Dealing with debt can be very difficult, especially when you have no financial support around you. Plus, some debts can be good and others can be bad. Bad debt is the one which causes you the most problems.
When it comes to dealing with debt, there are many ways you can go about it. One of the more common methods is speaking to a financial debt advisor to see the best ways to pay off your debt. However, there is a new modern way that seems to also be successful which is a debt payoff app.
Different Debt Payoff Apps
There are many different types of debt payoff apps which you can use. All of which achieve the same goal and that is to pay off your debt. Some apps will help you with budgeting and others keep you on top of your bills. Let’s take a look at the different types of debt payoff apps and why they will benefit.
Bill Organisers and Budget Planners
The first type of apps that we will look at are bill organisers and budget planners. These apps will allow you to put all of your debts into one place so you can see what you owe. They will also allow you to choose a repayment method for all of these bills in one place. They will also give you advice on where to put your money.
Create A Debt Reduction Spreadsheet
Sometimes, all you need is a simple method such as a spreadsheet. Now, we understand that not everybody is an expert when it comes to creating a Microsoft spreadsheet or Google Sheets. However, many companies will create these spreadsheets for you.
Managing debt is difficult and putting them all onto one spreadsheet with formulas also makes it difficult. That is why you should get a company to do it for you. Some companies will even offer to create a spreadsheet for you for free such as Vertex42. They will also incorporate different repayment methods.
Automated Repayment Apps
Another type of debt payoff app is an automated repayment application. Here you can manage your debts and bill repayments. This helps ensure you make your payments on time as well as not missing a payment completely.
Apps like Bright Money are great ways to pay off your debts. These apps will review your finances and then decide how much you pay towards each debt. The minimum amount will always be paid towards your debts however, it will also pay more towards the debts with the higher interest rates.
It isn’t all doom and gloom with these apps. Some of them will encourage you with notifications which will help keep you motivated. They will notify you that your credit score has improved or you are halfway through paying off one of your debts.
How To Choose The Right Debt Repayment App
There are several factors you must consider before you commit to one debt repayment app. All of which should help direct you towards picking the right app to manage and pay off your debts.
Cost
The cost of the app should always be a massive deciding factor. Remember, you are in debt so you need to pay very little. Some apps are completely free to use. Others require payment but we recommend you use a trial version to test and find the right one for you.
Once you have a variety of apps you like, compare them in terms of price and see which is the more affordable debt repayment app.
User-Friendly Interface
The next important factor is to choose an app which is easy to use. If you start using a repayment app that is hard to use, it will make you not want to use it. Therefore, you stop repaying your debts. Again, use different trial versions to find the app most suitable for you.
Debt Types
Some apps only allow you to put certain debts into the app however, other apps will allow you to manage all debts in one place. If you have multiple credit debts, you will want to choose an app that will allow all credit card debts.
Before you pick an app that you may need to pay a subscription fee for, make sure the app allows you to manage your debts.
Repayment Options
There are many different methods to repay your debts. Applications will also provide you with multiple methods of repaying your debts. For example, you could be advised to apply for a DRO or repay your debts using the avalanche method.
Account Integration
Another factor you should consider is account integration. Some debt repayment methods will allow you to integrate all of your credit accounts and bank accounts. However, some can be more time-consuming where you have to enter all of the debts manually.
Different Debt Payoff Strategies
Many factors help you decide which app to use but there are also many payoff strategies as well. All of them help you achieve your goal in different ways.
Debt Snowball
The debt snowball method is a great way to pay off debt and celebrate quick wins. In this strategy, you will prioritise paying your smaller debts first. As you pay off your smaller debts first, you will have less debts to pay off. Once you have paid the smallest debt, you will move on to the second smallest debt.
If motivation is something you struggle with when repaying your debts, this method may be the best strategy. These small debts are simple and will help you pay them off immediately.
Debt Avalanche
Debt avalanche is another common type of debt repayment. This is a more tactical approach to paying off debt as you are paying off debts with the highest interest rates. This is a much smarter method as in the long run, you are spending less.
One of the issues with this debt repayment method is that you may not see any progress over the short term. Nevertheless, it can be far more beneficial to your bank account in the future.
Stair-Stepper
Up next is the stair-stepper and this is a combination of debt avalanche and debt snowball. It is a more suitable strategy for someone who has multiple debts. Additionally, you will group your debts with this method. For example, debts will be £1-£1000 for group one. Group two will be £1001 – £2000 and so on.
Once you have grouped your debts, you will pay off the first lot of debt but only the debts with the highest interest rates. Then you move on to the next group.
Summary
A debt payoff app is a great way to deal with your debts. It will make your repayment fees more manageable. Sometimes, we need assistance and motivation to pay our debts. That is why a debt repayment app makes it much easier.