How To Pay Off Debt With No Money

How To Pay Off Debt With No Money

Achieving Financial Freedom is not an easy task.  Credit card debt is one of the most common types of debt and often times the hardest type of debt to pay off. While you may only owe a couple of thousand of dollars on your credit cards, if you are only paying the minimum amount due you could actually end up taking several years to pay off the credit cards and in total pay more than double the amount you actually owe. To avoid this problem, it is imperative that you pay off those credit cards as quickly as possible. As we all know; however, that can be easier said than done. Read on for several tips on how to pay off debt with no money.

How To Pay Off Debt With No Money

Start off by looking at your current budget.  There are online budget calculator and budget worksheets that can help you manage your budget better.  Understand your expense is step to paying off your debt quickly.   http://www.ourdebtfreelives.com has some great articles on decreasing your budget, which will allow you to come up with some extra cash you didn’t have before.

You should take in paying off your credit cards is creating a habit of paying more than the minimum amount due listed on your monthly statement. Generally, the minimum amount due represents only about 2% to 3% of the total balance. Keep in mind that paying only this small amount will take you that much longer to pay off the entire balance and that costs you even more money. Pay as much as you possibly can over the minimum amount due. In the end, you’ll pay off the cards faster and actually save a ton of money.

If you have more than one credit card, take the time to sit down and find out which ones have the highest interest rates. These are the credit cards you need to focus on paying off first because these are the ones that are costing you the most money and will take the longest to pay off. When you finally pay them off you can take the money that you were putting toward paying off that card and apply the same strategy to the next highest interest rate credit card.

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Another way you can pay off your credit cards is to take money out of your savings account and investments.  When You’re trying to prepare for early retirement Of course, this wouldn’t be the first choice of many people; however, when how much damage you could be doing to your financial future by not paying off those debts you can quickly realize that it will actually benefit you more to just bite the bullet and pay them off. Then you can focus your attention on building your savings and investment portfolio back up.

You might also consider taking out a home equity loan, if you own a home. With the money you receive through the loan you can pay down or pay off your debt and also obtain a much lower interest rate on the new loan than what you currently have on your credit card debt. In addition, for most people, the interest on the home equity loan will be tax deductible, which your credit card debt certainly is not.  Related Article: Debt Settlement Company

Understanding A Debt Consolidation Loan

debt consolidation loan

The facts for a debt consolidation loan

Unfortunately, many people wait far later than they should to consolidate their debt and manage it. One of the main reasons for this is that some people perceive debt consolidation to be negative when in reality it actually provides a number of advantages. Like any other important financial decision; however, you should fully understand the advantages and disadvantages of consolidating your debt.

First, understand that the process of consolidating your debt involves obtaining one loan to pay off all of your other debts and then paying off the single loan rather than the multiple loans. One of the major advantages you can gain through a debt consolidation loan is a lower interest rate.

Credit card companies frequently charge 18% interest or more, making it very difficult to pay off the original debt. A consolidation loan; however, can be obtained with a lower interest rate. This lowers your monthly payments making it much easier and affordable to pay them.

You should be aware if you are considering a debt consolidation loan that by doing so you are giving the consolidation lender the authority to take over all dealings with your creditors. The advantage of this; however, is that you no longer have to deal with it and can avoid further problems such as collection attempts.

Qualifying for a debt consolidation loan

Not everyone can qualify for a debt consolidation loan. In order to qualify you generally must have a steady source of income that you can use to repay the loan. Depending on the lender you may also be required to have either collateral or a co-signer. You will also need to turn over all information regarding your monthly budget, including expenses and income.

In addition, it is important to understand that not necessarily all types of debt can be consolidated with such a loan. Generally, the most common types of debts that can be consolidated with one loan include medical bills, credit card bills, department store cards, student loans, personal loans and checks that have bounced.

Like any other major financial decision there are certain facts you need to find out before you make a final decision. One of the most important decisions you must find out is how much will be charged for the loan. While it is quite common to pay a small fee, you should not work with any company that charges a large fee for a consolidation loan. You should also find out how much interest will be charged on the loan.  Generally, it will be lower than what you have been paying.  If the rate is higher, it will not benefit you much. Whenever possible, try to obtain a fixed interest rate. Finally, don’t forget to find out exactly how much your monthly payment will be and what kind of effect the consolidation loan will have on your credit.