Consumers will also take drastic steps at times to put them in a direction that will ensure debt relief. They will cut up all of their credit cards and only spend cash when they need to purchase something. They will also focus on paying down all of their debt as quickly as possible. This could be at the expense of many other things that consumers usually spend their money on. It can be pretty drastic. Sometimes it places a good deal of hardship on the consumer as well as their families. We will take a closer look at both of these scenarios.
Consolidation of debt works well when you have several high-interest rate loans or balances on credit cards that can be consolidated. Consolidate them into one low-interest rate personal loan or secured mortgage using the equity in your home.
Suddenly you go from paying 18% or higher interest to a low-interest rate of around 5% using today’s rates. Depending on the amounts that are owed and the existing monthly payments, consumers can save hundreds of dollars a month in interest charges and thousands per year. These savings can be translated into lower monthly payments.
On the other hand, consumers can keep the payment levels the same and put the extra money towards paying down the principle much more quickly saving them even more money. This is an additional method of achieving debt relief quickly and saving money at the same time. Ask your lender to calculate the difference in payments, the amount of interest paid and how quickly you can achieve debt relief by employing these methods.
This approach is considered by many consumers as being much more difficult. No one wants to limit their lives and avoid doing things that their friends and family are doing, but sometimes to achieve debt relief, severe measures need to be taken. For example, reducing restaurant meals, giving up smoking, and doing without a lot of things that many of us have come to expect can save a great deal of money, and if you put it toward debt relief, it can make a difference.
Sometimes by following this approach, you can reduce your expenses by as much as $100 a week, which is $400 a month. Even this amount can actually help to repay your debt much more quickly than it would otherwise. Set an objective, establish a budget, and decide just how far you can go with your family and your expenses.
Some people have already followed this approach and find they still are not achieving the kind of debt relief they are looking for. This is where a combination of both expense reduction and debt consolidation can sometimes make all of the difference. We talk more about this in the next paragraph.
Probably the best approach is a combination of both of the above debt relief strategies. Consumers can achieve debt relief. Consolidate all of their debt into one low-interest rate loan. At the same time, manage your expenditures to avoid further debt and even reducing their debt through extra payments. It can sometimes take a lot of perseverance. However, when you finally achieve debt relief, it can be wonderful. Suddenly you have money available for all kinds of things. Since you no longer need to make those high monthly payments!
Speak with a lender about debt relief consolidation methods and ask them to do the calculations for you that will help you get to your objectives for removing all of your debt.
For more posts about what to do about debt relief programs and what to do about it, click here.
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