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For most people, real freedom is intricately tied to having financial freedom. This means you need to be free of your debts which can inhibit you from being able to utilize your capital the way you want and having the quality of life you deserve. There are many things you can do to pay off your debt. The following are just a few of the debt repayment strategies available. 

Debt snowball 

One of the most popular methods of eliminating debt is the debt snowball strategy. This method entails prioritizing paying off your smallest balance first. Essentially, you would pay the minimum amount for all of your debts each month first, then any money left over would go towards the smallest balance owed to a creditor. Although it would be mathematically better to prioritize debts with the highest interest rates, the debt snowball method allows you to pay off a debt as fast as possible which can be what many people need psychologically since it can give them a sense of success right away. 

Debt avalanche 

This strategy is the most efficient mathematically speaking. The debt avalanche prioritizes paying the debt with the highest interest rates first. After you have made the minimum payments on each debt, put all of the leftover available funds into paying the debt charging the most in interest fees. This will save you the most money possible in the long run. 

Consolidating debt 

You may also want to consider debt consolidation as an option. This entails putting all of your various debts into one debt balance. You usually would do this through a personal loan or a balance transfer credit card which you would use to pay off all of your individual creditors, leaving you with a single balance to pay off. 

This will simplify things, requiring you to only worry about making a single minimum payment each month. Oftentimes you may end up with a lower interest rate using debt consolidation.

 Credit counseling agency 

Many people will consult with a credit counseling agency in order to help them with eliminating their debt once and for all. Usually, the agency will negotiate with your creditors on your behalf to reduce the total amount you owe. Once the agency has negotiated payment terms you can afford with each of your individual creditors, you will start making one single payment to the agency which will distribute the money paid to your creditors.  

Generally, credit counseling agencies will not be able to reduce the total debt owed to your creditor. However, an agency may be able to reduce the monthly minimum amount you are required to pay or even convince your creditors to waive some fees. Just like debt consolidation, working with a credit counseling agency can simplify things for you since you will only have to deal with one payment each month. 

Budgeting and personal finance planning 

Of course, the other part of making sure any of these debt repayment strategies actually work is to properly budget your money. This will help ensure you have the money necessary to make the required monthly payments towards paying off your debt. You may even want to talk to a professional to help you formulate a comprehensive personal financial plan. 

Opinions expressed in the attached article are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. The forgoing is not a recommendation to buy or sell any individual security or any combination of securities. Be sure to contact a qualified professional regarding your particular situation before making any investment or withdrawal decision.