Is Debt Consolidation Worth the Effort?
When you consolidate your debt, will you celebrate your freedom from credit card debt by going out and buying more on your credit card? Do you really want to live your life in debt, or would you prefer to take charge of your finances?
It’s too easy to consolidate debt. If it hurts to get rid of your credit card debt you’ll find it easier to resist getting into debt again.
Are you getting married? If your partner likes to live in debt, and you want to become a millionaire, who is going to give way? Most divorces are caused by money arguments. Discuss it before you marry.
You should debt consolidation if you have no ongoing credit card debt. The trouble when you consolidate debt is that the whole thing loses immediacy when you have thirty years to repay.
List your debts
Make a table showing all your debts, the amount still owing and how much you pay per month. Call the last column "Damage" and calculate it by multiplying your repayments by a hundred and dividing by the amount that you owe. The larger the damage, the more harm it is doing to your finances.
Imagine you had a fictitious list like this
Mortgage , $100000 , $500 , 0.5
College loan , $50000 , $333 , 0.66
Personal loan , $10000 , $100 , 1
Car loan , $10000 , $360 , 3.6
Visa Card , $4000 , $250 , 6.25
Master Card , $2000 , $200 , 10
You should realise if you consolidate debt then nearly all your monthly payments will be interest, so your debt won’t shrink much. When you pay an extra $100 your debt shrinks by that amount, and you won’t keep paying interest on it either.
List your surplus
Using the methods to earn and economise. Work out your surplus each month after all your expenses. Suppose you can spare an extra $456 each month. If there are two of you working, try to use all of one income to get out of debt, because you won’t always have both incomes.
See which damage figure is highest. That is the haemorrhage you must stanch first. In this example it is your Master Card.
Add your $456 to your monthly payment (mostly interest) of $200. You will shrink your debt by more than $456 because of paying less interest. You’ll have smashed that debt in about three months.
Now your self-discipline comes into play. Don’t go out on an expensive celebration! After 3 months you’ll be starting to build the financial discipline to make you a millionaire.
You’ve been paying $656 per month that is now surplus, so you add it to your visa account. That makes your repayments $906 each month. You’ll get rid of your Visa debt in a little over four months.
Now you can pay princely sum of $906 + $ 360 = $1266 per month on your car loan winning free in less than eight months... quite a lot less because of shrinking interest payments.
To cut a long story short, when you start to concentrate on your mortgage you’ll have $1266 + $100 + $333 = $1699 to add to your mortgage repayment of $500 per month.
When you start making repayments of $2.2K /month your twenty year mortgage will suddenly shrink to less than four years. You’ll have everything paid off before your first child is ten years old.
You may think that the big benefit is freedom from debt. The biggest benefit is the mindset that you’ve developed as you escaped from debt. You are now in charge of your finances... not letting the loan parasites continue to leech you of all your money.
But it gets better. An kid used the above method to get out of hundreds of thousands of dollars of debt, then became a millionaire while still in his twenties. He no longer needs to work, but he has a hobby of showing people how to become millionaires.
There’s just one problem. He isn’t interested in helping people who can’t save up $20 thousand to invest, because he says they aren’t trying very hard. Now if you take your $2.2 thousand, and start saving for $20K that will take you less than ten months.
He says that mindset is everything. Now you have the right mindset and have saved up $20K...
Debt Consolidation Calculator
You may be really happy because you’ve got lots of credit cards. You may feel too assured because you can always use it anytime of the day and wherever you are. Yes, credit cards can provide you with the needed cash especially when it is for an emergency but didn’t you know that with your every swipe comes another set of debts? The convenience is of course given to you by the credit card you have in your wallet.
Why not? You need not bring paper bills and coins when you shop or dine out. You simply have to swipe your credit card and presto! You have already paid to the cashier all your purchases. But then the real scenario is this—while you are paying with the absence of the paper money at your hands, you are likewise incurring debts which you will need to pay. The worst part is that when things go out of hand and your spending gets beyond control, you may one face a big trouble regarding the dues that you will have to pay.
The American people seem to be very hooked into the use of the credit cards. And most of them are also lured into the pool of debts that in turn bring them to extremely boiling water. The debt trap is exposing its claws and is continuously attacking the people. The end point for these things is the signing of debt consolidation strategies especially when dealing with the concerned lenders and then figuring out which will be the very best payment scheme option available will work out right.
Debt elimination calculator is like a software used in computing for the credit card debt consolidation options. With the debt elimination calculator, you and your advisor are able to find out the most reachable monthly savings that you can incur. Amazing, is it not? This becomes attainable through the carefully planned out and intelligent combination of several bills which are compounded into one. This in turn results to the cutting down of the severely high interest rates which creates tax-deductible loans. Furthermore, the debt elimination calculator will help you discover out the span of time which you will be needing in order to pay for the loan.
In truth, the debt elimination calculator is very easy to use. You just need to fill in the corresponding fields with regards to the monthly sum that you have in existence and then click on the “calculate” sign that you see therein. After which, the results will be displayed. The total and exact amount of the loan that you will have to pay will be shown and these will all be contrasted with the existing installments that you are facing.
It must be remembered that the debt consolidation calculator must be used with extreme caution. Yes, it provides you with the assistance in finally summarizing the financial situation you are facing at the moment but all the debt consolidation calculator can offer you are purely estimations. The results created are often utilized for the evaluation of the most probable outputs of consolidating certain debts as they are geared towards an equity loan.
It is vital that a professional must be consulted before the prior use of the debt elimination calculator because he or she can provide you with the advices you need most.