MANAGING Your Debt
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In this video I’ll discuss the types of debt, how to minimize debt, and ways to pay it down faster.
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Strictly defined, it is money owed to someone else, usually a creditor. It is important to note that debt as a general concept has a positive side. Without debt we wouldn’t be able to buy homes, cars, and send our kids to school.
The problem is when the debt becomes a way of life and overwhelms our ability to repay it.
When discussing debt, you first have to classify it in two main categories: secured and unsecured.
A secured debt is the type of debt is backed by tangible collateral, not just the creditworthiness of the borrower. Secured debt includes mortgages and car loans, and these generally have lower interest rates since the lender has a lien on a physical asset to repossess in case of default, making these types of loans less risky.
An unsecured debt is a type of debt that is not backed by any collateral, and is based strictly on the creditworthiness of the borrower. These types of loans are considered riskier, and the lender generally charges higher interest rate to offset this risk. The best-known example of an unsecured debt is a credit card, but there are many others.
The first is mortgage debt.
The second is auto loan debt.
The third is student loan debt.
The fourth is credit card debt.
The fifth is medical debt.
Finally, we have IRS or State tax debt.
1. Don’t buy more house than you can afford.
2. Try to save up the full 20% down payment or more.
3. Shop your loan carefully, especially if you have excellent credit.
Auto loan debt.
1. The best way to avoid an auto loan is to not get one by purchasing a relatively inexpensive used car, in cash.
2. There are major auto insurance savings possible if you buy a used car and pay it off in full. You can then get just liability, and not collision coverage.
3. Finally, another possibility to save on car payments is to rent the car out on Turo.com.
Student loan debt.
1. Academic or sports scholarships, grants, and tuition reimbursements.
2. Have the military pay for it via enlisting in one of the services.
3. go to a state school versus private, or attend a lower-division community college for two years before going to a more expensive upper division school.
Credit card debt.
The best possible financial advice with regards to credit cards is the following: only have one credit card, and only use it when you have the cash in your bank account to pay it off every month.
Try to get medical coverage at the first opportunity (even a low cost, limited-coverage plan is better than no plan).
If you are a freelancer or consultant, put away money for your taxes, and pay estimated taxes quarterly if advised to do so by your accountant.
Techniques to pay back debt faster.
Method 1 – Debt Stacking (or Debt Avalanche)
With this method you will rack and stack all of your non-mortgage debts according to the interest rate they charge, from highest to lowest. With four debts, it would look like this (by interest rate):
Credit Card (10K@18%)
IRS Tax Bill ($4K@8%)
Car Loan ($8K@6%)
Student Loan ($26K@4
Method 2 – Debt Snowball
With this method you will rack and stack all of your non-mortgage debts according to their amounts, but with the smallest amount first. With four debts, it would look like this (by amount):
IRS Tax Bill ($4K@8%)
Car Loan ($8K@6%)
Credit Card (10K@18%)
Student Loan ($26K@4%)
Method 3 – Balance Transfer
This mostly applies to credit cards. The idea here is to open a new credit card, that has a significantly lower interest rate than your current one, and transfer your existing balance to it.
Method 4 – Consolidation Loan
If you have good credit and want to consolidate a number of debt accounts, you can take out a consolidation loan from a bank or credit union.
This video was created for informational and educational purposes only, and should not be construed as a source of specific investing, financial, accounting, or legal advice. This video should never be used as the sole source of information, without consulting with a financial or legal professional to determine what may be best for your individual needs. The creator of this video, Elliot J. Gindis, does not make any guarantee or other promise as to any results that may be obtained from using the information in the video. To the maximum extent permitted by law, the creator of this video disclaims any and all liability in the event that any information, commentary, analysis, opinions, advice, and/or recommendations contained in this video prove to be inaccurate, incomplete, or unreliable, or result in any financial or other losses.
Has Secured Debt, MANAGING Your Debt.
Get Financial Obligation Relief For Debt Complimentary Living
We spoke about the benefits of a Secured Debt debt consolidation loan, now let’s see the cons. Excuses are how we validate not allowing something to happen. I imply disregard what other individuals are DOING AROUND YOU.
MANAGING Your Debt, Play top full length videos about Has Secured Debt.
Chapter 7 Personal Bankruptcy And Becoming Debt Free
You will not arrive working one task and earning a direct earnings. Serious delinquency, negative public record or collection filed – You have a large judgment, collection, or lien. Hence a credit line is specified for you.
There are 2 kinds of financial obligation the secured and unsecured loan. The protected loan are the for which you need to provide collateral to the bank. The creditor can settle the impressive financial obligation by selling your security. The unsecured loan is the financial obligation in which creditors do not take the interest but any security rate charged is very high. The unsecured financial obligations can be eliminated quickly due to lack of authority for the financial institution to recover their cash. This brings the settlement part. If you are not ready to pay the whole quantity then lender can refrain from doing much legally to recuperate their cash. In secured debt if you file for bankruptcy financial institution still have choice to auction your security and recover their expense. This part is missing out on in the unsecured financial obligation.
UnSecured Debt is financial obligation that is not Secured Debt-it isn’t connected to any specific possessions. Even if a financial obligation is “unsecured” does not imply that you can not be demanded the financial obligation. On the contrary, it suggests you should be sued face to face for the debt collector to collect any cash. The creditor then “enforces” the judgment versus you by garnishing earnings or attaching accounts. However this can be tough for numerous factors.
These kinds of loans are secured in nature simply like other guaranteed loans. A secured loan suggests that a person has to offer security while taking the loan. The individual who needs to take the loan has to pledge collateral; the security can be his personal property and so on.
Living a frugal way of living we aim to be financially assured. One method of achieving this is getting Debt Free. Financial obligations can be great and bad for us. It genuinely depends on how we handle the financial obligation. For example, if we are lazy and don’t deal with the financial obligation properly it can spiral out of control. Anyways, mindful administration of our finances can mean that we can clear our debts.
Never sustain any card debt that is beyond your capability to repay in a single month. That is to say, keep away from Revolving Debt. The card business make optimum out of the revolving debt just.
One payment versus lots of payments: The average resident of the U.S.A. pays 11 various lenders monthly. Making one single payment is much easier than figuring out who need to get paid how much and when. This makes handling your finances much easier.
Envision – debt free – no more home mortgage, early retirement, travel the world, buy a luxury yacht. Whatever your dreams are, you can have them. Others are doing it, you can too. Make today the start of something brand-new, exciting and BIG. Get your house based company in internet marketing began now, and make your dreams a truth.
Being financial obligation totally free appears to be just beyond the reach of Americans today. It simply means they might try to charge you high rates and never ever get your financial obligation decreased.
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