Best Way to Pay Off Debt Fast

Carl Andrews

Financial Advisor
Updated: 1/2019

Best Way to Pay Off Debt Fast

If you’re having problems paying your current debts, you’re not alone. America has a very large debt problem – many consumers in the country struggle to pay back their large credit card balances and loans. Much of this is a product of the global financial crisis in 2008 – many families accumulated debt to meet costs when wages decreased and unemployment increased. If you’re someone who is currently in large amounts of debt, you’re probably paying a lot of interest.

In This Article

Background

Once debt gets large enough, the interest itself can be a massive burden that prevents the debt-holder from moving forward with their lives. If you’re trying to reduce the amount of interest you pay over your lifetime, it’s important to pay down your debt quickly. While this might seem like a simple concept, many people have problems getting out of debt – it’s hard to kill bad habits or earn the money you need to escape high-interest debt problems.

But this doesn’t mean that you should give up. Paying back your debt quickly is much easier if you know what to do. You just need to develop and use the right strategy for your particular situation. In this article, we take a look at several different ways that you can pay off your debt fast. If you’re looking to stop paying interest and move forward with your life, you can do so by paying back your debt as fast as possible. Make sure to check out all the content on our site before you get started!

Assess Your Debt

If you’re going to pay off your debt quickly, it’s important to assess what type of debt you have. Each type of debt will have a different payment strategy – they also vary in terms of interest accumulation. In this section, we’ll take a look at some of the most common forms of debt and how they may be impacting your ability to pay back your debt fast. Check it out below.

Revolving Debt

This is one of the most common forms of consumer debt in the United States. Revolving debt includes credit cards and lines of credit. The reason they’re called ‘revolving’ debt is because you never have to pay off your balance as long as you meet your monthly minimum payment. This means, theoretically, you can prolong paying back your debt if you don’t want to pay off your full balance – but this will also mean that you continue to pay large amounts of interest.

Because of their convenience, credit cards have become a major problem for many American consumers. They are easy to spend with and they give you what you want immediately. But this also means that there is no definitive end date to your debt cycle – you can continue to meet your payments and spend more money on the card. For this reason, you have to be extremely careful with credit cards. Things can get out of hand quite quickly.

The other reason you should attempt to get out of credit card debt quickly is that the interest rates are very high. Because lines of credit and credit cards are unsecured forms of debt, they don’t have low interest rates. The bank is taking on a lot of risk by lending to you if you don’t secure the value of the loan against an asset. You will have to pay a higher interest rate for this luxury.

Payday Loans and Title Loans

Payday loans and title loans are an extremely common problem in modern society. While some payday loans can serve a purpose, if you’re able to pay the debt off immediately, they can also create huge problems for people who don’t have the money to pay back their loans. In fact, payday lenders typically fall into the category of predatory lenders – they aim to find desperate borrowers that won’t be able to pay off their loans quickly.

This is because payday lenders attach insanely high interest rates and fees to their loans. If you’re unable to pay back these fees or the interest you owe, it accumulates extremely quickly. Rates are often extortionate and ensure you are unable to escape debt. For example, some payday lenders may have interest rates of over 1,000% APR. This is insanely high and completely outside of the realm of typical financing.

Make sure to avoid payday loans or similar forms of finance if you want to ensure you’re financially healthy. These types of loans can destroy your financial health and end up causing problems for years into the future. For this reason, if you currently have a payday loan or title loans, it’s important to pay the debt off fast or the problem will only get much, much larger!

Best Way to Pay Off Debt Fast

Traditional Loans (Unsecured)

While most credit cards and lines of credit are unsecured, there are also plenty of other forms of finance that you can obtain without collateral. Some personal loans also provide users with the ability to borrow money at decent interest rates, others can be quite extortionate. The type of personal loan that you have will determine how fast you need to pay off the debt.

If your personal loan has interest rates similar to your credit cards, there’s a high chance you’re losing a lot of money that you could be saving. In this case, it’s important to pay the debt off fast because you can save money in the long-term. There’s not point wasting money on a high-interest personal loan when there are plenty of low-interest options on the table.

