One of the main reasons people are unable to obtain greater financial freedom is that they have excessive short-term debt. The debt comes from credit cards, student loans, car payments and personal loans. This guide provides several ways to better control out of control debt.
• Lower interest rates. Ask each creditor to pay your bills in time to lower your interest rate. If some of them agree to do so, you will be able to pay off the balances on these loans and cards faster. You may have more money to apply to repay other accounts with funds you save from lower interest rates.
• If you lower the interest rate on one or more credit cards, transfer the credit card with the higher interest rate to the credit card with the lower interest rate. Check if the lower rate card has any balance transfer fees associated with it. If this is the case, is the difference between the higher rate card and the lower rate card still better when you consider the transfer fee? If the difference is good for the transfer, then it is done.
• Obtain a consolidated loan. If your credit line is above average and your creditors are reluctant to lower your interest rate, consider obtaining a combined loan. The rates for these loans are usually lower than the credit card rates and are usually lower than the cost of paying each creditor separately. However, please note that your specific circumstances may require collateral [such as your home] to ensure a consolidated loan. Not all lenders need collateral. Therefore, if you think your credit and financial situation are sufficient to get a loan without collateral, then shopping is worth it.
• Tightening your expenses. Have lunch every day instead of going out to eat. Reduce your cappuccino spurges from five days a week to three days zero. Do you really need a few channels? Reduce cable TV packages. Use your savings to pay off your debts. Your prosperous financial freedom will love you.
• The next one seems to be in the left field, but it does work. Do you have a qualified retirement plan? Does your employer provide the appropriate donation? Did you contribute more to your account than the amount matched by your employer? Then, it may be time to pause the contribution above the game. If your employer can only match your salary to 3% of your salary, then the wage contribution will not exceed 3% of the salary.
Use extra cash to pay off short-term debt. Here's why: You may never see earnings in your retirement account close to the interest you pay for short-term debt, especially if most of it is on a credit card.
Let's take a closer look. Let us assume that your portfolio grows by an average of 11% per year. This will be a special case, but let's say it happened. We also say that your average credit card rate is 13.99%. By repaying your credit card debt with any additional funds you deposit in your retirement account, you pay an additional 2.99% extra for the debt each year. So, lower it. Then, if you want to restore your retirement amount to its original level, feel free to do so. There may be better places to invest extra cash, but this can be used for future discussions. You will do well, just free from the short-term debt handcuffs!
Excessive short-term debt can become a serious economic burden if left unchecked. Finding a place to start dealing with it in everyday life can be difficult. The way to reduce debt is more than the approach examined in this article, but using any of the methods listed is a step in the right direction – achieving greater financial freedom.
Orignal From: Check debt
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