Sometimes people ask questions, “Will I ever be debt-free again?” or “when will I be able to pay off all these debts?”
Anybody can become debt-free again, even in just a few years. Everything has to do with planning and discipline on the part of the debtor.
There are countless stories of people in the hardest debt situations coming out of them without declaring bankruptcy. How did they do this? Planning and discipline; no extra virtue.
Here are some tips on how to plan and become debt-free in just a few years.
Negotiate your debts:
Meet your creditors one-on-one and discuss upon your debts to see possible ways of drawing out more favorable payment plans, which may include a reduced interest rate. A good explanation of your willingness to pay off your debts, but how your present financial state isn’t helping issues, might make them consider a reduction.
Prioritize your debts:
Unless you just have one debt to pay, multiple debts require priority.
The debts you are to give more concentration are the ones with higher amounts and interest rates; not just interest rates alone. These are the kind of debts that put people in big financial problems. Try as much as possible to pay beyond the minimum amount. Paying just the minimum will prolong the duration for complete payment, and the interest would add up within that duration.
Skillfully look for ways to pay far more than the minimum monthly payments of debts with higher amounts and interest rates. This will help a lot.
Your debts should be prioritized according to their amount interest rates. For example, you owe three debts of the following amounts and annual interest rates: $10,000 24%; $30,000 18%, $25,000 23%. The one of $25,000 should top the list, followed by the one of $30,000, then $10,000.
The one of $10,000 seem to have the highest interest rate. However, 24% of $10,000 would give $2,400 a year ($2,000 a month), which becomes the smallest when compared with the amounts of the other debts. This is how you make calculations and determine which debt to give more concentration.
In some cases, minimum monthly payments can be as low as $50. You might not be acting wisely, even if you faithfully keep paying this minimum amount. Try as much as possible to pay even times ten of it; that is $500 or times three of it, and before long, you’d have paid off all your debts.
Debt consolidation:
Debt consolidation is an act which involves getting a loan to paying off several debts, thereby having just one debt remaining, which is the recent loan.
Debt consolidation allows you to pay all the amount owed beyond the minimum and then concentrate on paying back the loan, which becomes your only debt. There are lots of financial institutions that will give out loans with favorable interest rates; you can seek the help of a financial counselor for more assistance.
Friends and families:
Look for a friend or family member that can lend you money. Get are much money as you can get to pay off your debts, then focus on paying back the money lent to you. Such lending from friends or family members comes with no interest rate.
Seek financial counsel:
If possible, seek financial counsel from financial experts or counselors. They are normally full of financial tactics of getting through some of the most financially difficult situations. Their advice may be helpful.