The basics of debt stacking
The first thing to know about debt stacking is that in order to use this method, you need to be able to at least cover your minimum debts payments plus a little extra. How much extra will depend on what you can realistically afford. There is no hard, fast rule as to how much extra, just extra. The amount that you can afford to pay should be applied to your debt with the highest interest rate. In debt stacking you will be targeting your debts with the highest interest rates down to the debt with the lowest.
Once your debt with the highest interest rate is paid off, you apply what you were paying on that debt to the next debt with the highest interest rate. This causes the debts to continually be getting paid off at an increasing rate. This method has the ability to save you a lot on interest that you would have paid by just making the minimum payments until the debts are paid off. How much you will save in interest will depend on how much you owe total and what the interest rates are on those debts.
The basics of debt settlement
Debt settlement is an intended option for someone who can't afford to make even minimum payments of their unsecured debts, i.e. credit cards, private student loans, unsecured bank loans, merchant cash advances, repossessions, and various other forms of unsecured debt. It is the process of getting your creditors to agree to allowing you to pay a lesser amount than what you owe. For someone in a bad financial situation, it is not hard to qualify for a debt settlement program. This is because debt settlement is only for unsecured debts and since they are unsecured, the creditors don't have a lot of avenues on collecting that debt if you can't afford to pay. It's in their best interest to receive even half of the payback rather than none. This is also in the debtors best interest since the impact is not nearly as bad as bankruptcy and debt settlement is much more easy to qualify for and file for than bankruptcy. It also makes it much more likely that your creditors won't take legal action such as file for a judgement against you if you are trying to reach a settlement with them.
Is debt stacking or debt settlement right for you?
Put simply, it's an easy distinction between when debt settlement or debt stacking is your best option. The deciding factor is whether or not you can afford your minimum payment plus a little extra, or whether you can't even afford your minimum payments. If debt settlement is your better option, the best thing you can do is use a reputable debt relief company. They will get you the best settlement and have the best success at getting your debts settled.
Making a plan that works
Once you have decided which option is most realistic for you, it's time to put that plan into action. This is not where you want to get lazy and not act because believe me, interest is not lazy. It will work every day and grow without conscience. Interest doesn't care who you are and how hard you're struggling because of it. The best thing to do no matter what method is right for you is attack your debt head on.
Conclusion on attacking your debt
Debt can be an overwhelming part of our lives if we allow it to be. The key is not allowing it to control our mindset. Once you're defeated mentally, you've lost the battle. Rest assure, there are success stories every day about people climbing their way out from under debt. Just remember, the worst plan, is no plan. If you make the conscience decision to get rid of your debt and a conscience effort to eliminate it, you will get there.