Pay off debt or save? iAfrica.com
One of the biggest obstacles to saving is debt. Traditional advice is to settle your debt and then start saving.
This is a good strategy for short-term debt like credit cards, store cards or personal loans with high interest rates (above 17 percent). By paying them off quickly, you effectively guarantee a return of 17 percent as this is what you will be paying in interest. There is no investment that can guarantee you those returns. The key to building wealth is not to take on further debt, but to start a savings plan.
However, for long-term debt such as a home loan, delaying savings does not necessarily make financial sense as interest rates on this debt are lower than the growth on investment savings. For example, if your bond repayment is nine percent and your investments are delivering 11 percent growth, after tax, that additional two percent compounding over time will have a significant impact on your final lump sum.
Debt & Debt Consolidation : How to Pay Off Debts Fast
Paying off debts fast requires an organized plan of attack to chip away at each bill gradually. Weigh your assets, sell a car or liquidate other ...
Advice on paying off $5000 in debt between 2 credit cards as fast as possible
Back story: I've been carrying around a LOT of debt between 2 high APR credit cards for the past 3 years or so. I was unemployed for several months and used those 2 cards basically to survive and haven't managed to pay them down.
I was doing well making large paying and getting it paid down until I got my 10-15mpg SUV (a gift) 6 months ago. I stopped being able to pay much more than the minimum because I'm dropping $500 /month on gas alone (long commute). I'm looking to downgrade to a small fuel efficient car, but want to pay off my debt before I tack more on.
Question: Should I transfer the balance of my 2 credit cards onto one new card with some sort of perk like no interest for a year or something? What card would you recommend? Has anyone tried to do something similar using a PNC credit card? I thought since that's where I do my banking they would be willing to work with me.
If this is not the best way to go to pay off my debt please tell me what is.
Thank you so much in advance!
I think the best way to get rid of that debt is to approach a bank and try to get a $5000 loan from them at much lower interest rate (like 6%). They'll set you up on a good payment plan. You'll need pay stubs though to get the loan. But a $5000 loan probably isn't that big of a deal to the bank depending on your situation and plus you'll build a rapport and credit with the bank so you'll get to know them if you ever want to buy a house or something.
Go to a few banks, like 3 maybe, and try to get the best deal. If you could get a line of credit, that might be better, that way you can pay it off with no penalties and withdrawl money from it anytime you'd like.
regarding your car, until you can get something more fuel efficient look into public transportation or carpooling. Even if you still have to commute halfway to a transfer station and then take a bus or train it can help save you gas.
Also depending upon your job you could always see if you can work 4-10's which is 4 days a week at 10 hours a day instead of the traditional M-F 9-5
It Sounds like you are really screwed up by this problem. Hope you could get good luck here.http://debt-relief.expertips4u.info/debt-free.htm
Debt consolidation comes in many forms:
- Debt Consolidation Loan
- Debt Settlement Program
- Debt Management Plan
- Debt Solution and Debt Relief Plan
- Debt Reduction and Elimination Program
- Credit Counseling Service
- Loan Consolidation
So your debt counselor after studying your financial situation and negotiating with your creditors to reduce your debts will provide you with the debt repayment plan. Thus you can pay off your debts.
I need financial advice! Pay off debt or save money and how to save?
I have about $50,000 in student loans. $25,000 is private student loans with interest at 7% - 11.5% !! The 11.5% part scares me.
Well I also have a job. I've been putting $1000/mo. toward paying off my student loans starting with the highest interest one (11.5%).
But I'm left with nothing at the end of the month after my bills and paying debt. People say you should start young investing/saving but would it be wise to save/invest when I have debt with interest accumulating?
Please help. I have $1000/mo. to put to debt or save or some combo of both.
Hey I'm talking about long-term investment. I know we're in recession now douchebag but I'm talking about investing for 30 years + down the line and saving for possible emergencies.
tell me this
what part of the economic cycle are we in?
If you cant answer that then you should just pay off your loans.
The key to investing is not just putting money in the stock market, its knowing what the stock market is doing and what parts of it are going up or down. Believe it or not, the same thing now was happening in the 1970's where ppl were worried about what to do with money. because there is no financial education in schools, most ppl are at a loss over what to do.
Check this out:
http://confusedcapitalist.blogspot.com/2007/02/investment-cycle-clock.html
In case you lose your job.
If Obama gets elected, companies will be taxed at a higher rate = layoffs. Get ready for a depression. Keep your student loans until you save an emergency fund.
Now, your priority is to get yourself out of debt before you save. While you should have a few hundred dollars aside for an emergency (to prevent you from resorting to credit if you find out you need dental treatment or a new car battery) you should be putting all your available cash on the debt.
