Your debts may be the result of your mishandling of finances but once you get enmeshed in them, you should devise ways on how to emerge from them unscathed. If you play it by ear, you may or may not succeed. A solid debt repayments program, such as the snowball approach, may be your best bet in reducing your financial constraints in a more cost-effective manner.

The snowball approach prescribes that you should continue paying the minimum amounts due on the low interest debts but allocating a larger portion for repayment for those loans that have higher interest rates. You can save a considerable amount from interest foregone as well as eliminate your debts quicker. But when you are handling your debts using this snowball approach, if you make parallel borrowings from new sources, you’ll never be able to get out of the debt trap.

This snowball approach cannot be applied to all types of loans however. Particularly if one of your lenders is kith or kin, good sense demands that you should give first preference to this obligation even ahead of your higher interest debt. Your friend or relative doesn’t help with an aim to make money but out of concern for your well-being. You cannot exploit their natural and accommodating help that come with no strings attached and no interest. Even if they charge interest, it will be very minimal. Plus you avoid a default or delayed payment from appearing in your credit history. It’s quite improper on your part if you purposely postpone repaying them because then you’ll be taking advantage of their goodness. In the interest of harmonious relationships, it’s imperative that you settle these personal obligations first.

If you want to repay your debt by making monthly payments and if you’re not able to figure out just how much you have to pay monthly, the terms and conditions of other external personal loans will guide you in this regard. But if you have plans of repaying with a lump sum, knowing when they may need the money back could be a matter of asking the right questions from the right sources. You should make arrangements to return their money to serve their need. Such consideration on your part will in time reflect on stronger, closer relationships.