Having a debt free life begins with planning. Like any other thing worth achieving,
when you create a plan to pay off your debt and have a debt free life,
you will want to include any secured debts like your mortgage.
In many cases you can include your car or house in your debt pay off.
The tricky part is to decide which debts you want to pay off first.
A good plan for a debt free life to start with is to first pay off your car loan.
The biggest debts will be your secured debts, the ones that are backed by your house.
Steps to a debt free life
Generally, your secured debts will be the ones that are secured by your house.
So, your plan should be to figure out which of those you can get rid of first.
Secured debts are often the ones with the highest rates. If you can get your rates reduced,
it will save you a lot of money in the long run. You should also look at how much you are paying
towards interest on your secured debts every month. The more you pay,
the more you will be paying towards your principal.
What is your present financial picture?
Next, you should determine how much money you have in the bank.
The sooner you pay off your secured debts,
the sooner you will have money in the bank to put towards your secured debts.
So, you should figure out how much you have to pay on your secured debts.
The best plan for this is often to just pay the minimum on them.
This will keep the rates low and will help you pay off more quickly.
What is your income?
You should look at what you have coming in. You might not realize it, but by adding the money
you are currently paying on your secured debts and your minimum payment on your car loan and
your mortgage, you will most likely be able to put some money away towards your secured debts.
If you are able to put some money away, it will give you a better chance of paying off
those secured debts in a timely manner.
What are your expenses and how much can you afford?
If you have equity in your home, you will need to figure out how much you are paying
toward interest and your principal on the loans. When you pay off your secured debts,
you should look at if you are able to add any extra money to the mortgage.
If you are able to add any extra money to the mortgage, it will give you an even better
chance of paying off your secured debts. This extra money will be used to
put toward the monthly mortgage payment.
Ways to reduce your debt
There are two other ways to reduce the amount of money you owe.
One of those is to negotiate with your creditors. This should be done with each creditor separately.
This is because some creditors will accept a lower amount to settle the debt.
There is also the option of taking out a debt consolidation loan. In this case, you would take out a loan,
and use the extra money to pay off all your secured debts. This will leave you
with only one loan to pay, the consolidation loan.
If you have enough equity in your home, it would be best to go for a loan conversion.
With this option, you will take out a loan. The rate will be lower than your credit cards.
This will help to save you a bit of money, but be careful. You will have trouble meeting the payment every month.
If you are approved for this option, the debt repayment will be spread out over a longer period of time.
Your possible options
So, now that you have the basic idea of the options available to you,
let’s take a look at the debt relief options available to you.
1) Consolidate your debts. You could get a second mortgage on your home.
This would help to cover the mortgage payment. This would put you on top of
the debt reduction options, without adding extra debt.
2) Debt settlement. You could get a debt settlement company to negotiate with your creditors.
This would reduce your debt amount. Sometimes creditors will accept a lower amount to settle.
3) Bankruptcy. You could file for Chapter 7. In this case, all your debts will be wiped out.
4) Paying the minimum payment. This option will put you in the red until you clear your debt.
This is the most popular method for those who do not want to file for bankruptcy.
Credit card debt is one of the biggest problems for Americans today. Americans spend more than what they earn,
and the credit card companies expect them to pay the minimum amount every month.
The situation is getting worse every month. If you think you cannot get out of debt, think again.
There is a solution for you at the table. If you follow the tips, you will be on the road to a debt free life.
Learn from more than 166000 people how hey got out of debt?
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