If debt free and worry free living are something that sound good to you, then you're in the right place. We're about to go over a plan that will help you eliminate your debt faster than you ever thought possible!
1. Get your spending under control. Stop buying anything with your credit cards unless it is something that is absolutely essential to live and you can pay off the balance in full at the end of the month. You need to stop accumulating bad debt.
2. On a sheet of paper or in an excel spreadsheet, list all of the people or creditors that you owe money too. Next to each name, list the current balance or total amount owed, the interest rate, and the minimum monthly payment.
3. Rank your debts by interest rate, starting with the highest rate first. Another way to do this would be to rank your debt by the lowest current balance first. Which way you choose will depend on your level of motivation. By paying off your higher interest debt first, you will be saving yourself some money in the long run. But if you're desperate to see something happening with your plan, you might want to pay off smaller balances first to keep you motivated.
4. This step might be rough, especially if you're already struggling to get by. But you need to find some extra money that you can apply to your debt reduction plan on a monthly basis. Obviously the more money you can come up with the better, but anything will help. As I mentioned, finding extra money is not always easy, but if you dig deep enough you can usually find some unnecessary expense that can be cut out, such as smoking, t.v., or paying for that coffee on the way to work. You can then use that money towards debt reduction.
5. Starting with the debt you decided to rank #1, make your minimum monthly payment plus the extra money you came up with. On everything else, make the minimum monthly payment only. Continue to do this every month until the first debt is paid off. On the following month apply the minimum monthly payment from debt #1, the minimum monthly payment from debt #2, and the extra money to debt #2. Continue to make the minimum payment on everything else. You will follow this pattern until your debt is completely eliminated. Good luck!
Showing posts with label Debt Relief Plan. Show all posts
Showing posts with label Debt Relief Plan. Show all posts
Friday, March 28, 2008
3 Tips for Debt Relief Plan
The only way to eliminate debt is to create a realistic plan of action for repaying creditors. Fortunately, there are numerous ways to reduce debts, which lower your monthly obligations. Fewer bills mean more money, which can be used for other things. Before considering bankruptcy or a type of debt settlement, consider the following tips for eliminating unnecessary debts.
Pay More than the Minimum Payment
If you want to payoff credit cards, intend on paying more than the monthly minimum. If possible, double or triple the amount due. The best way to quickly payoff credit card balances is to apply a lump sum of money toward the debt. This money can come from second employment, income tax return, the sale of a personal item, etc. Another tactic for reducing a credit card balance involves obtaining loans or cash gifts from friends or family members.
Acquire a Bill Consolidation Loan
Bill and debt consolidation loans are ideal for persons hoping to become debt free. If you own a home, consider a home equity loan or cash-out mortgage refinancing. The funds acquired from the transaction can be used to payoff high interest credit cards and other debts.
Home equity loans create an additional loan. Because these loans have low rates and fixed terms, they are normally easy to repay. If choosing the refinancing route, the monies received are wrapped into a new mortgage loan. Hence, the amount owed on your home will increase.
Other methods of bill consolidation include obtaining a secured or unsecured personal loan from a financial institution. If you cannot qualify for a consolidation loan, seek the help of a debt management company.
Obtain a Credit Card Balance Transfer
Individuals with excessive credit card debt generally cannot fathom obtaining a new credit card. However, credit cards offering balance transfers at an introductory rate of zero percent provide an effective means of eliminating debt. For the most part, zero percent is offered for the first 12 to 15 months. This allows ample time to reduce or eliminate the credit card balance. Because zero percent only applies to the balance transfer, avoid new credit card charges.
Pay More than the Minimum Payment
If you want to payoff credit cards, intend on paying more than the monthly minimum. If possible, double or triple the amount due. The best way to quickly payoff credit card balances is to apply a lump sum of money toward the debt. This money can come from second employment, income tax return, the sale of a personal item, etc. Another tactic for reducing a credit card balance involves obtaining loans or cash gifts from friends or family members.
Acquire a Bill Consolidation Loan
Bill and debt consolidation loans are ideal for persons hoping to become debt free. If you own a home, consider a home equity loan or cash-out mortgage refinancing. The funds acquired from the transaction can be used to payoff high interest credit cards and other debts.
Home equity loans create an additional loan. Because these loans have low rates and fixed terms, they are normally easy to repay. If choosing the refinancing route, the monies received are wrapped into a new mortgage loan. Hence, the amount owed on your home will increase.
Other methods of bill consolidation include obtaining a secured or unsecured personal loan from a financial institution. If you cannot qualify for a consolidation loan, seek the help of a debt management company.
Obtain a Credit Card Balance Transfer
Individuals with excessive credit card debt generally cannot fathom obtaining a new credit card. However, credit cards offering balance transfers at an introductory rate of zero percent provide an effective means of eliminating debt. For the most part, zero percent is offered for the first 12 to 15 months. This allows ample time to reduce or eliminate the credit card balance. Because zero percent only applies to the balance transfer, avoid new credit card charges.
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