Traditional Loans (Secured)

If you have a secured loan, this might not be a type of debt that you need to pay off fast. For example, if you have an auto-loan or a mortgage, there’s typically no reason to pay off the debt fast if you have a decent interest rate. These types of loans typically have much lower interest rates than the other forms of finance mentioned in this article. For this reason, you won’t have to worry as much about paying this debt off fast.

At the end of the day, most people have good rates on their mortgages or auto-loans. Because these loans are secured and are extremely large, it’s not advisable to try and pay them off extremely quickly. You should try and pay off the other debts mentioned in this section, but most people keep their mortgages and auto loans intact, unless their rates are extortionate.

Best Ways to Pay Off Debt Quickly

Once you understand the types of debt that you have and why they may be impacting your ability to move forward in life, it’s time to approach your situation with the right game plan. You don’t want to waste any time if you’re trying to pay your debt off quickly. You should approach it comprehensively and with an end-goal in mind. Below we will explore some of the best ways to pay off debt fast. Make sure to take all our recommendations into consideration.

Budgeting – Large Payments

One of the best ways to pay off debt fast is through responsible financial management. While this can be hard, it can pay off in the long-run if you approach it seriously. You should be aiming to pay off your debt as quickly as possible by making solid payments towards your debt as often as possible. While it might seem painful to see your money go out the window, you’ll be able to save better in the future if you don’t have any debt to worry about.

One of the many reasons that people get into bad debt situations is the fact that they don’t have good budgeting skills. If you want to ensure you can escape debt quickly and don’t return to similar problems, it’s important to make a budget and stick to it. There are plenty of budgeting tools online that can help you get the most from your current income. Use these great online tools to help you assess what you’re spending and ensure you save more money.

Use these savings to pay down your debts straight away. While it may seem better to hold onto your savings, the amount of interest you’re paying says otherwise. Make sure to be honest with yourself about your spending and how you can curtail it – it’s the best way to ensure you create a realistic budget.

Debt Consolidation

Debt consolidation is another great way to pay down your debt quickly. Many people don’t realize debt consolidation is an option – it’s not something that is talked about frequently. Debt consolidation is typically the process of consolidating multiple debts at a lower interest rate – this can also be referred to as debt refinancing. Most people consolidate debt by taking out a personal loan, paying off their current debts with the loan, and then paying back the loan.

This is a great option if you can find a personal loan with a much lower interest rate than your current debt. It can really help you pay off your debt fast. You need to be certain that your interest rate is much lower than your current interest rate for this to be worth it. This is also a great option because it moves all your debt liabilities into a single payment.

Lastly, debt consolidation is a good option because it places your current debts into a term loan. This provides you with a timeline for how long it will take you to escape your debt, which can make the process much easier. There are tons of online debt consolidation lenders that can help you pay down your debt fast, you just need to find one that offers good interest rates. Many of these consolidation loans are unsecured, so you won’t have to worry about collateral to get a hold of one of these loans. This has grown into an extremely popular way to get out of debt quickly.

But remember, if you’re going to use a loan to pay off debt, make sure it’s the right loan.

Best Way to Pay Off Debt Fast

Balance Transfer Cards

Balance transfer cards are another form of debt consolidation – though this is typically only for credit card debt. Most credit card companies will allow you transfer the balance of your credit card to a new card. Some balance transfer cards will offer long no-interest periods for those who transfer balances to the cards – this makes it easy to put a dent in your debt without having to pay interest for a set amount of time.

The only downside to these types of cards is that they continue to allow you to spend on them. This means that you might not end up eliminating yourself of debt. It incentivises you to continue bad habits that may not benefit you. 

Debt Settlement

Debt settlement is another technique used by consumers to pay off debt fast. Debt settlement should only be used if you have no chance of paying your debt back – it is very bad for your credit score. Debt settlement companies negotiate with your lender to get you to pay back a smaller portion of your loan. While this might sound like a good idea, it will seriously damage your chances of applying for finance in the near future.

Again, this should be used as a last resort to escape debt. The best way to pay off debt and raise your credit score is to use other techniques mentioned in this article.

Benefits of Paying Off Debt Fast

So, what are the explicit benefits of paying off debt fast? There are actually a range of different benefits associated with paying off your debt. If you’re someone who wants to be financially responsible, it’s important to pay off high-interest debt as quickly as possible. In this section, we’ll take a look at the top reasons you should pay off your debt fast!

