Best debt repayment strategy?

[new-comer]

I read up and there are three main strategies to clear debt:
1. Snowball method - Clearing debts from lowest balance to highest balance
2. Avalanche method - Clearing debts from highest interest bearing to lowest interest bearing
3. Consolidation method - Taking a new loan (balance transfer for eg.) to clear off existing loans

Which will be the most ideal method?

 

[fr33d0m]

If you are unsure, you should seek counselling

 

[BBCWatcher]

Financially it’s best to minimize the total net present cost of (high cost) debt repayment. Of course you’d try to reduce the cost of debt through any reasonable refinancing offers.

I’m assuming you are, in fact, actually going to repay debts. If you aren’t (or can’t) it’s generally best to “fail first and fast.” One of the best examples of this was during the Global Financial Crisis in the United States. People who struggled mightily to pay their big mortgages on suddenly lower value homes, and who paid those mortgages as best they could for several months or years only to end up bankrupt, typically did far worse than the people who simply stopped paying at the beginning of the crisis. And the lenders knew all this, but of course they wanted to squeeze as much as they could out of struggling borrowers before what they knew would be their inevitable capitulation. A few assets, even in Singapore, are effectively untouchable in bankruptcy. Sometimes a trip through bankruptcy now is the lowest total cost option.

 

[limster]

As the article in this journal points out, a large portion of US mortgages are de facto non recourse, so stories about US mortgages are really not applicable to SG

https://ir.lawnet.fordham.edu/jcfl/vol16/iss3/2/

In US, you can just walk away from your mortgage if property price drops. This sort of mortgage can be repackaged and sold as AAA CDO

 

[BBCWatcher]

As the article in this journal points out, a large portion of US mortgages are de facto non recourse, so stories about US mortgages are really not applicable to SG....

No, but the same basic principle applies. Personal bankruptcy is one option, sometimes inevitable. Especially (but not only) if bankruptcy is inevitable then it's better to get it done and behind you sooner rather than later.

I'll illustrate with a simple example. Let's suppose you have $100,000 of (net) debts, zero income, and just cannot pay your debts. However, you could borrow a maximum of $10,000 from a sibling and reduce that debt to $90,000, delaying bankruptcy by a few months (let's suppose). Is this a sensible thing to do? I would vote no. You're not going to be able to rescue this sinking ship, and there's no sense in making a creditor $10,000 richer and your sibling $10,000 poorer. Yet so many people do exactly this sort of thing. Please don't.

 

[CrashWire]

TS should read the DCP and DMP threads and their respective programmes:

https://forums.hardwarezone.com.sg/threads/debt-consolidation-plan-part-2.6035250/

https://forums.hardwarezone.com.sg/...-by-credit-counselling-singapore-ccs.5821687/

 

[wira]

I read up and there are three main strategies to clear debt:
1. Snowball method - Clearing debts from lowest balance to highest balance
2. Avalanche method - Clearing debts from highest interest bearing to lowest interest bearing
3. Consolidation method - Taking a new loan (balance transfer for eg.) to clear off existing loans

Which will be the most ideal method?

i would think mix of both #2 and #3 ?

make sense to always pays off highest interest first.
and its also good if you can borrow cheaper and use that to pay off the higher interest debt