How to Eliminate Debt the Smart Way
How to Eliminate Debt the Smart Way
Credit card debt has become an increasing problem in the United States of America.
More and more individuals are obtaining credit cards and loans without the proper means to repay their liabilities. While the federal government has implemented several acts to prevent credit cards and loans from being given to unqualified individuals, not much has been done to help people who have already acquired large sums of debt. This article contains three steps to help individuals repay their financial obligations in a uncomplicated and manageable way.
Aurora Lillo Editor of the "Best Debt Settlement Services" website -- http://www.BestDebtSettlementServices.com -- pointed out;
"...Step 1: Calculating Debt...
The first step to eliminating outstanding liabilities in a smart way is to calculate exactly how much liability there is. Collect the statement for every credit card or loan that is either currently outstanding or will become outstanding soon. Next, grab a pen and two pieces of paper. On one sheet of paper make a complete list of each credit card or loan, the balance, and the interest rate. Then on the second sheet of paper rearrange the list from the highest interest rate to the lowest. Finally add all the balances together and this will be the total amount owed. Figuring out the total amount owed is often times shocking. Creating a list will help the individual grasp the reality and severity of their situation..."
Step 2: Analyze the Debt
The second step to eliminating debt is to analyze and interpret the data. In this case, the data is the list created in step 1. Take a look at each individual item, whether it is a credit card or loan, and compare the initial balance with the balance owed today. For example, an individual has an American Express credit card on their list that has an initial balance of $3000.00, 12% annual interest rate, and a final balance of $4214.78. The individual can see that over the course of three years they have accumulated over 25% of the initial balance in interest fees. This is the most important step of this process. When an individual analyzes their indebtedness, they begin to comprehend exactly how expensive outstanding debt can become.
"...Step 3: Create a Payment Plan...
The third and final step is to create a reasonable payment plan. The most common mistake that people make when attempting to repay their outstanding balances is to pay the minimum balance on each credit card or loan. While logically this makes sense, however it is not the most effective technique. The most effective way to repay outstanding debt is to pay the items with the largest balance first. The larger the balance the larger amount of interest will be accumulated and eventually added to the balance. By focusing on the item with the largest balance, the individual is minimizing the amount of interest fees being paid..." added A. Lillo.
Further Information By Visiting; http://www.BestDebtSettlementServices.com
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