A quick perusal of any financial website will show you that there are numerous strategies which you can use to reduce the amount of money you owe if your plan is to become debt free as quickly as possible. Many of these strategies do actually work and the decision about which one to use really depends on personal preference, your motivation and, to a large extent, your will power.
Is Your Debt Actually Manageable?
Depending on the size of your debt and your level of income, it may be possible to pay off everything you owe within a reasonable period of time. If this is not the case and you are in serious debt and struggling to make ends meet, then an IVA may be the best option and you should discuss this with a qualified financial adviser to ensure you get the best guidance for your situation.
What is the Stack Method?
If you have a steady income, however, and earn enough to at least pay the minimum amount to service your debts, you may want to consider the Stack Method as a strategy for reducing then eliminating your debt.
The Stack Method is described as a quick way of paying off what you owe by putting all of your debts in a list in order of interest rates, with the highest rates at the top of the list. Then, in a nutshell, you throw as much money as you can afford at the debt at the top of your list until it is eliminated before moving on to tackle the next one. Again bear in mind that you must be realistic about your ability to manage in your current circumstances and if you’re wondering ‘what is an IVA?’ an IFA can help you with this.
In order to succeed using the stacking method there are a number of very important steps that you should follow after you have drawn up your list of debts. Firstly, see if you can reduce the interest rates with balance transfers, then create a repayment schedule that allows for emergencies as well as some “fun money”. Stick to your schedule and reward yourself each time a debt is eliminated and, above all, DO NOT create more debt by borrowing more!