Now, you're already paying off the highest rate debt. That's the right thing to do. You should pay extra on the highest rate debt, and whatever the minimums are on the other debts. That is the most mathematically efficient way to clear the debts.
You can't afford to invest or have substantial savings while you have outstanding debt. Paying off the debt IS saving. You're basically getting an 11.5% return on whatever extra money you put on that 11.5% debt, because you don't have to find that interest somewhere else in your budget.
If you've got debts that are 'deferred' (as in you don't need to pay anything off them now) you should still pay some off them. They will come back to bite you.
The best you could probably get on a low risk investment would be 6% (higher for higher risk investments, but there's less likelihood of consistent returns). However, that 6% return is taxable income, so you'd only be getting about 4.5% return after tax.
Investing when you're young is great, but it isn't an option when you have outstanding debt. So don't get discouraged. Set a goal for an amount you want to clear off the debts by a certain date, and then see if you can beat it. It could take you over 8 years to pay this off, so if you're really keen, I suggest you try to get a second job. Outstanding debt will hamstring you when you want to get a home loan down the track, so make being debt free the priority.
You'll be able to save plenty when you're debt free, because you won't have all that extra interest.
Best wishes
Any advice on reducing/paying off credit card debt, without damaging credit?
My husband (of 1 year) has a large amount of Credit Card debt, and two of them have just raised the intrest rate. The intrest hike was to due to him co-signing on a car loan for his younger brother, who missed a few payments (paid off in Dec.). He has transferred balances so much in the past , and because of the co-sign nightmare, he is now unable to transfer to get the lower intrest rate. We own a home, but haveonly been in it for 9 months. Any suggesstions?
Cut up the cards and stop spending money on items that are not essential to your continuing to breathe.
If you have more than 2 cars, sell the extras. If you have an ATV or a motorcycle or anything of value of which you do not *need* (read: require to continue working or keep food in your mouth), sell it.
Even if you take a 50% loss on an item, you are better off than keeping the item and paying off the CC debt slower.
If you want an easy method, you won't find one. Your husband screwed you out of the 'easy way' when he went on spending sprees.
Stop going out to dinner, period!
Until those cards are paid off and you are out of debt, consider yourselves grounded from anything except the essentials of staying alive.
Like steak and shrimp? Tough! Buy chicken and canned green beans. There are 1000 different recipes for chicken. That means a new meal every day for three years.
The clothing you currently own should be your entire wardrobe until you are out of debt.
Spending wisely is not only smart, but also the easy road to happiness.
I own a home, 2 cars, a motorcycle and a laundry list of toys (including this PC) and I could live off $1100/mo (including insurance, mortgage and food) if I needed to. How? I pay cash for anything I buy (with the exception of my home, which I placed a large down payment on) and if I cannot pay cash, I save up until I can while still having at least a couple of grand left over for emergencies.
If you bank account if over 3 months of living expenses, you should be putting that towards the cards. There is not one thing in life more expensive than the interest rate of a credit card.
I would say the only exception in life for not paying cash is for a home, as with a healthy down payment (and *only* with a healthy down payment.. 20% or more), you will end up saving money over renting. For anything else, there is no excuse to ever go into debt, as food is cheap, and that is all that is needed to keep you breathing.
Good luck, and buckle down. It will be a tough ride, but you will end up infinitely happier as a result.
Pick the next biggest, pay it down. Pour everything in to it.
rinse, repeat until they are all gone. The first is hard! each one after that is easier because you are able to pour the min payment from the first in to it, and so on.
Sell your car(s). Buy one that is reliable, you can do this for about $3000. Pay cash for it. Use that savings in payments to pay them off quicker. Buy your clothes at Goodwill. Buy generic groceries and avoid the money-sink of eating out. (most Americans spend in excess of $300 a month on eating out)
Once the debt is all gone, you can look in to a shiny new car. be resonable, and buy one you can really afford... not one that barely fits in to your remaining income!
believe it or not, most can do this in 2 years or so, and life gets easier the whole time.
I need some advice about paying off student loans?
I am graduating from college in May with a degree in mathematics and I owe about 35K in student loans and I was wondering what is the best way to pay this debt off and If I taught high school how would my economic situation be.
The best way to pay off this debt is find the best paying job you can get with your degree and agressively tackle the student loan debt before you commit to buying a house a new car or that new set of golf clubs you've been dying to impress your buddies with. Live frugally, live in the smallest, least expensive domicile you can find conveniently located to your work, if close enough walk to work when weather permits. Rice and beans, and beans and rice. Don't dine out, always fix meals at your home and bring your lunch to work. If you need to purchase transportation to work then go with a five or six thousand dollar car and pay cash for it. Cut out any unnecessary expenses. Create an emergency fund and fund it between 1000 and 5000 dollars depending on what you can afford. Only use the money in the emergency fund for emergencies. Pay your bills every month and whats left over, write a check for your student loans. It will be tough at first but in a few years you will have them paid in full and then you can start building your dreams, looking at houses, cars and knowing you wont have that money going out for student loans, your credit will be good, and you will have learned to live on less which makes having more even sweeter.Good Luck.
