The Burden of Plastic Money


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The cost of living in Manhattan is 154% higher than the national average. No wonder many people say that if you can make it in New York, you can make it anywhere.

Financial advisors estimate that to live comfortably, you need to earn three times your rent. Therefore, an average Bronx citizen would have to earn around $7,000 per month to achieve that goal. However, if we consider that New York’s unemployment rate is about 11%, we can easily see why so many New Yorkers live in debt.

The Burden of Plastic Money

Is there a way to manage your finances more efficiently and live debt-free? Here are some tips and tricks on how to repay your debt more easily.

Debt Repaying Methods That Work: Snowball and Avalanche

You’ve probably heard of snowball and avalanche credit card debt repayment methods. But do you know which one is right for you? Let’s break down each method so you can decide which is best for repaying your debts.

The Avalanche Method

The avalanche is an accelerated debt repayment plan, which relies on you making minimum payments toward each debt you have except for the one with the highest interest rate, which you should pay off in full. That way, you’re focusing on paying off the highest debt first so you can move on to the second-highest once the first one is cleared, and so forth.

One of the main benefits of the avalanche method is the fact that it lowers the amount of interest you’ll pay to the bank in the end. It also reduces the debt repayment time.

However, this method is not for everyone. In fact, it takes a lot of commitment and discipline, especially if we take into account that there might be some unforeseen expenses throughout the year.

The Snowball Method

With the snowball method, you take the opposite approach and strive toward repaying the smallest debt first while putting just the minimum payments toward other debts you might have. Once you pay off the smallest debt, you move on to the next one until it’s completely paid off.

While it has more sense to pay off the debt with the highest interest rates first, a debt avalanche is not a viable solution for everyone. The snowball method, in that sense, might be more convenient since “small wins” will motivate you to continue with the journey toward becoming debt-free.

The biggest con of this method is the fact you won’t be able to save money on interest, as you would with the avalanche method. It also takes longer.

Snowball vs. Avalanche: Which is Better?

Both of these methods require debtors to tackle debt one at a time, but they’re different in terms of which one to tackle first.

The snowball method allows debtors to pay off their first debt faster; however, they’ll pay more interest compared to the avalanche method. Furthermore, since the avalanche method requires time, persistence, and dedication, it might not be the best option for those with low levels of self-control. The snowball method, in that sense, is a much better idea, as it allows you to celebrate wins much quicker and get a boost to continue with the same tempo.

Both methods work; it’s just a matter of what fits your needs and personality type. You can even switch methods mid-stream and still be on the right path toward full debt repayment.

New York and Debt

In addition to the snowball and avalanche methods, there are several other possibilities to repay debt more easily. These are some of the debt relief options available to residents of New York:

● Debt Management

Debt management programs in New York offer the possibility of reducing the interest rate from an average of 16.7% to about 8%. Applying for a debt management program means that counselors will calculate appropriate monthly payments based on the debtor’s income. Debtors can give up and quit the program at any time; however, if they do so, the credit card company will take back the interest rate concession.

● Debt Consolidation Loans

A debt consolidation loan basically means replacing multiple loans with one big loan. The interest rate you’ll get with this type of loan varies depending on your credit score and willingness to put up collateral. This is a good option for anyone whose credit score has improved since taking out their last loan and for people who want to simplify the whole repayment process by replacing multiple payments with just one monthly payment.

● Debt Settlement

Debt settlement enables debt-ridden New Yorkers to strike a deal with their creditors to pay less than what they owe. While this might sound like a tempting option, you should only consider it as a last-resort measure due to the high probability of it damaging your credit score.


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