The world is in a debt crisis so what is the average person to do ? There are options available to you when you want to clear debt the challenge is finding the best deal possible. The first thing we must be aware of is that not all debt is bad – when in fact there is such a thing is good debt. Where we draw the line between good and bad debt is what the debt is for and how much you have to pay back.
Sitting down and taking a hard look at your finances is important so you know what is happening with your hard earned money. If you do not take a serious interest in your finances how could you expect anyone else to do so? One option that many people are looking at doing is consolidating their debts into one manageable payment. If you have a property that has some equity you may be able to leverage that equity to pay off some if not all of your debts.
You can easily find out from a mortgage expert in your area how much of a mortgage you could reasonably afford and if using your home equity is the best option you have to clear debt. If you are not a property owner there are options out there.
First identify which debts are costing you the most in interest. Credit cards are usually on the top there, if you have been prompt with your payments but are carrying a balance then call your card company and ask for a lower rate. Many people are reluctant to call and ask for a better rate, the credit card company wants to keep you as a client and if you voice out you want a lower rate they will either concede or you can shop for a better deal elsewhere. The market is getting more competitive for credit cards since the economy is slowly recovering and you may want to look into a balance transfer.
A balance transfer is where you take your current credit debt with one institution and transfer all or a portion of it to another card at a discounted interest rate, or a zero percent interest rate. Just be sure there isn’t some type of 0 balance transfer fee cost – that should never happen and don’t let it. Before doing this make sure to read the fine print with the promotion. Some offerings with the low introductory rate is for three to twelve months but you will need to find out what yours is offering. Also find out if there are any underlying conditions such as a minimum amount to transfer.
When you are using a balance transfer facility it does not clear debt, it reduces the total amount you end up paying over time. If you have student debt, then the process of paying that down is a bit different than paying a traditional creditor. When you have a student loan chances are it is from a government program and the government will want its money back plus interest.
The great thing with the government is they are willing to help you find a repayment plan that will help get your finances on track. You may even be able to alleviate some of your credit card debt with out paying it back, with the credit card debt forgiveness act. What you must do to clear debt is accept that you can never be totally debt free and why would you want to be. If you buy a home or invest in an education these are debts that will make your life easier and more fruitful. Bad debts are credit card debt and other consumer related where you are paying on things that do not add value to your life. In life we all make mistakes when it comes to money management, but if you take control of your situation you will feel empowered for any fiscal challenges that might come your way.
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