Best Strategy To Prioritise & Clear Off Your Debts


Accumulating too much debt puts a lot of pressure on your shoulders. It’s frightening when your income isn’t enough to pay those outstanding balances.

You’re on the right page, though.

The guide below teaches you how to manage your debts effectively.

One of the ways to lower the overall interest rate on your many debts, is to collate them all into one. Next, get a low interest loan and make only one repayment per month.

So, if you’re feeling overwhelmed, read the seven strategies below to find the right one for your needs.

Things To Consider First

Before delving into the solutions below, you need to know precisely what your loans are. So, list:

  • The total sum you own, including all the accumulated late fees
  • The interest for each loan
  • The legal actions (if any) that your loan provider(s) have taken against you


1. Budget and Save


The first step to clear off your debts is making your budget.

This is extremely important because that’s where you manage your income.

Side-note: Ideally, you should always have an updated budget for your household, with income, expenses, and saving plans. This strategy helps you avoid debts in the first place, and it keeps you debt-free after you’ve cleared your outstanding balances.

After writing down expected costs and incoming cash:

  • Prioritise necessary expenses.
  • Cut back on the things you don’t need (e.g., eating out or taking your car o work if you have reliable public transport around).
  • Identify and eliminate negative spending patterns (e.g., shopping sprees when you’re tired).
  • Make plans and lists to keep your expenses in check – and stick to them.

2. Debt Snowball Strategy

The debt snowball strategy works like this:

1. You rank all of your debts by size.

2. Use the money you saved at stage 1 to pay as much as possible of that smallest debt.

3. Keep paying the minimum required installment for the other debts.

4. After you finish repaying the smallest debt, put its corresponding installments + the money you can save monthly towards the second smallest debt.

5. Continue until you’re debt-free.

3. Debt Avalanche Method

The debt avalanche method is similar to the debt-snowball strategy, with one caveat: you’ll start focusing on your largest debt first.

Imagine the feeling of clearing an immense loan; it’s liberating.

There’s a problem, though:

Larger debts take longer to repay, which means you can lose sight of your goals more quickly. If you know you’re easily demotivated, choose the debt-snowball strategy instead.

4. Debt Consolidation

Debt consolidation is another worthwhile strategy for multiple loans because it amasses your debts into one. As a result, your monthly installments decrease and your tenure increases.

You can obtain a debt consolidation loan from a licensed moneylender in Singapore or a bank. Bank loans have lower interest rates, but you need a high credit rating to obtain them.

You can also utilise free search platforms like Instant Cash Loan SG that help you narrow down your options!

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5. Negotiations

You can always try negotiating with your lender, but you should craft a plan to show them you’re serious. Underline all the reasons why your proposal is in their best interest too.

Here’s how you should proceed:

  • Explain why you had to delay your payments (e.g., job loss, divorce, health emergency, etc.).
  • Show proof of how/when your financial situation will recover (e.g., when the health emergency finishes, when you secure better employment, etc.)
  • Break down your goal of repaying your loan into smaller steps.
  • Propose a compromise, such as:
    • Freezing your debts for a certain period until you solve your problem
    • Paying only the interest to your loans for a certain period
    • Reimbursing part of the loan in a lump sum now and erasing the entire debt after

6. Home Equity Loan

Consider a home equity loan if your debts add to your property’s value. This loan uses your house as collateral to get you a more long-term, low-interest sum of money.

It’s like converting your previous debts into a mortgage.

The problem is when you can’t repay this new loan. So, stick to the plan you’ve made at step one and continue paying these instalments to keep your home.

This is not the best choice if you’re living with your family members. Instead, speak to us and let us find you a low interest loan that decreases your overall interest.

7. Credit Counselling


Some people are biased against counselling of any kind because it’s a sign of weakness in their minds. But just like a swimming teacher helps you learn how to stay afloat in water, a credit counsellor will teach you how to manage your finances.

After learning the basics of budgeting, you will apply this knowledge to your situation. Your counsellor will also show you personalised solutions for tackling your debts effectively.

They can even negotiate with your lenders on your behalf – what could be better than that?

Wrapping Up

Next time you take a loan, make sure you can repay it. Also, never take money from Ah Long – even if things look dire.

Instant Cash Loan Singapore is always here to help.

Do not fear loans. Find out the advantages and disadvantages of personal loans in our article. We are able to help you source for the fastest and cheapest instant loan in Singapore.

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