Free at Last

Things to Learn if You Want Financial Freedom
Here are some important facts that you need to know about if you want to be free:
  1. Equity in Your Home - Find out how much equity you have in your home and learn how to use it wisely. Most people have more equity than they think. You can use the equity locked up in your home to clear some of your debts or to consolidate all your loans. If you do this, make sure that you do not add onto your debts. As soon as you have cleared all your other debts, get rid of the loan on your home.

  2. Second Mortgage - Do not entertain second mortgages. Having a second mortgage is not a good idea. If you must have one, in order to gain a financial advantage or reduce debt in another area, that’s fine. But you need to exercise control and discipline; otherwise you will be in a worse situation than before.

  3. Refinance - Refinancing is not too expensive. Most people see refinancing as costly, but it is not expensive because it will save you money. If you are refinancing to slash the interest rates you are paying, it’s not expensive at all.

  4. Credit - Retain a good credit rating. Your credit history will stay on your record for five years. Try and maintain good credit because that is better than trying to explain any problems on your credit report. Don’t feel trapped because of a less than acceptable credit rating. Work hard to establish new credit, clean up all past debts and then wait until your record is totally renewed.

  5. Clear of Risk - Don’t put your house at risk to pay bills. It is smart not to put your house at risk. However, sometimes you have to look at the overall risk. The bigger your overall monthly payments, the more risk you put yourself under. This can result in you losing everything, including your home. It may be wise for you to look at a plan where you can borrow a little extra on your house to clean all bills and then do not go into debt again. What you are trying to do is to minimise your overall risk by minimising your total debt. So, to get out of debt faster and create a small emergency fund as a reserve, refinancing (using your home) may be a wise move.

The 8 Fastest Ways to be Free of Debt

  1. Use your assets. If you have assets with significant equity (such as your home), you may be able to use these to get control of all your debts.

  2. Find extra work. Look at getting a second job, to help pay off your debts faster. Once the debts are gone you can go back to a normal life with one job.

  3. Set up a repayment plan. It is no use looking at being out of debt unless you put together a plan and stick to it. Your plan should show how you could cut back on your expenses, including paying off the debts with the highest rates first.

  4. Cut up your credit cards. Get rid of all your USA and overseas credit cards except for one. Cut them up. Use the existing credit card for emergencies and conveniences. You will find that one of the best steps to get out of debt is immediately stop using credit cards.

  5. Consolidate. A consolidation loan makes sense. This is where you get one loan (perhaps secured on your home) and clean up the four or five other bills. Not only will the interest rate be lower, but also you can focus to clear one debt, as soon as possible. If you are going to go for a consolidation loan, make sure you don’t add any more debt. In general, this new loan will have a smaller payment and a much lower interest rate than the others. It is also good to have one payment, rather than half a dozen every month.

  6. Seek counselling. Don’t try to handle becoming debt free on your own, if you feel you need help. It is nothing to be ashamed of. It is far better to own up and seek the services of a counsellor or a financial adviser who can put together a debt reduction plan for you, and encourage you to be financially free.

  7. Make an arrangement to pay. If you have a number of debts it may be a good time for you to get in touch with all your creditors and come to an arrangement whereby you can pay them off over a period. Some of them may even accept 50 cents in the dollar just to clear the matter. If you can put a payment plan to your creditors allowing you to pay them in an orderly fashion over a period, this will not only preserve your credit rating, but it will also give you peace of mind. It operates in a similar way to a debt consolidation loan, except you don’t have to borrow the money to pay the creditors off. The important thing with a proposal to creditors is that once it is in place you must stick to it. Do not renege or even miss one payment.

  8. Look at bankruptcy. As a last resort, bankruptcy is an option. This should only be considered if all other alternatives do not work out. Unfortunately for some people, bankruptcy is the only way to start afresh. More and more people are becoming bankrupt because it offers a quicker solution for getting out of debt and getting back on track. Do not file for bankruptcy unless you have received proper advice.