Debt can present real pressure, it can impact your everyday life in numerous ways, it can effect your relationships, your ability to enjoy your life and probably most importantly it can effect your health.In an Ideal world, no one would require credit – either credit cards or loans. We’d pay for everything in cash. Our grandparents didn’t want or need credit. If they couldn’t afford something, they simply wouldn’t buy it.Of course things are a lot different today and the ‘Credit Crunch’ we are winessing is a direct result of all the easily available credit. If you owe money, on a credit card or a loan, you may be wondering if you can ever be debt free.There is a method of paying off your credit card and loan debts which is gaining currency and helping many to become debt free. This method is called the ‘Debt Snowball’. Numerous experts in finance have endorsed this method and for many people struggling with mounting debt it’s been the solution.How Does The Debt Snowball Method Work?The Debt Snowball is a process in which you pay of the credit card or loan which has the highest interest rate first. First of all you make a list of your credit cards and/or loans, ranked from highest to lowest interest rate. You then need to look at your monthly finances to pinpoint how much money you can set aside for repaying these debts.For example let’s say that you have four debts, a mixture of credit cards and loans. The highest interest rate amount would be listed first and so on in descending order to the lowest.Next, you take the money you’ve set aside in your monthly budget and use this to pay off as much as possible of the debt with the highest interest rate. This must be more than the minimum payments. For the other debts, make only the minimum payments.Continue making these payments until the first debt on your list is paid off and then move on to the debt with the second highest interest rate. Keep paying off the second debt using the same method.Just keep on working down your debt list and paying off each credit card or loan using the same method. With each credit card or loan you pay off, the amount you’ll be able to afford to pay off the next increases. If you keep setting aside that extra money in your monthly budget to repay your debts, you’ll be able to get out of debt fairly quick.So why pay off the highest interest card or loan first? You’ll save more money this way – the higher the interest rate, the quicker your debt will grow.You Can Be Debt FreeThe Debt Snowball method has been used by many people to become debt free and take control of their lives again. It isn’t necessarily easy; it will take some dedication and a little sacrifice to make this method work for you.By committing to pay off your debts, you’ll find that your mental strain will also begin to lighten. Once you pay off your debts, cut up and cancel all but one of your credit cards. Keep this one to use for emergencies only and for times wen no other payment method is available. Now congratulate yourself on a job well done and then start enjoying your new, debt free life!Another More Cost Effective Debt Reduction MethodYour other best debt reduction method is debt consolidation with a low interest loan. Total up all the debts you have, obtain a single low rate loan for this amount and settle all of your debts in one go by paying them off with your new loan.With the Debt Snowball method all your debts other than the one you are attempting to pay off are ignored, to a degree as you only pay the minimum repayment each month, and they continue to cost you money, usually at a higher rate of interest than your typical debt consolidation loan.By utilising a debt consolidation loan you’re left with one easy to manage lower rate payment per month. This also takes away the subconscious pressure of having multiple debts as well as saving you money.By using this method you also avoid the higher repayments costs of higher interest credit cards and loans. Debt consolidation is a very cost effective method of becoming debt free.
Aside from the hardships brought about by the high qualifications set by the various colleges and universities operating, another principal concern by most college students today is the financial requirements of these learning institutions. The costs of financing one?s studies have gone up over the years. If a family can no longer support to spend for the education of a college student then the next best thing would be to apply for a student loan. It is thus not surprising that the percentage of students who avail of loans in order to finance their studies is similarly on the rise. In the United States alone, a survey was conducted and it revealed that at least half of its newly-graduates have student loans to pay off. This is indicative of the fact that having a student loan is normal for an individual who desires to finish a degree.Whether you are still a student dealing with a student loan or a recent graduate burdened with accumulated student loans, there is a way that you can reduce or possibly eliminate your student loan. The two most common types of student loan debt reduction are debt consolidation or debt refinancing.Under debt consolidation, your different student loans may be consolidated into only one loan. Under this scheme, by combining all your loans, you need to deal with only one interest rate, which is usually lower compared to when you average the rates for all your loans. The payment period is extended resulting to lower monthly installments for you. After consolidation, you only have to deal with one lending institution. Under debt refinancing, you have the choice of either getting a lower interest rate or spreading your payments into a longer period of time. Refinancing simply means trying to ask for better terms and conditions from your present financial situation.Of the two types available, applying for debt consolidation to reduce your student loan debt is more advisable as it offers more benefits to you.
Are you thinking of consolidating debt, perhaps credit cards or store cards or just general consumer loans but you have some black marks on your credit file?Even if you have had debt problems in the past, there are many debt consolidation loans that may still be available to you to help you get out of debt.There is almost always some form of credit available to you no matter how bad your credit history is and in fact, there are many companies that specialize in debt consolidation loans to people with bad credit.Generally, because you are deemed a higher risk, you will not be able to get the lowest rates but there will normally be some form of credit available to you.Here are two of the borrowing options for people with poor credit. There are often other options available as well and you should always seek professional help before committing to anything.Secured Loans
The biggest problem for lenders when taking on someone with bad credit is that they may not repay the loan. If you are prepared to guarantee the loan with something (often a house), the risk becomes much smaller for the lender and so you will find it much easier to get debt consolidation loans if you are able to provide security for the lender.This does not mean that you cannot get an unsecured loan; they will just be harder to find.Debt Management Plans
This is another option for you if you are have debt problems and have a bad credit history. It is generally used to try to avoid an IVA and bankruptcy and is much less severe.You will do it through an advisor and they will negotiate a payment plan with your creditors where you pay an agreed amount for a set period and then the debt is written off. Often with this plan, you may not end up paying the full amount that you owe but it will further negatively affect your credit record.