Nine Possible Ways to Pay Off Debt
Nine Possible Ways to Pay Off Debt
Debt Snowball Tips
If someone is dedicated enough, he can get out of debts with these 9 possible ways:
Pay more than the minimum monthly payment
Make some sacrifices to find extra amount to double your monthly payment. Don't stick on the habit of paying only the minimum requirement which tends to prolong your agony. This is where the banks play their selfish game, the longer you have to pay your debt, the more interest are accrued and what is left in your pocket is only short cash. Increased payments will give you a savings of hundreds or maybe thousands in interest payment alone. And the most important part is you have freed yourself more quickly from debts.
Snowball your debt payments
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This is method of repaying where you lather, rinse and then repeat. When your debt decreases, the amount you have to attack increases. Your payment is snowballed until all debts are threshed out.
Look for a particular card with low interest rate, examine if you have reached the maximum limit if not transfer a higher-interest rate bill to that card. This is permitted by many credit card agencies.
Cash out your savings account
Pay off your debt using the proceeds from your savings account. It is noted that savings account interest are lesser than the interest rate on debts.
Borrow against your life insurance
You can borrow your own money against your life insurance policy. Interest rate for this kind of loan is much below the commercial rates. The irony of it is when you died and you haven't repaid the loan, the balance plus the interest is deducted from the amount payable to the beneficiary leaving your loved ones financially burdened.
Finagle family and friends
Family or friends could possibly lend you money. But in order to maintain a healthy relationship with them, it's best to have an agreement written to avoid misunderstanding in the future. You should also adhere to the agreements made, otherwise you are not invited in future family reunions or gatherings.
Get a home equity loan
Consider to have a Home Equity Loan (HEL) with a maximum amount allowed. Home equity has accumulated for the years while you're paying off your mortgage.
Borrow from your 401(k)
The loan you borrowed from a 401k account is your own money and lets you borrow 50% of the amount. The interest is much cheaper than that of the credit cards. The best part of it is you are paying directly to yourself.
Try to renegotiate terms with your creditors
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Inform your creditors about your situation that you will not be able to pay your debts and if unable to talk on negotiating terms, you will declare bankruptcy. This drastic step would move the creditors to solve problem in such a manner to protect their selves for a possible total loss.
As a last recourse, file bankruptcy
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Since nothing else could be done to solve your problem, to declare bankruptcy is your last recourse. However, you will have some drawbacks on your credit records, this information will be there for 10 years, you will have a hard time obtaining loan should you decide to have one. Bankruptcy may not totally give relief to you because there are laws today that are getting tougher and tougher.
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