Save Money on Interest

It goes without saying, the quicker you pay off your loans, the less interest you will have to pay on your loans. By paying off debt quickly, you won’t have to worry about paying as much interest. This is a great benefit if you’re looking to save money. Many people look at interest rates without understanding how truly expensive interest can add up to be – you may end up paying thousands of dollars if you’re unable to pay off your debt quickly. Don’t underestimate the amount of interest you may end up paying if you keep high levels of debt.

Take Advantage of Opportunities

If you’re in a large amount of debt, you won’t be able to take advantage of opportunities if they arise. Many people who are financially successful had the ability to take advantage of opportunities when they needed to grow their wealth. If you’re strapped with large amounts of debt, you won’t have the capital to invest in opportunities or remain mobile when needed. For this reason, the quicker you can get out of debt, the more you will be able to move forward financially. It’s very important to consider this if you want to have a financially successful life.

Improve Your Credit Score

Your credit score is one of the most important components of your financial portfolio. It will dictate how easily you will be able to get hold of financing if you need to get a loan or credit card. With a bad credit score, you won’t be able to get any form of financing at a decent rate. Those with better credit scores tend to be offered better interest rates by lending institutions. It’s important to consider this when you’re applying for financing.

Most credit reporting bodies factor your current credit card balances as a major component of your credit score. If you’re looking to improve your credit score quickly, paying down your current debt can help you find an amicable solution. If you use less of your available credit, you will typically have a much higher credit score. Having a better credit score will help you improve your financial standing in the future – it’s an investment in your personal financial health. 

Best Way to Pay Off Debt Fast

Tips and Tricks

If you’re going to enter the debt elimination process, it’s important to understand a few tips and tricks to help you get the most out of the process. If you want to eliminate debt quickly, you need to be an informed consumer. In this section of our article about paying debt off fast, we’ll explore some additional tips and tricks that can help you succeed. Check them out below!

Comprehensive Approach

If you want to pay debt off fast, it’s important that you take a comprehensive approach. If you don’t, you might end up back in the same position. In addition, a comprehensive approach can ensure you pay off debt much faster. For example, if you choose to consolidate your debt and also make a budget, you will most likely have a much higher chance of succeeding.

Paying debt off fast is hard if you don’t take it seriously. That’s why we recommend that you take a multi-faceted approach that will remove the issues preventing you from paying down your debt. Don’t underestimate the power of using as many strategies as possible. Stay disciplined.

Check Your Credit Report

If you’re planning on paying down your debt by debt consolidation, it’s essential that you check your credit report before you apply for a consolidation loan. This is because you should be aiming to have as high of a credit score as possible. If you want to benefit from the best interest rates possible, it’s important to ensure that you have a high credit score.

Having a high credit score will put you in position to have a better chance of loan approval and a better chance of getting a decent interest rate. Those who don’t have good interest rates won’t save as much money from the consolidation process.

Check your credit score for mistakes – they’re more common than you think. Also, if you have any way of paying down your credit card balances before you apply for a loan, this is also a solid idea. While it may be hard if you’re already in debt, paying down your credit card balances can sharply increase your credit score. Just make sure you do it in time for it to impact your consolidation loan application.

Due Diligence

If you decide to involve another company with paying off your debt, it’s important that due diligence occurs. You need to make sure that you’re working with a reputable company that you can trust. Whether this be a consolidation loan lender or a debt settlement company, make sure you can trust their services.

By heading online to Consumer Affairs or the Better Business Bureau, you can check what past customers think of their services. This is one of the best ways to ensure that you’re working with a reputable company. Many of these consumer watchdog groups also offer their own ratings for these companies – they do independent research to determine the viability of many different firms.

Verdict: It’s Time to Move On

Using debt payment techniques in this article can help pay off debt fast – you just need to take the process seriously. Don’t waste any more time paying off large interest balances – it doesn’t need to be this way. There are plenty of different opportunities that can help you regain the financial freedom you want. Assess the type of debt you have and then decide which technique can help you pay off debt fast.

If you want to refinance to pay off debt, make sure to use a lender that you know is reputable. Also, make sure to choose the debt consolidation lender you are best matched with before you apply for a debt consolidation loan – the more you’re rejected, the less likely you are to be approved. There are also other strategies to pay off debt mentioned in this article.

