December 3rd, 2008
Five Great Ways To Get Out of Debt
For those that are facing a mountain of debt, it can seem almost impossible to find a way out. However, there are strategies that you can employ to help you get out of debt quickly and easily. We’ve identified five ways that you can start reducing your debt, starting today.
1. Get a low rate consolidation loan.
This is the best option for those that have many different credit cards with high interest rates that are getting out control. By taking quick action, before those cards become delinquent, you can reduce the risk of having your credit score be adversely affected, and you’ll be spending less money on interest. It is however vital that you read the terms of this loan very carefully. In many cases, you may end up spending more over the long term, especially if you get a loan for more than five years. However, if you need a fast solution to get those cards paid off, this is typically the easiest way.
2. Start with the worst card and work your way through.
If you can pinpoint which credit card is causing the most problems, you can start paying that one down and then move through the rest. You’ll need to keep making at least the minimum payments on your other cards. Find the card with the highest interest rate or the highest balance and focus on getting that balance down to a manageable level.
3. Check your spending.
In many cases, people end up in debt simply because they are not controlling their spending. You can start by making a budget for each month. See how much money you have coming in and then compare that to how much you spend. Work on reducing your outgoing money that is eating away at your income by getting rid of any nonessentials. This will quickly free up money that can in turn be used to pay down your debts.
4. Get a second job briefly.
In some cases, the only quick way to get out of debt is to increase your income enough so that you can pay off what you owe. Getting a second job is the easiest way to do this in the short term. Just make sure that you take that paycheck and immediately apply it to your debts, to reduce the chances of spending it on other things. If this doesn’t appeal to you, find other ways to set up another stream of income to give you enough cash flow to pay down what you owe.
5. Renegotiate your terms.
If you have a good payment history with a creditor, they may be willing to renegotiate your interest rate. On a high balance credit card, every point you can reduce will help and this can have a dramatic impact on what you owe overall. The worst thing they can say is no, so it is worth a try to ask for a lower rate. Many creditors will agree to at least a small reduction.
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Any suggestions on places to get a low rate consolidation loan?
With the sub-prime issues banks are only going to provide good rates if you have a good credit score (720+). If you do take a look at these lenders.
http://firstagain.com/Rates/
http://www.lendingclub.com/home.action
Let us know if you give them a shot.
We used the Dave Ramsey plan to get out of about $50k of debt in about a year. Worked flawlessly and taught us how to manage our money. Get The Total Money Makeover – it will change your life. Here are the 7 baby steps: http://is.gd/adyR
You have gifted your readers such a great and informative post. The person who is facing debt problems, he will take the post like a remedy so that he can get out of his existing debts. If anyone can follow the five ways, he or she will definitely be able to get relief from debt. I will mostly emphasize on the third point where you have suggested to check the day-to-day spending.