The top 3 ways to become debt free: Tip #3

[dnlgarnett]

Hey all,

Here is tip #3, the final tip of this series:

Do you have self control? If you are in debt chances are no (not always the case, I know). If you can acquire self-control and learn the art of discipline then there is a fairly quick way to can get on the right track.

The theory is simple, pay off high interest debt using lower interest debt with more favourable terms. The idea is that this will free up cash flow and enable you more control to pay off your debts.

The easiest way to do this is if you have access to equity in your home. You can refinance your home and use that money to pay off things like department store cards or credit cards.

Nice in theory, I know. The problem with this method is that you will now have access to more debt. If you don?t possess the discipline to not use your credit cards again then you may find yourself in a worse situation than when you started. Remember to consult with a financial advisor before attempting this tactic.

If you would like a free step-by-step video course explaining this then grab a copy of my free video course:

thedebtsolutionsystem.com/financial_resources_kit/tdss_squeeze/opt.html

Cheers!

Daniel

[crist]

Psychologically, 7 outstanding debts feels more overwhelming than 2 outstanding debts even if they are at the same total balance. Many people are struggling with debt and have tried on several abortive attempts to eliminate their debt using the highest-to-lowest method, and each time they failed. Why?

[crist]

List all debts in ascending order from smallest balance to largest.
Commit to pay the minimum payment on every debt.
Determine how much extra can be applied towards the smallest debt.
Pay the minimum payment plus the extra amount towards that smallest debt until it is paid off.
Then, add the old minimum payment from the first debt to the extra amount, and apply the new sum to the second smallest debt.
Repeat until all debts are paid in full.

In theory, by the time the final debts are reached, the snowball will be rolling quickly as it has picked up a lot of financial mass. Hence, larger debts will be paid off faster.

Let take an example to illustration the Debt-snowball Method. Assume a typical young woman in her mid-twenties who awakes one morning to realize that shes in debt and decides to do something about it. She might be burdened with the following hypothetical liabilities:

30,000 college loan at 5%
10,000 credit card balance at 12%
2,000 computer loan at 10%
3,000 car loan at 4%

The highest-to-lowest method would advise her debt to be paid off in this order:

10,000 credit card balance at 12%
2,000 computer loan at 10%
30,000 college loan at 5%
3,000 car loan at 4%
:thankU:

[crist]

In short, the Debt-snowball Method is another method to help a debtor to clear off his debt in more psychological way: by reducing the number of debts first as compare the total debt amount. Those who are unsure of their ability to stick with the plan may want to pay the smallest debt first, because the thrill of eliminating an entire balance sooner may encourage them to continue.

[crist]

For more details try this link:
National Debtline

[helenth01]

The initiative taken for the concern is very serious and need an attention of every one. This is the concern which exists in the society and needs to be eliminated from the society as soon as possible.
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[JamesYates]

You can withdraw your savings and investments and use the proceeds to repay debt. The overall goal of reducing personal debt should be the minimization of financial risks. Offer your home as collateral against unsecured debt, to save a few points of interest increases the risk of tremendous loss.

[aaarabiskkadri]

hey, The longer you take to repay the charges, the more interest they make, and the less cash you have in your pocket. Don't play their selfish game.