How to Enjoy Financial Freedom After Credit Card Debt
Solution: Life After Debt, an innovative two-pronged strategy to slashing high-interest student loan debt once and for all. First, existing credit unions could opt to allocate a large portion, or all, of the traditional retirement benefits to a low-cost, Roth-like student loan program. This would, quite possibly, drastically reduce the amount of money students pay out each month toward loans and could significantly reduce overall debt burden. Second, graduates could contribute to a student loan forgiveness program, thereby dramatically reducing the amount of time spent paying student loans off altogether.
Step one is the most obvious. If you belong to a professional credit union, your first step should be to contact your local credit union leadership and ask about the plans available to your members. Ask about the student loan forgiveness programs mentioned above, as well as about the fair credit reporting act and about the credit repair process itself. Do not feel compelled to ask these questions specifically; instead, simply ask general questions about the union’s plans. Be as forthcoming as possible, as this will give credit bureau’s an accurate picture of how your finances are currently stands. They will then provide you with helpful information regarding the steps necessary to take to restore your credit score.
Step two is a bit more involved. In order to successfully complete a debt settlement process, it is vital that you have a good credit score. A bad credit score will not only make it difficult but downright impossible to successfully initiate the debt relief process. You must also maintain good payment habits on all your other accounts in order to have a chance at recovering from debt.
Credit counselors and experts recommend filling out a loan modification form every month once your monthly income has been calculated. This form asks for detailed information about your monthly expenses, such as food, gasoline, clothing, and other essentials. The information is then compared with your estimated monthly income. If you find that your expenses exceed your income by more than twenty percent, you will be advised to contact a financial expert who can assist you with creating a budget and work towards paying off your debt.
Experts recommend that you set aside twenty to thirty percent of every paycheck that you receive. When you set aside money, you must ensure that you are only spending that amount. Not only will you not go crazy with debt, but you will also be able to save money that can go towards paying off your loans and mortgage. Another thing you should do is save as much money as you possibly can each month. Experts recommend saving three to five percent of each paycheck. By doing so, you will be able to pay off your bills easily while being able to save money to pay off your debts.
Experts suggest that you get rid of your debts as soon as possible. However, they also remind you to make sure that the debts you have are affordable ones. If you have too many bills, then you should try to consolidate your various loans into one affordable loan. Although consolidating your debts into one loan may seem like it will be very expensive, it actually does not have to be. By shopping around for different rates and policies, you will end up saving a lot of money and finding a good deal on your loan.
If you cannot pay off your debt within the time frame given by your lenders, then you should consider bankruptcy. However, experts advise that you avoid this option if at all possible. Bankruptcy will ruin your credit rating for up to 10 years, which means that you will have poor credit ratings for the rest of your life. Another way to achieve financial freedom is to reduce your credit card debt. Many credit card companies give customers special offers in order to bring them back to their company, which is why the credit card companies often encourage consumers to use their cards irresponsibly and rack up huge debts in order to build up huge balances.
Instead of using your credit cards to pay off your debts, you can consider applying for a secured credit card. A secured credit card is one that requires collateral, such as a home or an automobile, in order to be issued. This reduces the risk for the company, because they do not have to take the chance on the consumer defaulting on their loan. Therefore, secured credit cards are a good alternative to unsecured credit cards when trying to establish a good credit history. Although you can save money by carrying a secured card, remember that you will have to pay a higher interest rate than an unsecured credit card because you are putting up your home or automobile as collateral.