Money Smart: How To Get Your Financial Freedom Back If You Are Dealing With Debt

Money Smart: How To Get Your Financial Freedom Back If You Are Dealing With Debt

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Taking on debt over the course of life is commonplace, and many individuals accrue debt through car loans, student loans and a home mortgage payment. If you are like many others, you may also have personal loans and credit cards that require monthly payments. When debt balances and payments become too significant, you may feel the weight of financial stress on a daily basis. Achieving financial freedom may seem impossible, but there are some steps that you can take to get back on track with your finances.

Create a Budget

Many individuals who struggle with their finances do not have a working budget available. A budget is a useful tool that can give you insight regarding how much money you have leftover each month for extra things like going out to the movies. The best budget is one that is carefully researched and that is accurate down to the dollar. You may need to review your last few months bank statements to determine how much you are actually spending on gas, food and other items when preparing your budget. This will also tell you how much money you are spending on debt payments and how tight your financial situation is.

Analyze Your Debts

While a budget may be used to help you to determine why your financial situation is so tight, creating a budget alone is not enough. As a next step, analyze your debts carefully. For each account, review your total outstanding debt, monthly payment, interest rate and loan term. Make a list of all of your accounts highlighting this information. This list will serve an important role when you attempt to consolidate or reduce your debts.

Consider a Home Equity Loan

In many instances, consumers have high interest rates on credit cards and other types of personal loans. The lowest interest rates are generally on secured loans, such as with a home mortgage. If you have equity in your home, you may be able to pull money out of your home through a home equity loan. This loan may have affordable monthly payments and a fixed term, and you can use the cash to pay off higher interest rate accounts that have burdensome payments. By doing so, you may establish an attractive debt reduction plan while also improving your cash flow each month.

Think About Other Financing Solutions

If you do not have equity in your home, you may think about how you can use other types of financial solutions to accomplish this same goal. For example, if have equity in a boat, a car, an RV or another significant asset, you may refinance those items and use the cash as you would use home equity loan proceeds. When you do not have equity available in your assets, you can also apply for a fixed term personal loan. Each of these loan options can be used to consolidate your debts.

Finances can be stressful to deal with, but there are usually solutions available to help you move forward through your challenges. When you take a closer look at your budget, your debts and your financing options, you may find the solution that you are looking for.

Informational credit to Mortgage Centre.

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Categories: Debt Management

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