Personal Loans For Debt Consolidation and Options For Getting Out of Debt
If you are looking for personal loans for debt consolidation then I have a question for you. Have you considered getting out of debt before looking to consolidate your debt? I realize that you have been looking on the Internet for online debt consolidation help, but here are two examples of how you can get out of debt.
Getting out of debt is like saving money, it takes time and discipline. But, once your debt is gone, you will feel a heavy burden lifted off of your shoulders. By the way, you should always try to figure a way to get out of debt first before you apply for personal loans for debt consolidation. The reason is becuase you want to see the time diffrences on which one would take the shortest amount of time to get out of debt.
If you are going to go with one of the debt options below, I suggest you get a pen and paper out for taking notes. Then, if you don't like the example provided, you can always apply for the personal loans for debt consolidation.
Debt Option 1
The first option to getting out of debt is to pay off the loans with the highest annual percentage rate (APR) first. This example does not include mortgages. These are just examples and the payment and interest are example based only.
Jack has 3 credit cards, 1 car loan, and 1 personal loan. The 1st step is to write down every debt he has. CC = Credit Card.
CC 2 = $1,000 owed at 22% APR @ $20 minimum payment - 1st debt to wipe out.
CC 3 = $750 owed at 18% APR @ $15 minimum payment – 2nd debt to wipe out.
CC 1 = $500 owed at 14% APR @ $10 minimum payment – 3rd debt to wipe out.
Personal Loan = $8,000 at 12% APR @ $140 minimum payment – 4th debt to wipe out.
Car Loan = $10,000 at 10% APR @ $225 minimum payment – 5th debt to wipe out.
In the above example, Jack decided to pay $100 more per month. Jack adds this $100 per month to one loan at a time. The minimum payments are still being made to the other debts while focusing on one debt at a time. When one debt is paid off, Jack would draw a line through the debt with the word DONE at the end of the line. This helps to keep track of the progress.
Jack would first take CC 2, which has an interest rate of 22% per year and pay $100 more per month, plus the minimum payment. The minimum payment for CC 2 is $20 per month. Therefore, the total payment for CC2 is now at $120 per month. While applying this process, Jack would still pay the minimum payments on all the other loans as well. When the complete balance is paid off on CC 2, Jack would apply the money of $120 from CC 2 to the next debt, which is CC 3.
CC 3 has an interest rate of 18% per year. CC 3 also has a minimum payment of $15. The new payment for CC 3 would now be $15 + $120 = $135 monthly.
CC 1 would be next in line to wipe out, which has an interest rate of 14% a year. CC 1 has a minimum payment of $10 a month. Jack would then take the payment from CC 3 which was $135 + $10 = $145 a month. While applying this process, Jack would still pay the minimum payments on all the other loans as well. Jack would pay this amount until the debt is paid off and then move to the next debt. Jack will repeat this process to the other loans until all the loans are paid off.
One of the reasons why people apply for personal loans for debt consolidation is becuase they think it is easier to get out of debt. But, the keys to these options of getting out of debt are Will Power, Discipline, Focus, and Persistence. Lastly, keep in mind that you can accomplish this process, but it is really up to you to take action.
Want To Learn More About How To Get Out of Debt?
Debt Option Part 2 is about debt consolidation and personal loans.
Learn More About Consumer Debt
Additional articles about consumer debt consolidation.
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