Really Get Out Of Debt NOW!
Wednesday, October 28th, 2009 Subscribe To Our Feed
But How?…
Don’t “Repair” your credit, Don’t “Consolidate” your loans (What a joke!) and Don’t get on your knees and “Beg” your creditors to forgive part of your debts. Get RID of That Debt!
OK How do I really do it?…
These three methods are the most suggested ways, when asking about, how to get out of debt. Let’s look at each of them.
1. Repair your credit
I’ve always wondered how the fact you repair your credit helps
you OUT. While correcting mistakes, explaining a problem or
challenging an enntry on your credit report is worthwhile, even
needed, it still doesn’t get you OUT.
Use it only after getting out of debt and then don’t pay someone to
do it. There is too much free information out there on the web not to
do it yourself. So why loose more money?
2. Consolidate your loans
Now this one really IS a joke! Let me see…you take your 5 loans
totaling $30,000 and move them to one loan with a balance of
$30,000. NOW you’re getting out of debt. NOT! This math/thinking
only works in Washington D.C..
Some of you are saying, but wait… I have moved the older loans to
one loan with a lower interest rate and this lowers my payments to
where I can afford them. While a few (very few) are saved by doing
this there are some hidden problems that make this method not as
golden as the advertising would make you believe.
Your payment is lower but is it for a longer time? In most cases I’ve
seen, longer is the answer (How do you think they got the payment
down?). Longer payments mean that compounding interest is
working against you and eating up most, if not all the interest
savings. All you really did was lower the payment. But paid it back
over a longer time (that equals more payments).
Where’s the savings?
Oh Yeah…by the way. My 30+ years of working with folks and their
money tells me that most (read: no one) takes the savings from the
lower payment and adds it to the unpaid balance to get it paid off
sooner. So where is the benefit to you? The bank loved the deal,
because they made more money. They make more – you have less.
3. Beg your creditors to forgive part of your loan
The ads we see and hear use the term “settle” or “debt settlement.” That’s just a marketing friendly way of saying cheating the creditor out of his money (back home we called that ‘stealing’.)
You used your credit to get something. You agreed to pay it back.
Why should you expect the creditor to not expect ALL his money
back? Would YOU expect it ALL back if you were the creditor? Stand
up and pay your debts.
Did you know that “settling” a debt for less than the total amount
due is reported to the credit reporting agencies and is reflected as a
very bad mark on your credit?
I have also seen where the creditor reports the amount written off as
income to you. Yes…the IRS will look at that “forgiven” amount as
income to you and you will be taxed at the highest rate possible rate for your situation.
So…if these ways don’t work…what does?
Here are the 4 steps to doing it. They are not easy. They will take time. There will be pain. But they DO WORK.
1. Stop adding to your debt. “It’s hard to drain the tub when the spigot is still open.”
2. Do an inventory of ALL your debts.
3. Set up a plan to systematically pay off those debts. Start and
finish
4. Determine it’s worth it and then JUST DO IT!
No matter which method you use this last point is the most important. You must decide WHY you want to get out of debt. Imagine what your life will be like when you are free from debts deep dark dungeon.
There are techniques you can learn to get you out faster, but you can’t just say… “I want out of debt”…and be successful, you must COMMIT to doing what it takes to get it done, no matter how long and painful it is. Sorry no easy out here.
Grant H. Lynn, CFP, CSA has 30+ years of experience helping people with their money. With a degree in Financial and Estate Planning and 2 professional designations {Certified Financial Planner (CFP) & Certified Senior Advisor (CSA)} he is uniquely qualified to counsel individuals and families on how to get out of debt.
He has turned his presentation on how to get out of debt (developed over 20 years ago) into a simple understandable video. The video lets you look over his shoulder and watch as he walks you through, step-by-step the process of Getting Out Of Debt Really!
For free information on how to get this video go to http://getoutofdebtreally.com You’ve never been taught many of these things and it shows. To chat about this and other financial topics go to his blog at http://ImagineDebtGone.com you’ll be glad you did.
It CAN be done. You CAN do it. I’ve done it. You Can too.
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