What do you need to pay off debts quickly
Guest Post About Debt Consolidation:
Author: Andy Masaki
Debts have become a common day affair for nearly every citizen of our country.
If some have miscellaneous credit card balances and payday loans to pay off, then others are stooping low under the pressure of mortgages or car loans!
Still, things need not to be so problematic, if one just knows the right debt relief options and the best methods to pay off debts fast. Here I want to mention a couple of things, right at the beginning, to make this post crystal clear.
First of all, the process you are trying to get hold of, about paying off debts fast, is referred to as debt relief!
Secondly, we will be covering payment options based on unsecured debts only. Secured debts, such as mortgages or car loans cannot be handled by debt relief.
For secured debts please ask your creditor about loan modification terms and conditions. Also the same is applicable for student loans.
Debt relief is a vast concept that has many categorial divisions in it. As per the most plain and simple definition of the term, debt relief is any process that reduces debt obligations up to a great extent.
It can be done by either lowering down the debt amount itself or spreading out the payments over an extended period while keeping the overall interest amount (not rate) same.
You can do debt relief all by yourself, or take some kind of professional help! No matter whatever you choose, the success rates of either, are never demoralizing.
If each and every person starts to make the proper implementation of debt relief procedures, then we can hope to see a new America, sometime soon, where consumer debts and the number of debtors have decreased remarkably!
So, are you ready and set to become debt free soon, and at the same time bring a little good change to America’s debt situation?
Bet you are!!
Come on then let’s get started!
Debt relief is categorized into 3 main parts, that helps to pay off debts faster:
Devoid of ‘Professional’ or ‘Do-It-Yourself’ methods, here will be listed the three most sought after debt relief options, in the current US finance market.
These three are namely, Debt Consolidation, Debt Settlement, and Bankruptcy. I will be discussing each one of them in a well-explained structure, if not brief.
Guess, after going through each of them, you will able to decide which option will work the best for you.
- The first is inevitably Debt Consolidation:
Talking about Debt Consolidation, brings on so many perspectives, that it is made up of.
Just a basic example might give you a glance and peep at the most used debt consolidation method used by so many people all around the world!
You may have not quite paid attention to Credit Card Balance Transfer before, but I got to remind you that it is exclusively a distinct form of debt consolidation.
In balance transfer you bring all your previous credit card balances into a new card, that has a credit limit equivalent to the sum of your total existing credit card debt.
Once the transfer is done, you will then have only one card to pay off, with only one marginalized interest rate.
And, that’s what debt consolidation is all about.
Hence, when you consolidate your debts, all you do is bring your debts into one place and then have one debt to manage.
You need to understand, however, that debt consolidation is only applicable to unsecured debts, like credit cards, payday loans, personal loans and so on.
Now, when you are planning to consolidate unsecured debts, other than credit cards, the best option open for you is to get a personal loan, that will pay off all your existing debts at one go. Then you can arrange periodic payments and eliminate the consolidation loan as per your convenience.
Overall, debt consolidation is easy to do it yourself, but if creditors don’t allow you to take out a consolidation loan, or a balance transfer card, then you might need some professional help.
- Second is Debt Settlement:
Debt consolidation will never reduce your total debt amount, and that’s a big con. But, you have the option of debt settlement, which has the power to negotiate debt amount by a huge percentage.
Debt settlement is quite different from consolidation, and for this, you have to get help from a debt relief company.
You can definitely try to do it on your own, but creditors are big-time disapprovers of debt settlement. They will agree to settle your debts, after you have pestered them for some thousand times with your offer! Also, you will have to write a settlement letter, that needs to be neutral and 100% accurate.
All these things make debt settlement very difficult for a common debtor to go with all alone. A debt expert from a reputed company will do the negotiations for you, and help you to get rid of your debts by only paying a lump-sum for the original amounts owed.
Plus, debt settlement is faster than debt consolidation for paying off your debts.
Usually, a professional debt relief company will ask you to get ready with a certain amount. After which, the company approaches the creditor with this money, on your behalf, and settles the debt once and for all!
- Bankruptcy will forever remain the last option:
This is the deadliest debt relief option, as it has many other side effects on top of being the fastest debt relief option.
There are two chapters open for you. One is Chapter 7, and the other is Chapter 13.
In Chapter 13, you get to see a repayment plan spread-out for all your debts, and you get to keep your assets.
Even though this chapter is a long one, yet it’s applicable when you have no chance to pay off your debts in this lifetime!
On the other hand, Chapter 7 is the rush. It is the storm that eliminates all your debts in a few months time, and/or liquidate all your assets, and then give you a brand new life. It has its repercussions though.
I won’t be discussing the whole of bankruptcy over here, for that will generate a whole different topic.
So, that was the official debt relief in a summarized picture.
The job’s still not done. In the world of personal finance, it is you who can make the change!
If you can’t initiate the small steps to be debt free, then don’t expect your debt problems to get solved quickly. You need to learn ethical spending, know why saving every dollar is important, and have a handy personal budget!
That’s the combination you gotta aim for.
Down here I will give you one very unique debt payoff strategy, that you can use to pay down debt quickly. But, along with you will have to control spending up to some level, to stabilize your financial life. Debt relief can be practiced at home itself. Let me show you that.
Your wants are not your needs:
No matter how much you insist, not all the things you buy are necessary. Purchase mistakes clutter our houses everywhere we look.
Understand your basic needs and don’t confuse it with your desires. You need oats and milk, but a bottle of single malt and Chinese crockeries are your sweet wishes swelling with debt.
Shop only those that you can afford! By afford, I mean with your debit cards, and not credit cards.
Use debt avalanche:
This is a debt payment strategy, that you should implement to get out of debt fast. The first target that debt of yours, that has the highest interest rate. Start making extra payments on it, while keeping up with the minimum payments on your other debts.
Once this debt is cleared, repeat this simple step on your next high-interest rate debt in the descending order. Continue doing this, till all your debts get paid off.
You can be well assured, that these above two simple steps are enough to clear your debts. And, till you have cleared your debts, don’t use your credit cards or incur more debts! It can delay the whole pay off structure for a long time.
This post has reached its end.
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