Tuesday, July 12, 2011

Is It Possible To Get Rid Off Debt Without Debt Consolidation?

Paying off debt is not the only solution for personal debt consolidation. In fact, it can have dangerous side effects. If you consolidate your consumer debts into one loan and can not pay off your payments, you might lose your home, or it could drag you to insolvency. Instead, using a debt "snowball" approach, you can implement your plan to pay the debt and experience success sooner rather than later. And it is not that difficult, most people pay off their consumer debt in two years.

Add up your income after taxes for the last three months of pay stubs.

Add up all the costs of their checking account statements and comparing the sum with the sum of their pay stubs.

Make sure your income is greater than your expenses during the period of three months. If they are older, you must add the difference of the amount to be determined, then to make significant progress in debt.

List your debts, excluding your mortgage, on a sheet of lined paper from the smallest to the largest debt. Beside each debt, list the minimum required payment for each.

Identify spending cuts equal to at least $ 100 per month or more. Note that these spending cuts are temporary and can be reset if you want after your debts are paid.

Add the additional amount that has been created through spending cuts to the minimum payment on the smallest debt on your list, and pay that amount to the debt each month until fully paid. Make minimum payments on other debts only.

Apply both the extra amount you have created through spending cuts and the minimum payment on the debt smaller than the minimum payment on the next debt on the list until it is well paid off.

Work your way through each debt on your list this same way, adding your minimum payment before the payment of its growth "snowball" until the last non-mortgage debt is paid.

Consider using their freedom to create cash for an emergency fund and increase your savings for retirement.

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