It is neither desired nor it is morally correct to live long in debt. Whenever you feel that you are drowning in debt, try to hold the helm before it is too late. And if you are already in a state of deep-debt, do not wait for the calls from collection agencies. Think some strategies to pay it off ASAP.
Now the question comes how to pay off the debt? How to plan for it? What is the right way to proceed, so that one can get out of debts without any hassles? Well, there is no generalized solution for the problem. The solution entirely depends upon the financial state of each individual; however, some all-purpose solutions are suggested here, keeping in mind the most problematic financial conditions possible.
Before the proper debt solution is suggested, a few case studies were made and the research yielded the following results. The solution for the respective case is mentioned along with.
Case 1 One high amount loan - It is a very rare case in our country. The normal trend here is to take loan from different creditors and normally the interest rate also varies for different creditors. Anyway, if you have a high amount loan and you wish to close it now, then you can take a loan too, to pay it. But before that, it would be wiser to consult a counselor, who is the best person to suggest if your pocket would permit taking a loan.
Ultimately, if all the points go in favor of you, and finally if you start the debt repayment program, be careful about not going for any unnecessary loan until you are free from the previous one.
Case 2 A number of loans from different creditors and of different interest rates - The number of candidates in this category is much more in our country. So this is the most common type of example of being in debt. There are three solutions to overcome this situation.
First, select the highest loan amount, and start paying it back. For example, say, you have a few loans of amount $22,000, $5,000 and $80,000. Then first pay off the loan of amount $50,000.When the process will be going on, you might have a tight budget, but face it. As soon this loan is paid, your monthly installment is going to drop dramatically. And it is going to give you a kind of mental strength also that - "Oh! I have paid off the highest amount!"
Second, select the loan for which you are paying the highest interest rate. And pay it first. Suppose you have four different loans for which you are paying, say, 9.9%, 11%, 17% and 5% interest. Then first pay back the loan for which you are paying 17% interest. It will reduce your monthly payable installment and you can see the effect from the next month.
Third, start paying the small amount of loans and start from the lowest amount. This strategy is helpful when you have too many loans. If your loans are of amount, say, $2,000, $18,500, $4,600, $9,000 and $50,000, then pay $2,000 first, then $4,600 and so on keeping the $50,000 loan aside. One may ask how this strategy is effective? Is it a good policy? Well, the answer is yes, because, it is easier to pay the small amounts as it will not impart a heavy load on your monthly budget and you will be relaxed to know that instead of having five loans you are now with one high amount loan, for which you can go for a consolidation loan too, and the installment and interest rate for consolidation loan is usually lower.
So stop blaming your fate and no more depression! Select the right strategy for yourself and forward the first step towards debt free living.
Many Americans have succumbed to the endless offers of easy credit that have been thrust upon us over the last decade. Now we are starting to get that 'morning after' feeling that the easy credit party may not have been such a good idea after all. And we may now face a hangover of huge personal debt problems.
Regular credit card debts combined with store cards, car payments and any other, of the numerous types of lending that were available have now plunged many of us into a very tricky debt situation.
At a time like this, it can be difficult to know where to begin the clearing of your debt situation. You could of course, just leave things as they are, but then, if things start to become worse as everybody in the financial world, believes they will. What will be your situation should interest rates rise, and your income does not?
An ever increasing burden of debt is the not only financially but also emotionally stressful and cause untold misery to people who find themselves in a bad debt situation.
You should consider taking action now to avoid the problem getting worse. Where your credit score possibly falls, through late payments or other financial problems. Dealing with situation immediately is a good bet to avoid future serious problems.
Credit cards form the largest part of many Americans non mortgage debts. Credit cards also have perhaps the highest interest rates that you are probably paying right now. Easy access to credit card funds can be so convenient, but they also can cause tremendous debt hardship.
One way to deal with this is to start to pay off your credit cards, one by one. The best place to start work is usually the card with the highest outstanding balance. You should endeavor to pay as much as possible off this card each month until you can get it down to a zero balance. With all your other cards, you should maintain at least the minimum monthly payment.
Once you have managed to reduce that first card down to a nil balance. Then start on the second highest balance card, and so on. You must of course avoid using your cards to increase your current debt. Only keep one card with you for genuine emergency problems, not just when you are a little short of cash that day.
The strategy will work extremely well in removing, not just your credit cards but all your other outstanding debts. The big problem with this type of debt killing is that it takes a considerable amount of time. It may take several years to pay off every one of your cards and other debts.
Although this is probably the best way to deal with your outstanding balances. It can psychologically, the incredibly demanding to commit yourself to many months or even years of debt clearing. Which can be soul destroying and you will have plenty of time to fall by the wayside during years of financial commitment.
Another good idea is to reduce your outgoings, wherever possible, things like cutting back on your cable TV bill, entertainment, eating in restaurants, weekends away, can drastically reduce the amount of outgoings that you have each month.
The problem is that psychologically, and to an extent financially, this feels like putting a band aid on a gaping wound. Committing to years of frugal living in order to remove your debt can be practical and in the end provide excellent results. Actually living like that can be incredibly difficult for most Americans.
A better solution may be to remove all of your debts with one action. A debt consolidation loan can be an ideal alternative for many American families. Many people believe that the type of loan just adds another debt to an already long list that they have.
This is because a lot of people do not understand just what a debt consolidation loan is, and what it can do for them. A debt consolidation loan works like a type of second mortgage, this loan is secured against your property. Like a mortgage, it carries a low interest rate and is paid off of over a long period of years.
The intention of this type of loan is to pay off every single other debt that you have. That way you are left with just one single loan at a low interest with low monthly payments that will probably be less than half of the total you are paying now.
Therefore, a debt consolidation loan removes all your existing debts and replaces them with one low interest loan that has very low monthly payments.
This can eliminate all those years of saving and paying off your cards and car payments in a slow but sure fashion. This type of loan is the solution than many Americans are looking for. They are easily set up by a professional online broker, who can guide you through each of the reasonably simple steps, to securing a loan from a quality financial institution.
Both Debt Samaritan & Joseph Kenny are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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