If you have any more questions about paying off debt fast or debt consolidation, make sure to check out some of the other resources on our website!

FAQ

Getting Started With Debt Repayment

Americans face more debt than ever before and excessive debt can seriously hamper one’s personal financial growth. In order to get out from under the tyranny of debt, it is imperative to create an effective debt repayment strategy. Learning everything you can about debt repayment will make it easier for you to create a customized debt repayment plan that works for your unique situation.      

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How to start paying off debt?
To start paying off debt, first, reduce your spending and then create a budget in order to start saving money to apply to your past debt. Make sure to pay more than the minimum balance on each payment.
Where to start paying off debt?
The first type of debt to pay off first is your debt with the highest interest rate. This is the debt that is taking the most out of your income and should be tackled first as a part of your overall debt and budgeting plan.
Which debt to pay first?
In general, it is recommended to make a payment on the highest interest rate debts first. Credit cards usually have the highest interest rates and so these should be tackled first.
How much should I save before paying off debt?
It is recommended to save at least three months’ worth of income before beginning to make payments towards your past debt. This will give you an emergency cushion if anything affects your income.
How to prioritize debt payoff?
One way to prioritize your debt is by paying off the debt with the highest interest rates while also making extra payments to lower the total overall balance on your debt.

Creating A Debt Payoff Plan

One of the most effective ways to tackle debt is to come up with a debt payoff plan. It is helpful to learn the best methods and techniques for coming up with a debt payoff plan that works for your lifestyle and budget. Once you have an understanding of how to create the best debt payoff plan for your situation, you can begin making steps towards regaining your financial stability for a debt free life.

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How to create a flexible debt payoff plan?

To create a flexible payoff plan, arrange your debts in order from least to greatest. Choose the most manageable debt and start there so that you can have flexibility by focusing on one debt at a time.

How to create a debt payoff plan?

Create a debt payoff plan by saving a percentage of your income to put towards paying down past debts. Tackle the large debts that are costing you the most and make consistent payments each month.

How to make a digital debt amortization payoff chart?

You can use Microsoft Excel in order to create an amortization schedule that details each of the payments you will make over the entire life of your loan. The schedule should include updated interest and principal amounts.

How to create structured debt payoff?

Creating a structured debt payoff plan allows you to pay off specific types of debt in a certain order so that you can save the most money. Start by listing your debt balances in order from greatest to least.

How to negotiate debt payoff?

Go over your debt in detail including the interest rates and fees. Figure out what you can afford to pay each month and then negotiate with your creditors for that amount.

How Debt Payoff Affects Your Credit Score

Many people want to pay off their debt in order to have an increased credit score, however, it isn’t always that simple. That is because paying off your debt can affect your credit in different ways. By learning how debt payoff affects your credit, you can make positive changes and approach your debt payoff in a systematic way for the best results.

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Will paying off delinquent debt improve my credit?

Paying off delinquent debt can affect your credit score in different ways. If you don’t have other open lines of credit, then paying off an old debt and closing the account could lower your score.

How fast does paying off debt increase credit score?

After paying off your debt, your credit score will improve in one or two billing cycles. However, it can sometimes take about 90 days before you see a drastic improvement in your credit score.

How much debt to payoff to affect credit score?

For your debt payoff to affect your credit score, you will need to pay down enough of your debt that your debt to credit ratio becomes lower. This will ensure that your credit score improves.

Does paying off bad debt increase credit score?

According to FICO, paying off a debt that is in collections is not guaranteed to reduce your credit score. However, paying off your debt will lower your debt to credit ratio.

Will paying off all debt improve credit score?

If you pay off all debt and don’t have any new open installment accounts, this could harm your credit. However, if you have open credit accounts, then paying off all debt will improve your credit score.

Why did my credit score drop after paying off debt?

Your score dropped because paying off your debt closed your accounts. Without a sufficient number of open accounts, your credit score will decrease instead of improving. Opening a new installment account can help your credit score to improve.

How to rebuild credit after paying off debt?

To rebuild your credit after paying off debt, you will need to open an installment account and maintain a credit utilization of 30% or less. Make timely payments to ensure your credit score stays high.

