How to get rid of debt.
To get rid of debt will probably be one the most difficult thing you’ll have to do. Debts are treacherous, sneaky and before you realize what’s going on, you’re knee-deep in it. It usually start with getting a credit card in order to build your credit and it ends up with you having a multitude of debts from different sources and borrowing from one in order to pay for the other. You sit down and try to remember where all the money went and you can’t quite remember because like I told you, debts are treacherous and sneaky.
Nevertheless, you have debts that are good for you and others that are simply futile. You are not alone in this situation, as the average North American has about $38,000 in personal debt, excluding mortgages.
To be precise, bad debts are consumer debts like those that arise from credit cards, car loans and personal loans. These kinds of debts don’t necessarily improve your situation and they tend to leave you worse off than when you started.
Consumer credit facilities are usually there to help us buy tangible or intangible things like a car and a trip. On the other hand, good debts are like student’s loans and mortgages. Why, you ask? A student loan might improve your career prospects hence your financial situation and a mortgage gives you access to a wealth building asset from which you can borrow to invest in other wealth building assets hence triggering the virtuous cycle of wealth creation. It’s as simple as that.
Simply put, if you want to know how to get rid of debt you either have to increase your revenue or lower your expenses or both. It’s as simple as that.
Keep reading and start building wealth.
Debt reduction services
These services are available all across the continent and they can play a vital role in reducing your debt load. They negotiate a new debt amount with all your creditors in exchange for your full cooperation. When I say full cooperation, it means that if you accept to pay the new reduced amount, you cannot be late in any of your payments or else the deal is off and you’re back to where you started.
Why are the creditors willing to accept to negotiate a reduced amount? They want to get paid and 50% of $38,000 is always better than 100% of $0 because if you declare bankruptcy, that’s what they’ll get.
If you follow this route, these are the benefits:
1. The creditors and debt collection agencies aren’t allowed to call you anymore.
- You won’t have to face the social judgment of your peers.
2. All your debts will be concentrated in one monthly payment.
- .It will allow you to budget better and you will be able to finally constantly be able to put food on your table without your debt load taking away that basic right and necessity.
3. When you will finish paying your debts, there’s a strong possibility that credit will be made available to you again.
- . You will have a second chance to not make the same mistakes and that’s worth its weight in gold.
Wherever there’s a ying, there’s also a yang. There are consequences if you choose this path:
1. If you miss one payment during the repayment period, the debt reduction will not be able to help you anymore and the creditors (vultures) will be able to go after you again.
2. The repayment period can last for a few years and you will really need to be diligent with your finances.
3. Your credit score will take a severe hit hence guaranteeing that you will not be eligible for credit during your repayment period and for possibly longer.
4. Even if you’re eligible for credit after the repayment period, you will not get the best interest rates on new loans, mortgages and other credit facilities. This situation can be difficult to cope with at first and can even bring you back running to payday loans.
If you chose the debt reduction service avenue, there’s a simple way to remain unscathed when you finished paying your debt. Plan ahead and put as much as you can in your savings account. If you do that, you can ask for a secured credit card that will help rebuild your credit and allow you to receive a credit card with a more decent interest rate.
It’s a really straightforward concept; let me explain it to you. The credit card company offers you credit to the extent of the security you sent them. For example, if you deposited $500, they will extend a $500 credit card. Payday loan companies might offer you that resembles this product but please do not accept it.
Payday loans companies do not report to the different credit bureau hence they have no influence over your credit score. The only companies that offer such a product are true credit card providers like VISA or MasterCard.
My suggestion is to go with this company, Refresh Financial, as they are knowledgeable, trustworthy and will provide you with the quick and simple solution you seek.
Verdict: Debt reduction services are an excellent solution if you’re really in a dire situation and the creditors are about to seize everything you own.
Debt consolidation loans for people with bad credit
Another step in our how to get rid of debt journey is to ask for a debt consolidation for people with bad credit. These kinds of loans are readily available in many financial institutions nevertheless I advise you to go with this one, Fairstone Financial. They have a good reputation, their rates are exceedingly reasonable and they will treat you like a human being.
A debt consolidation loan is granted in order to merge all your debts in one place.
The benefits of using this option are plentiful. Let’s take a look at some of them.
1. Your credit will not take a huge hit.
- Meaning that you will not be barred from all financial institutions for the foreseeable future.
2. Creditors will stop harassing you.
- They won’t stop harassing because it’s against the law but more because you would have paid your creditors. That’s a main difference with the debt reduction services.
3. It will give you a chance to regain control.
- To have all your debts merge into one payment, greatly diminishes the budgeting headaches believe me. At the same time, it increases your disposable income because that one monthly payment will certainly be less than all the scattered payments you used to make.
4. The secured credit card is still an available option.
- Usually after you ask for a debt consolidation loan, the financial institution might want to cut all your credit cards and instead offer you the possibility to apply for a secured credit card.
On the other hand, there are a few complications with this option.
1. The total amount owed will be not be reduced.
- Remember how with the debt reduction services, they negotiated with the creditors? Well, with a consolidation loan there are no official negotiations. You can still negotiate on your own albeit they might accept or refuse. Regardless of the aftermath, I highly suggest you try it out; you might be surprised with the results. The debt consolidation loan will be used to pay the full original amount of all the creditors.
2. It can be difficult to get if your credit is below a certain threshold.
- Indeed, regarding your credit score there’s a fine line in the sand that financing companies might not be willing to cross in order to offer you that consolidation loan.
Verdict: A Debt Consolidation Loan for people with bad credit is the best solution if you still have a decent credit score and can afford the higher monthly payments.
If you decide that this option is the one for you, I strongly suggest you take a look at Fairstone Financial. They offer consolidation loans to people with bad credit and their interest rate range from 6% to 36% which is extremely less than what payday loans offer. Payday loan companies have prohibitive interest rates that average 400% annual percentage rate. In my opinion, these companies are ludicrous and it should be criminal to offer this kind of rates to people whom are in desperate need of help.
Each of the solution that I’m providing you with is tailored to help you in accordance with the situation you’re in right now.
If you’re still able to breathe, you’re not yet crushed under a massive amount of debt load and you have been using payday loans for some time which I strongly advise you against, your predicament is not critical yet.
The best solution for you is to use Fairstone Financial as they are a perfect fit for you. They allow you to borrow up to $35,000 at an interest rate varying from 6%-36%, offer financial counseling and a plethora of other products to help you.
Debt reduction services are the more drastic solution if you have nowhere else to turn to. The keyword at this point is preservation…and I mean preservation of everything. Preservation of wealth, house and especially dignity.
This debt reduction service, Debt.ca, will help you do just that. I strongly advise you to focus on what you want to keep, make the necessary steps to avoid foreclosure, seizure and unrelenting debt collection calls.
This concludes my how to get rid of debt article nonetheless I want to reiterate that If you find yourself in any of these conditions, there’s no better time than now to do something about it.
As I reminder, that there are institutions there to help you, I will provide you with links. I’ve been through it, it was difficult but I know you can do it. If you need any other advice or tips that you have not been able to find in my blog, please do not hesitate to contact me.
Secured credit card (Refresh Financial)
Debt reduction services (Debt.ca)
Debt consolidation loans (Fairstone Financial)
Any other solutions that you have in order to get rid of debt? Let me know in the comments below.
Please don’t forget to leave any comments or questions you might have below and it will be my pleasure to continue the conversation.