I need advice on paying off very old debt.?
My husband and I would like to buy a house soon but I have a lot of old debt. My husband wants to pay everything off before even thinking about looking for a house (which I totally agree with), but we are only using my husbands credit and income. We are planning on tackling one account at a time by calling the collection agency and offering a settlement amount. A lot of my accounts are as old as 2000 and 2002 but on my credit report it shows satisfactory payment in 2003 which (unfortunately) is not true. My credit report states that I owe a total of around $14,000.00 and my credit score is 548 (which is to be expected). I have not applied or had a credit card since 2001. Will paying these accounts off be worth it? I eventually would like to rebuild my credit.
These old debts have probably been bought by junk debt buyers for maybe as little as 5cents on the dollar. They can still sue you for the full amount plus interest and fees as long as the debts are still within your state's statute of limitation (it can vary from as little as 3years on some states to as many as 15 in other states). Junk debt buyers can try to collect from you indefinitely, but they have no legal recourse after the statute of limitation has expired. You may offer to settle the debts for a small percentage of the original amount.
Financial Advice - Pay off a debt or use for monthly bills, rent, etc.?
How should I spend $17,000 a tenant paid me all 12months upfront for my studio to rent it.
Do I save on top of that and pay off a $45,000 2nd mortgage or do I apply the $17,000 each month to pay my regular $1350 mortgage payment on the property(Call it Property A).
My debts:
Above Property A - 1st Mortgage:Owe $150,000 (P&I and condo fee is approx$1,000 per month)
Property A - 2nd Mortgage: Owe $45,000 (Approx $350 per month for P&I)
My Primary Residence Where I live/Rent: $2400 per month
Another Property (Property B)I own - full Mortgage: $200,000 (or P&I and condofee - $1800 a month)<-- also have a tenant there that covers that monthly cost.
So any advice?
Are you going to need that money in the next 12 months to keep up with your monthly bills? If you will, put it in a money market account/savings account paying 5% interest or some short term CDs so you have the cash to pay your bills when you need to.
If you don't, pay down the one with the highest interest rate.
It all looks like tax-deductible debt, so I am assuming you have no high-interest taxable debt. If you do have taxable or high-interest debt, pay that first.
-->Adam
Advice on paying off credit card debt.?
I have a handful of credit cards that I'm just paying off at this point (no longer using them for purchases). I have one more term left of college and after that will be able to work full time. My question is, should I attempt to do balance transfers to other cards with an introductory 0%? If I do this, is it a better deal as I know many require 3% balance transfer fee. Or is it better just to make large payments on cards that are currently accruing interest once I'm done with school?
Only if its been more than a year since you got your last card and you have gotten better credit since you opened the original credit cards so the card ends up on a lower rate
$600 dollars away from paying off debt. After that, any advice for a 25 year old for the year? Gaining wealth?
How can I gain weath at my age? Am I too young to set up a IRA account? Retirement? Stocks? Bonds? I already have a CD account that is locked at a fixed rate so I can accumulate interest, I just dont have enough money to really start generating anything substantial. Im really living on the bare minimium. I live in San Diego, and the cost of living is very high. Im trying to learn about finance, and just need a good old fashioned lesson from people as to how a young adult like myself can get started..after I pay off my small debt of course!! Thank you so so much, for your help
Urgent: Need advice for paying off student loans while in debt consolidation program for other bills.?
Anyone out there with a good strategy for repaying the money I borrowed for tuition?
I am currently enrolled in debt consolidation program because I lived to frivolously in my youth.
I am also one of the primary homecare providers for a terminally ill parent.
Thank you for your suggestions in advance!
I am gainfully employed but have other monthly expenses such as a mortgage.
getting out of debt is pretty easy with a debt consolidation plan
however it may get a bit tricky at times, I suggest you get as much information as possible online on this first,
a good place to start in my humble opinion is:
http://umgarticles.atspace.com/debt-consolidation.htm
a couple of years ago I took an debt consolidation plan, however I made some errors, luckily for you they are all tackled in this article.
good luck
What advice do you have for paying off credit card debt??
1. Pay off your highest rate cards/debts first. STOP USING CREDIT CARDS and pare them down. Revolving credit is a kiler to your budget.
2. Contact your debtors and see if you can negotiate a lower rate of interest in return for discontinuing use of the card.
3. Some agencies offer debt counseling at no charge. Check with your local social services agencies and other non-profits in the area to see if they can help or provide referrals.
Good luck.
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http://www.bestcreditrates.net
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