I have no idea anyone who purchased their home with cash. There will also be other situations that arise-like medical and family emergencies, unpredicted car failure, and the list goes on. Just since you have some debt, doesn't necessarily imply that you've mismanaged your whole financial life.
Once you suspect that your debt is beginning to get as large as the federal government's, you might want to consider a quick diet for debt reduction.
Step 1: Stop incurring more debt-unless it's an urgent situation.
One thing I really hate doing is telling people how you can spend their money. I prefer to help people identify the very best lending deals. Unfortunately, the truth is that if you need to freeze your debt, you must freeze your spending, especially without having the income to support that debt. No spending, absolutely no debt. Real simple.
Step 2: Evaluate your financial condition-get an agenda.
"If you fail to plan, you plan to fall short. " That's a guarantee. Creating a plan involves numerous steps, like taking a close look at each and every creditor your debt, understanding exactly how much it's costing you to possess each particular debt, and reviewing your payment history along with all creditors (did you pay on time).
Your plan should be a roadmap that takes you from debt to debtless. To achieve that, you need to know how much your total debt is and how long it will require to pay it off, given your current payments. Knowing that, you can look forward to the day whenever your debt is gone!
Step 3: Realize there are money-saving possibilities, and keep your eye out for those opportunities.
Ever observe that when you become interested in buying a particular vehicle, you suddenly see cars of that model everywhere a person go, whereas before you didn't see any? Well, individuals cars didn't just surge in popularity; they've been presently there all along. The same is also true when you start trying to find debt-reduction options. As you start to dig into debt management and closely examine your circumstances, you'll start seeing many opportunities to save money-for example, all those low-rate credit card offers that you find inside your mailbox almost every day.
Last year alone, banks sent by mail some 2. 5 billion of these offers. Many of them could save you money, but you need to read the fine print and then calculate if their offer is truly something you can use to your benefit. Stay tuned for future articles to learn how to judge those offers.
Step 4: TAKE ACTION
Knowledge is useless if you don't put your plan into action. Don't be lazy! Come up with your money-saving plan today and, most importantly, follow through onto it! Simply knowing the route from your home to your destination won't enable you to get there until you actually start traveling.
Step 5: Track charge card offers and loan offers.
You know those low rate offers I was referring to before? Well, you need to track them and save them inside a box or file. When you need to turn to a different bank for cheaper financing, you'll have already done the study and know which banks to contact-many who have already pre-approved the application. Also, you need to track offers from your current credit accounts. They'll be the easiest lons to acquire because you already have a history with them-hopefully a clean, on-time repayment history.
Step 6: Don't be hasty in closing charge card accounts.
When you cut up your credit cards, you cut out your choices. As long as your current credit-card accounts (and outlines of credit) aren't charging you any fees for lack of exercise, then it's in your best interest to hang onto that account. What I do is put zero-balance cards inside a file called the "credit-card graveyard. " When an offer arrives that saves me money, I "exhume" them.
The problem with closing your accounts is that you'll be at the mercy of whatever bank(s) you decide to maintain. That's the same as saying that you'll shop at one store regardless of how good the prices are at other stores. Don't give any bank a monopoly in your business; keep your options open.
Step 7: PAY ON TIME regardless of what it takes!
If there is sin in debt payment, it is paying late. This hurts you immediately along with late fees, which would have been better used to lessen your debt, and a strike against your future bargaining energy. But most importantly, if you pay late, you may not be capable of geting the best rates and deals when you need all of them most, like on a mortgage. In the long operate, that kind of negligence can cost you thousands associated with dollars. I would, and have, borrowed money to make certain my payments get there on time. The result is that my rates have been under 8% APR on all my credit cards going back 10+ years.
Debt management is a continuous process. Remain on top your situation, and keep more of your cash!