Tips On Managing Your Debts According to the Pros
In this hub you will be introduced to the secrets to managing debts. First to begin, we all know how we get ourselves into debts, but never quite seem to know how to manage debts! The handling of debt crisis can be quite a challenge for everyone who has been literally living from paycheck to paycheck.
These people just do not have the financial resources to take care of most of their needs and honor their debts at the same time. However, sometimes a large percentage of these individuals are just not taking the correct approaches to addressing their money problems. In this hub, I will be sharing a few tips on how to better address your financial debts.
Most of us have been victims of huge debts for too long, and really need to do something about it before it creates disruptions in our lives and causes our families serious grieves. Credit cards debt for example, can be our number one enemy, so let's focus all our energies on getting rid of them.
First, you should try to get rid of all the credit cards you own. You may begin by gathering all your credit card statements and search through the most recent ones. Write down the APRs in large bold numbers on top of each statement, then sort the statements with the highest APR at the top and then those with the lowest at the bottom. You should then use a calculator to calculate your monthly minimum payments.
Be aware that credit card companies deliberately require very small minimum payments. They deliberately do this, because they want credit card holders to pile up large amount of debts, so they can earn as much interest as possible. For example, based on findings, if you were to owe 4 thousand dollars with a 17 percent interest, it could take you 48 years to pay this off. Taking into consideration that with some credit cards, the compound interest many of us are currently paying exceeds 34 percents. Why shouldn't we do our best to pay them off?
If it means borrowing a loan from friends or relatives, let this be a priority! If for some reason you are unable to obtain enough cash to pay them off, you should at least pay off those with the highest APRs. Once you do this, do not accept any other new offers.
From this point onward, if you should ever need the convenience of a card, it's recommended that you get debit cards instead. However, before you do so, you are advised to ask the bank to give you true, pure debit cards. You should not accept any card that comes with a built-in credit card feature!
The next important step to take, is to begin paying down any other personal loans you might have outstanding. If you own a home or properties, it is of paramount importance that you pay down your mortgage, especially if you are locked into a high rate or have an adjustable-rate mortgage. You should make it your goal to send an extra amount or an amount that is greater than what is required by your mortgage company each month. For example, say your required monthly payment is $1,200, try to send 1,500 monthly, if you can afford it. You will be surprised how much sooner this extra $300 will help you to pay off your mortgage.
Whenever you receive your income tax returns or should you come up with any extra cash periodically, don't go spending wildly -- consider using some of this money to tackle your financial debts. Try to build up your cash savings. Some money market experts suggest that you should even consider postponing paying down your fixed-rate mortgages until you have sufficient cash to cover six months of expenses, should in case you are very concerned about the possibility of you losing your job.
To summarize, times are hard; money is very scare, or hard to come by. As a result, most of us rely heavily on credit cards to help pay the bills, eat, shop and so on. However, it's time to step back and take a good look at the tremendous amount of debts we keep piling up. Don't forget the mortgage and other loan obligations that you have to meet!
I know that it's hard, but hopefully with these few tips you can at least start to address any debt crisis that you might be currently struggling with. Finally, remember no matter what tips anyone is going to share with you on how to deal with debts, if you don't make an effort to implement them or curtail your spending habits, it's useless even listening!
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