Monday, March 15, 2010

Debt Reduction: Amazing Little-Known Secrets about Eliminating Debt

Debt reduction should be a key focus for anyone with personal debt and especially anyone with personal loans they are finding difficult to pay each month. Experts recommend debt consolidation loans for recovering control over multiple loans and getting on top of personal money management. However, there are also other amazing little-known Do-It-Yourself steps you can take yourself to eliminate debt faster.

Rising interest rates, multiple personal loans, mortgages, large credit card liabilities and unemployment are making it increasingly difficult for people to meet their monthly loan repayments that, in the good times, weren’t a problem. If this is your situation you will be all too aware that missing loan repayments causes a lot of stress and will result in you developing a negative credit history. This decreases one’s credit worthiness with financial institutions and therefore your ability to borrow. And access to credit and borrowing (used wisely) is essential if you wish to create wealth using Other Peoples Money and develop financial independence and later financial freedom.

Nowadays, many people are going for Debt Consolidation Loans or what they call Secured Personal Loans to get on top of their monthly repayment needs. Ideally before taking out a Debt Consolidation Loan or a Secured Loan, you should explore other credit management options such as:

1.0% Credit Card Balance Transfers

This is essentially moving some of your existing high-interest credit card debt to a new credit card provider with a 0% interest rate. Typically, you will get 0% interest on balance transfers of existing debt for 6-12 months. Used correctly, this is one of cheapest forms of borrowing. But the one caveat is that you need to be sure you can pay off the balance before the 0% interest period expires.

2.Paying off Debt Using Savings

It is a much better money management principle to use your savings to pay off debt; the interest on savings accounts is always going to be much less than the interest you pay on loans. There is little point in having savings on one hand and personal debt on the other. When you think about it, you’re basically borrowing from yourself and paying interest for the privilege which is pretty crazy! ... (Paying Off Your Debt - read more)

3.Remortgaging

Remortgaging (sometimes referred to as refinancing) is basically swapping your mortgage from one lender to another. Your objective is to get a lower interest rate from the new lender. Make sure to check if there are any charges for switching. Remortgaging your home to pay off personal debt is overall a bad idea. The primary purpose of remortgaging is to reduce your interest rate and monthly mortgage payments. (Remortgaging - read more)

4.Renegotiating

Everything in life is negotiable, even debt! Only one thing worries a lender more than not making profit and that’s bad debts i.e. not been able to collect the capital amount lent (never mind the interest). So, you can renegotiate interest rates, payment term, fees, penalties etc. Never take a payment demand at face value. Ask and Negotiate. (Renegotiating - read more)

Be wary of debt consolidation and secured personal loans. Taking on debt to pay off debt is ultimately a bad idea. Trying to borrow your way out of debt could possibly lead to even greater financial difficulties.

Mastering debt reduction will ensure that money you earn isn’t flitted away carelessly and that you get to secure your financial independence! Discover debt reduction, money management and wealth creation techniques. Sign up for Millionaire Mindset Secrets for FREE now, you'll get instant access to insider secrets on Debt Reduction - www.millionairemindsetsecrets.com

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