Why There’s No One-Size-Fits-All Approach to Debt Relief

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It’s easy to feel like you’re alone in dealing with debt. After all, it’s not the easiest subject in the world to talk about with others. Many people even conceal their debt, working hard to appear outwardly unaffected by financial stressors like collection notices. But rest assured, if you’re carrying debt, you’re far from the only one. It’s likely many of your family members, friends and acquaintances are also facing debt of some sort.

Here’s the proof: For the fifth consecutive year, annual household debt in the U.S. grew. As CNBC reports, debt levels increased across the credit card, auto, college loan and mortgage categories. This rising debt is due to a number of factors. A booming economy tends to make people more confident in borrowing money. Furthermore, the cost of living in the U.S. has risen faster than wages—causing some people to turn to borrowing to keep up with expenses.

Although many people take on debt at some point in their lives, there’s no one-size-fits-all approach to getting rid of it. Why? Because the best option for eliminating debt depends on your specific circumstances. Here are three areas to consider when you’re seeking out a debt relief strategy.

Debt Type: Good vs. Bad Debt

Debt roughly falls into one of two categories: “good” or “bad.” Good debt tends to increase your net worth, meaning you borrow money with the eventual goal of making money from your original investment. Examples include taking out a mortgage on a home or taking out a loan to pay for an educational program. While you still owe money—and “good” debt can become problematic if you can’t repay it—you’ll presumably have something of value down the line.

Debt that’s “bad” goes toward purchasing things that will depreciate in value. Notable examples include vehicles and consumable goods. Credit card debt in particular falls under the category of bad debt because it tends to saddle consumers with high interest rates, and often goes toward paying for items that depreciate in value quickly.

The type of debt you’re dealing with ultimately dictates your options for repayment.

Debt Amount Affects Relief Options

You’ll also have to factor how much debt you’re carrying. You may fall anywhere on the broad spectrum from a few hundred dollars to hundreds of thousands, and different magnitudes of debt call for different strategies to address them.

Consumers may elect to tackle small- to medium-sized debts on their own using a popular strategy like avalanching. According to this theory, paying off debts in descending order by interest rate will save consumers time and money. It’s important to pay the minimum balance due across all debts, even as you’re targeting the one with the highest APR at any given time.

Large debts often call for heavy-duty solutions. To enroll in a debt settlement program through an industry leader like Freedom Debt Relief, consumers must have at least $7,500 in unsecured debt—like credit card balances, personal loans and medical bills. After enrolling, clients contribute money to a dedicated account until they’ve saved a certain amount. Professional negotiators then reach out to their creditors and attempt to settle for less than the amount originally owed. As many recent Freedom Debt Relief reviews reveal, consumers often appreciate partnering with Certified Debt Consultants and negotiators to navigate the process.

Long story short: The amount of debt you carry affects your options for relief.

Your Income Affects Your Strategy

The last piece of the puzzle affecting how you approach debt relief is your income. Strategies like debt settlement require consumers to make regular deposits, often for a span of two to four years. Do-it-yourself debt repayment is flexible, but it’s important to make sure you have enough income to cover living expenses and debt elimination.

Everyone’s financial situation is different, meaning there’s no one-size-fits-all way to relieve debt. The best thing you can do is research your options before committing.

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