Debt may seem like a downward spiral. But what if you could stop the motion and start climbing out? You can change the state of your finances for the better. Here’s how you can take action.
No matter how many poor financial decisions you have made or how many excuses and justifications you can find throughout your life, the truth is, debt is avoidable and it is also soluble. Yes, you can defeat debt altogether. Not in a very distant past, I was buried in debt, and I mean, all kinds of debt, student loans, credit card debt, auto loan, mortgage, medical bills, you name it, I owed it. I thought I would never recover; there seemed to be no way out except bankruptcy. However, those who seek, find, and in the span of 6 months to a year, I was able to reduce my debt to an all-time low. How? I read as many books and online articles as I could, consulted expert advisors, and cut my spending. For weeks, I read and took notes. Then, when I emerged from my investigative research mode, I summarized all my notes and decided on a course. Step by step, my debt was almost all gone. If it worked for me, anyone could do it. Ever since, I’ve been spreading the word. Don’t drown in debt, instead, take a deep breath and step into action.
Step 1: Pay no interest on credit card debt
You’ll need a good to excellent credit standing for this one. Here’s how it works. Apply to one of many “0% interest rate credit card for a limited time” offer. Transfer your highest interest debt to the new card and pay it off in the least amount of time you can before the 0% interest rate offer expires. Then, if you can transfer the second highest interest rate debt to the same card or find another one in the market with the same offer, you’ll have conquered twice as much. Credit card companies flooding the market with these offers have one thing in mind: to get you to transfer your debt and charge you a typically outrageous amount of interest after the offer period lapses. Most people don’t pay off the total amount of debt in the given period unless they cut their living expenses.
But don’t let that happen to you. Be wise, take advantage of the 0% financing to clear your debt. It worked for me because I stopped overspending, tightened my belt and reduced my budget. After I paid the first and second card off this way, my focus became the mortgage and school loans. Even if you can’t transfer all your debt and pay it all off, you will at least have reduced your debt.
Step 2: Save money when you refinance your debt
If you are not able to transfer your balance or your balance is too high to transfer, your best bet is to refinance your debt to a lower APR. Let’s say your mortgage loan is at 9% interest and you owe $200,000. Whether you have been paying your mortgage on time every month or not, get in contact with your lender. Explain your situation and ask them if they are willing to refinance the loan to a lower APR, let’s say 5.99% APR. Refinancing your loan will lower your monthly payment and reduce the total amount of your debt. If you lender turns you down, move on to the next. Talk to other lenders. It took me a few weeks to find the right debt refinancing institution for my needs. But, alas, there were more than two willing to go ahead with a viable transaction.
You must first calculate the savings you will receive before deciding on any one transaction. Utilizing a free debt calculator such as http://www.youcandealwithit.com/borrowers/calculators you will be able to make an informed decision.
Step 3: Get professional debt analysis
For those with poor or no credit, qualifying for the above options is an unlikely occurrence. Don’t lose faith, though, numerous companies specializing in “Debt Relief” offer their services to folks just like you, every day. To qualify, your debt must be higher than $7,500 originating from diverse unsecured sources such as credit cards, medical bills, taxes, and a sleuth of others. They also know how to help debtors in hardship situations where there is loss of income, illness, or lay off.
The job is to negotiate your debt for a reduced amount and finance the remaining principal after fees and penalties have been removed, to a monthly payment you can afford.
Because they are experts in financial matters, they can give you an in-depth analysis of your debt and the options available to your specific situation. What is more, Debt Relief companies can act on your behalf by negotiating reductions and the terms of your loan with creditors. No matter how bad you think your situation is, they’ve seen it all. One of the best services a host of these companies offer is to provide consumers with a free debt analysis report with options and recommendations. Expert free advice is a double positive. There’s power in knowledge. Make sure they are members in good standing of the Online Business Bureau before you commit to do any business with a company and cross-check one with another for more security. Invest your time in your financial future; call for a free consultation. Don’t commit to anything, ask all the questions you can think of, and listen carefully, and take notes. Use this information to compare one consultation to another. Make sure you consult your pillow next and don’t make any decisions until you are ready.
Step 4: Student loan debt? No problem.
There is just no way out of student loans, or is there? Soon after graduating college, especially those who went for a master’s, the total sum of all the student debts, their rates, lenders, and monthly payments loom like a dark cloud over their financial future. In my case, just as I was treading in deep waters, I found the knowledge I needed to pull myself out. I learned that similarly to how you can refinance your credit cards and other loans, you can also refinance student loans. As a matter of fact, you can even consolidate them while you’re at it.
You’ll be able to see significant savings at the end of the loan term using these free debt consolidation and debt refinancing calculators available to everyone. Once you know what the numbers are, your confidence level will skyrocket, and your sharper-than-ever negotiation skills will master the skill of being rid of debt once and for all.
Debt management is the path that you must trace along the way to your goal of being debt free.
Step 5: Refinancing the mortgage
Right now is the perfect time to refinance! Historically, refinancing rates have never been this low. Your savings can be astronomical, stop spending too much money on interest. Take advantage of the current low rate opportunity.
When you refinance your home, you can also throw in any outstanding high-interest credit card balances you may have.
For instance, if you owe $200,00 and your interest rate lowers by 1%, you can end up saving $40,000 over the course of the loan and as much as $100 less in monthly mortgage payments.
A debt-free life can mean less stress and more opportunity for your future financial wellness. Instead of paying interest, invest in your retirement, your children’s education, or your next getaway. “A journey of a thousand miles begins with a single step,” said Lao Tzu; “the quicker you get started, the better,” says your financial future.