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2 Methods to Quickly Pay Off Your Outstanding Debt

2 Methods to Quickly Pay Off Your Outstanding Debt

Having outstanding debts is not something to be ashamed of. In a country with a high cost of living such as Singapore, many people take loans at one point of time or another. Common examples include university study loans, car purchase loans, housing loans, as well as a personal loan in Singapore.

You should be trying your best to settle your financial obligations as soon as possible. This prevents your interest from exponentially increasing and turning your debt into a serious problem. Furthermore, it helps to improve your credit score, which will be needed should you need to take an additional loan in the event of an emergency.

Naturally, if you have an abundance of resources, then repayment would not be an issue. However, for those who are barely making it by, constant repayments may challenging. In this article, we are going to discuss the two common methods for efficiently clearing your outstanding debts:

Stacking Method

Before anything else, the stacking method requires that you list down all existing debts and sort them from those with the highest interest to those with the lowest. In this method, the actual amount owed or the principal is disregarded. Instead, the interest on each loan is the primary focus.

In stacking, the debtor tries to pay as much money as possible towards the higher interest loans, while attempting to only pay the minimum amount for the lower interest loans. The rationale here is reduce the rate at which your debt grows by reducing the amount that is compounded each period.

Once the higher interest loans have been fully paid off, you can start to switch your attention to the lower interest loans. The main benefits of the stacking method is that it enables you to manage your obligations correctly.

Snowball Method

In direct contrast, the snowball method focuses not on interest rates, but instead on the amount owed. To start, list all your existing debts and sort them from the smallest to the biggest amounts.

The principle behind this method is that accumulating multiple loans causes your debt to snowball. As such, prevent a possible avalanche, you should attempt to fully pay off as many loans as possible in the short term. To achieve this, it makes sense to concentrate on fully paying off loans with the lowest principals while only paying the minimum on those with larger amounts.

Once smaller obligations have been paid, you may begin work your way up towards the larger loans. What makes snowballing a good way of settling obligations is that it can give you a sense of achievement. You will start to feel good as you complete repayment of each debt.


The choice of the method to use in paying your debts depends on a lot of factors. As such, it is highly recommended that you speak with your moneylender in Singapore to determine the best course of action for you.

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