When I opened the Outlook app on my iPhone the other day, there was an advertisement at the top of the feed that said, “Pay off debt without a loan.”

At that moment, Anne said, “Did I just hear your eyes blink?”

I put down my phone. I sat in baffled astonishment trying to imagine what that could mean: Pay off debt without a loan. I know some people are allergic to dictionaries. (I once had a client tell me I couldn’t use a word because she didn’t know what it meant.) But I Love them. So, I grabbed mine and tried to resolve the conundrum logically and linguistically.

First, I looked up debt:

Since that was pretty much what I expected, so far, so good.

Next, I looked up loan:

It’s entirely possible I misinterpreted. But the way I read the definition of loan, it seemed to me to be another way of acquiring debt — and deepening it with interest. Presuming I was on the wrong track, I tried a different one, which included research (another allergen to some).

Brace Yourself

The good news is there are several ways to pay off debt without a loan. The bad news is they require discipline, which is going the way of empiricism and common sense. Nevertheless, here’s what I found. You can pay off debt by:

1. Budgeting: Track your income and your expenses. WARNING: This method requires math.
2. The Snowball Method: Pay off debts starting with the smallest balance first, regardless of interest rates. This will create the illusion of progress while you continue to rack up interest on your larger debts.
3. Avalanche Method: Pay off debts with the highest interest rate first, giving your smaller debts time to accrue additional interest while making minimum payments on them. It’s a great way to stay in debt while creating the illusion that you’re getting out of it.
4. Increase Income: Uh oh. Like budgeting, this method entails another four-letter word: work.
5. Pray. This method is akin to hope. Neither is exactly a strategy.
6. Use windfalls: If Uncle Herman drops dead and leaves you a bundle, don’t blow it on all the stuff that got you into debt in the first place.
7. Automate Payments: Set up automatic payments to avoid late fees and ensure consistent progress. Along with discipline, this method may require #4.

Red Flag

My research turned up a panoply of red flags when it came to debt-relief programs: They frequently have high fees. This can have a negative effect on your credit score because late payments can be reported to credit bureaus. If a portion of your debt is forgiven, it can be considered taxable income, leading to additional tax liabilities. Debt-relief programs don’t protect you from calls from third-party collection agencies, penalty fees, and legal actions while you’re negotiating. And it can take months for settlement offers to be accepted. Last but not least (and not at all surprising), the debt-relief industry includes more financial scammers than the Democrat Party.

The Punch Line

After all the reading and research I did, I went back to the ad on my phone and clicked it, just to satisfy my curiosity. Imagine my shock when I saw it was a debt-relief program from a company endorsed by … come on … you can do it … the Democratic administration of the State of Connecticut. Right! Their new slogan by the way is, “We’re the Nuts in the Nutmeg State.”

Criticize the Democrat Party all you want. But you can’t say they’re inconsistent.

This is their theme song. Good Grief.

Originally Published on https://www.bizcatalyst360.com/category/lifecolumns/notes-to-self/

Mark O'Brien Writer, Blogger

I'm the founder and principal of O'Brien Communications Group (obriencg.com) and the co-founder and President of EinSource (einsource.com). I'm a lifelong writer. My wife, Anne, and I have two married sons and four grandchildren. I'm having the time of my life.