Does paying off debt in collections improve credit score?

If you pay a debt in collections and it is still listed on your credit report, it will still impact your score negatively. You will need to have it removed entirely for your credit score to improve.

How to increase credit score after paying off debt?

To increase your credit score after paying off debt, make sure to remove the negative accounts from your report by requesting this from the creditor. Then open new accounts and keep them in good standing.

Paying Off Credit Card Debt          

Credit card debt is one of the most prevalent types of debt in the United States. If you are facing extensive credit card debt, you will likely want to find the best methods and techniques for paying it off quickly and effectively. The following answers address paying off credit card debt so you can enjoy a life free from overwhelming and oppressive credit card debt.        

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How to reduce your payoff on a credit card debt?

To reduce your payoff on credit card debt, the debt will need to be seriously delinquent in order for the credit card company to want to settle the debt. When the debt is past due, you can negotiate for a lower payoff amount.                                    

What is the best way to payoff credit card debt?

Start by negotiating a lower interest rate with your credit card company. If you have multiple credit cards, you may want to consider consolidating them so that you have only one payment to make.                                                      

How to earn payoff credit card debt?

In order to earn payoff on a credit card debt, the debt will have to be significantly past due. When the debt is very old, the credit card company will be willing to negotiate in order to recoup some of the money. 

How to negotiate credit card debt payoff?

Figure out how much you can afford to pay on a monthly basis. Once you have figured out your desired payment amount, contact your creditors and request this lower payment and reduced interest rate.

How to pay down credit card debt?

Start with your highest interest rate credit card debt and begin to pay down this card first. Once you have made progress with this first card, you can then move on to paying down your next credit card.

How to pay credit card debt fast?

To quickly pay back credit card debt, the first step is to stop using your credit cards entirely. The next steps include cutting expenses and allocating funds for debt repayment.

Do you have to pay credit card debt after death?

After death, you will not need to pay back your spouse’s credit card debt. If an individual has set up an estate plan, the estate will usually take care of their credit card debts and other balances.

How to pay credit card debt with no income?

You may consider filing for bankruptcy which would absolve you of the responsibility of paying your credit card debt. However, you could also consider developing a debt strategy such as using a 0% balance transfer offer to pay down debt.

What Happens If You Don’t Pay Your Debt?

Often people become curious about what would happen if they avoided paying their debt altogether. One of the obvious repercussions is that of having a lower credit score. However, there are other things to keep in mind that could take place if you avoided paying debts that you owe. The following questions and answers can provide insight into the possible outcomes of not paying your debts.

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What happens if you never pay your credit card debt?

If you fail to pay your credit card debt, you could face legal repercussions such as liens placed on your assets, wage garnishment, or other legal action taken against you.

Can you go to jail for not paying debt?

No, a person cannot be imprisoned for failing to pay on a debt that they owe. However, the court may order that their wages be garnished or that a lien may be placed on their assets.                                                 

What are the consequences of not paying credit card debt?

If you neglect to pay your credit card issuer for more than three due dates in a row, your negligent payments will be reported to the credit reporting agencies which will lower your credit score.

Can I be arrested for not paying a debt?

The only types of debt you may face jail time for is tax debt and child support debt. However, you cannot be arrested for failing to pay your credit card debt, loans, or hospital debt.

How to get out of paying debt collectors?

The best way to get out of paying debt collectors is to file a dispute for the debt amount that you owe. If the debt collector is unable to prove that the debt is valid, you may not have to repay it.                       

Saving & Budgeting to Pay Down Debt  

One of the best ways to may progress with your debt repayment efforts is to save and budget. You can save and budget your money in order to pay down debt for the best results in your debt payoff plans.

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How to save money while paying off debt?

Saving money while paying off debt can be done by increasing your income with a second job while also cutting down on expenses. This will leave more funds available to save each month.

Should I save while paying off debt?

Saving while paying off debt can help you to meet your other financial goals and objectives such as saving to purchase a home, car, or to go on vacation. The best way to save is to budget a little bit to put away each week.                

Which debt payoff will save me the most money?

To save the most money in your debt repayment strategy, tackle your most expensive debt first. This is usually the debt with the largest interest rate, so paying this off will save you the most money.

