Nobody's perfect and many people have a debt to pay off. The question is: “Do you have a plan?” Get out of debt with the suited repayment plan that is integrated into your budget.
Paying debts can be exciting if you have a straight, well-organized plan. Connect all your credit and loan accounts, and we'll show you the way to a debt-free future. After that, add the accounts you’d like to pay off. Don’t forget to include promotional rate or forbearance into calculations to make your plan more accurate.
The feature is based on patterns known as “avalanche” and “snowball” that we have discussed above. Our smart algorithm calculates the most profitable debt repayment strategy, so you'll save hundreds or even thousands by paying less in interest!
See how many payment cycles are left until the debt-free date. You can always change the amount of money towards paying debts if you feel like paying more or less and apply changes to the current plan.
See how much is paid and left to pay correspondingly. Correct your budget if you step off the road. Stick to your plan with the PocketGuard debt burndown chart.
Play with the repayment budget amount to see how your strategy changes. Apply a new budget to your strategy to become debt-free faster.
Few words about debts
Debt stands for the amount of money that one should repay back. Simply said, that is something borrowed by one party from another. Debts are needed by many to have an opportunity to buy more goods they couldn’t afford under normal circumstances. It all sounds great unless you know how much you borrow and return all funds on time to avoid problems.
In any case, debts have a ripple effect on your entire financial life. You should keep an eye on them if you want your credit scores to be positive. Without a good financial reputation, you won’t be able to use many services.
A certain credit limit is set to prevent consumers from overspending. However, some people still manage to purchase too much. It’s necessary to keep in mind that both credit restrictions and interest rates may change.
Installment debts come from several types of debts. They include various loans and mortgages. Usually, such things as the interest rate and how much you pay per month are fixed from the very beginning, but they can be modified under certain conditions, so you should always specify those details.
Paying your debts on time is of utmost importance. In case a borrower ignores or skips the payment due date, the one who lends money can report such misbehavior to the credit bureaus. This single mistake can cost a borrower their reputation. It remains on their credit reports for up to 7 years. Sure, some fees can be paid later without such consequences, but it’s still tiring and burdensome.
Aside from your payment history, it may vary how each type of debt affects your credit story. Installment debts do not affect the credit score a lot, but it is still unpleasant. However, revolving debt is different and more risky. So, what may impact your credit scores negatively? It happens in case a borrower has higher balances compared to their credit restrictions from month to month.
That is especially true for multiple cards.
It’s essential to understand the total amount of debt you owe. Having a clear understanding of the numbers will empower you to make a repayment plan that actually works.
Many people may be unsure what the total is across all accounts, so the first thing to start is to visualize what you owe across different accounts. Link all your credit cards to get the entire picture of your debt landscape.
After you’ve determined the total amount you owe, it’s time to dig a bit deeper and read the fine print. Are you aware of:
It’s important to know the debt details because they will ultimately help you determine the best repayment plan.
You should define the smallest amount of money that you have to pay back monthly to avoid issues and keep your score and reputation safe. It is not a problem to estimate that amount. Most banks determine the minimum payment by calculating 1 percent of the total balance owed.
Once you understand the big picture, it’s time to create a debt repayment plan. There are two main approaches to covering what you owe.
Debt snowball. Pay off the smallest debt first while maintaining the lowest amounts to pay on all other debts. As each debt is paid off, the cash used for the previous debt is “snowballed.” It’s like a snowball principle. The sum from the previous payment which is left is used to cover the upcoming tiny debt and so forth until you’re done with the entire amount you borrowed. Choose this strategy if you need additional motivation by seeing all debts are paid. However, this will not save as much money as the next approach we’re going to look at.
Debt avalanche. Determine which debt has the highest interest rate. If you can do that, pay this one in the first turn. Pay minimum monthly payments on the rest of your debts. After that, consumers focus on the debt with the second-highest interest rate. The cycle continues until the borrower gets rid of all debts successfully.
It’s important to celebrate your debt repayment victories to keep your motivation high. Let's say you paid off the first $1000. Great! Treat yourself!
Set milestones within your larger debt repayment plan. Once you achieve one, make something for yourself. What about ice cream? :)
Plan a budget for such things to stay on track, especially if you follow a zero-based budgeting strategy.
You’ll never get out of debt if you’re continually borrowing money using credit cards. No one tells you to close the accounts because that will damage your credit score and reputation.
Stop getting loans, so you don't have the ability to create additional debt. New debt increases the payments you have to make, which creates additional strain on your monthly income. It’s tough to live without credit cards, but if you’re serious about getting out of debt, find a way to live without exceeding your income.
Borrowers should do whatever possible to reduce an interest rate. If this indicator is high, it is more difficult to cover what you owe. Why is it a good idea to lower an interest? Well, it leads to the minimized monthly interest. Also, this practice that banks can help with makes it possible to pay off your debt faster.
So, having a good credit score is one target which our tool helps to hit. It is the key to leveraging more toward getting a lower interest rate. Taking advantage of a 0% balance transfer offer is even better.
Personal loans are beneficial for anyone who finds themselves on the wrong end. It means having too many debts or being unable to pay them. If your credit score is at least above average (650 or higher), you may be able to get a personal loan of up to $35,000 at a lower APR than your credit cards. Start covering your debts way quicker to live a normal life!
PocketGuard helps thousands of people pay their debts every day. Our goal is to build a simple, achievable plan built into your budget. You’re responsible just for your own discipline.
Sign up for PocketGuard
To learn more about how the debt repayment plan works, you can use our online calculator. To create a customized plan and integrate it into your budget, sign up for PocketGuard.
Add your accounts and details
The more accounts you add, the better debt repayment plan and budget capabilities you get. From credit cards and loans to mortgage and car insurance. Enter details such as APR, minimum payment, and more.
Setup payoff budget and choose a strategy
Allocate enough money towards paying off debts, among other necessities such as bills and savings. Choose a financial strategy based on tips and recommendations from financial experts and PocketGuard. Then, consolidate your payoff budget based on your needs.
Succeed!
All you need to have now is discipline. Don't worry as PocketGuard will notify you if you ever step off the road so you can correct your budget.
Become debt-free on your own terms with a personalized plan, repayment
schedule, and burndown chart consolidated in your monthly budget.
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