures, and financial situation to create the best budget plan.
You could choose to manually write your plan or take it digitally to pay off your debt fast; here are some ways to devise a financial plan that works.
2. Debt snowball vs. Debt avalanche
You could choose to pay the most expensive debt or the least costly; it could both work, and it is best to select the most comfortable option that aligns with your financial situation.
The debt snowball is a strategy where you start paying the smallest debt you owe and build momentum until the most significant debt owed is paid. This is for people who want to fast-track the quick gains in paying off debt.
The debt avalanche is a strategy where the priority is first to pay the debt with the highest interest rate. This method allows you to save money in the long run by not allowing your debt to multiply due to interests. This method also encourages paying the minimum balance for other obligations while focusing on the most expensive.
3. Manage your credit card spending
If you are in a position where you cannot control your spending without cash, and you rely heavily on credit cards for any purchase, then consider removing your credit card from your wallet. This is to limit the temptation for over-purchasing and keep your finances under control.
Consider deleting this information as another self-control measure if you have a credit card directly linked to an online store.
4. Increase your income
Applying for a part-time job or selling unnecessary things in your garage helps you earn some to pay off your debt fast. If your work salary is insufficient to pay for your debt or you do not want to lose the bills in your wallet completely, take your time earning.
Your necessary expenses are your priority but if you want something out of necessity, earn money to pay for it instead of borrowing money.
5. Debt consolidation
If it becomes too much a burden to keep up with the loan payments and the due dates, debt consolidation is another way. BlendPH offers a personal loan to transfer a loan to another lender.
Debt consolidation is a way to look for a lender to fund your existing loan. The interest rate for another loan will be higher or lower than in the past, but if your priority is to pay off your debt fast, then debt consolidation is a way to do so.
Personal Loans from BlendPH
Loans differ based on the purpose for which they will be used. Personal loans are any loans used for any reason with validity and under legal conditions.
Loans in the Philippines are repaid over time and are money owed to be used to cover expenses from medical bills to vacation fees. This differs from installment loans used under specific needs, this including loans for education purposes like student loans and home purchases.
Personal loans in the Philippines have varying interests, which depend on the bank you owed the money from, how long you are willing to pay for it, and what kind of loan it will fall under, which could be either secured or unsecured, revolving, and nonrevolving loans.
Personal loan in the Philippines is mainly used for immediate needs, minor home improvement, student loans, housing loans, paying off debt fast, and more. Banks offer personal loans for their users, and BlendPH is one of the online platforms available for this service.
BlendPH is the website to put your trust in, knowing how to pay off debt quickly. The platform offers secure loans for any use from personal, franchise, business, fast, seafarer, Auto Sangla, and educational loans.
BlendPH is an online platform that allows borrowers to fund their goals and lenders who want to grow their wealth through investing.
If you are looking for a platform that will cater to your personal loans with the highest interest rate of 3 % per month, then BlendPH is the best platform for you. To achieve more extraordinary things, BlendPH offers personal loans in the Philippines from Php 50,000 to Php 2,000,000 with different partner lenders, including Welcome Bank.
BlendPH offers personal loans in the Philippines for paying for education, starting a business, paying off credit card or debt, availing of home improvement services, buying a car, and funding travels.
First, check your eligibility with BlendPH’s loan calculator to apply for a personal loan. Afterward, create an account where all the requirements must be filled and tagged as complete. The third step is to wait while BlendPH’s team processes your application by verifying the information and the requirements; after the verification, BlendPH will endorse you to the partner lenders.
The last step is to wait for the funding and disbursement of your loan application and wait for the notification that a lender decides to fund your loan and that the money is ready for disbursement.
To know more about how Blend.PH, the safer and more reliable online P2P platform for you, works. Visit Blend.PH‘s website and start applying now.