How to budget and pay off bad debt?

To begin budgeting and paying off bad debt, first cut back on unnecessary expenditures. Then, focus on making payments on the bad debt to reduce your overall debt load over time.                                 

How to pay down debt fast and save money?

To pay down debt fast and save money, first you will need to stop using your credit cards, then you will need to double up on payments in order to make a dent in your overall debt load.

Pay Down Debt Techniques

Although it’s important to make an effort to pay back debt, it’s smarter to have an actual debt strategy. When you have an actual technique and strategy that you can use to repay the debt you owe, then you will be able to make more progress in your debt repayment efforts. Learning different facts about paying down debt as well as becoming familiar with various debt strategies can aid you in becoming debt free or reducing your overall debt burden.   

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What does snowball mean in debt payoff?

The debt snowball method is used for paying off credit cards starting with the lowest balance first and then making the minimum payments on larger debt.

How to pay down debt fast?

If you are paying down debt fast, the best approach is to make more than the minimum payments and if possible, to make double payments on the past due debt that you owe. By making larger payments, you can pay down debt quickly.                                    

How to pay all my debt at once?

List your debt from smallest to largest and begin making payments on the smallest debts while also making the minimum payments on the largest debts. Once the smaller debts are paid, use the money to put towards the larger debt.                         

Do I have to pay an old debt?

You can dispute a debt that is older and if the debt collector can’t prove that the debt is valid, then you don’t have to make any payments on this debt. If the debt is older than 7 years, it won’t be listed on your credit report.

Is it better to pay down debt or invest?

By paying down debt first, you can ensure that your after-tax return on your investment would be higher than the after-tax cost of your debt. Paying off your debt will reduce your overall debt load and offer you more money to invest with.                           

Who can help me pay my debt?

A debt consolidation company can provide you with a loan to repay all of your debts. Then you will only need to make one payment to the debt consolidation company each month to settle your debt.                                                  

Do you have to pay a debt after 7 years?

After 7 years, the debt won’t be listed on your credit report however you still have a legal obligation to repay the debt. The debt collector can still pursue the debt that you owe them.

How much do collection companies pay for debt?

On average, debt collectors pay about 4 cents to every $1 for the debt that is owed. The debt is usually obtained through a bidding process where the highest bidder gets to purchase the debt.                

How to pay 2000 in debt?

By using a debt calculator, you can see how long it would take you to pay off $2,000 in debt. The total time will depend on your interest rate and the length of time that the loan is for.                                      

How to insure confirmation of personal debt payoff?

When making a personal debt payoff, it helps to get everything in writing to guarantee that once the final payoff is made, you will be free of the requirements of the debt.

How to pay my debt with my birth certificate?

There are claims of the existence of a law called the Strawman Law that makes your birth certificate into a bond which is worth money. The claim is that you can use the birth certificate to repay your debt, however, it hasn’t been proven.                                         

How to pay your debt with your birth certificate?

There have been myths circulating that Americans can use their birth certificates in order to pay off their credit card debt. However, according to www.treasurydirect.gov, there is no monetary value assigned to a birth certificate.

Should I withdraw from my 401k to pay debt?

There are penalties associated with making withdrawals from a 401k. It is important to compare the amount of the penalties with the interest rate on your debt to see if it is worth making the withdrawal.                                            

Can you payoff debt with 401k?

You can use a withdrawal from your 401k to pay off debt, however, you will have to pay income tax on the amount you withdraw in addition to associated penalty amounts.

How to pay debt online?

You can contact the collection agency that you owe money to and find out if they provide an online payment portal. You can make your payments to them through that website.                         

How shall I prioritize student loan debt payoff?

Begin making payments towards the student loans that have the highest interest rates. If possible, put the other loans in forbearance until the larger student loan debts have been paid.                                

How to payoff student debt?

Begin paying off student loan debt by contacting your student loan provider and making payment arrangements. They may offer concessions based on your economic situation if you are receiving government assistance. 

Carl Andrews


Carl has years of experience helping people tackle debt. As a Senior Financial Advisor, he knows the ins and outs of debt consolidation and debt management. He holds a Masters Degree in Finance and according to him, not all debt problems are the same and that’s why it’s important to take a look at the different options available for your situation.