If we are to become a Debt Free America then we all need to become much, much smarter in the way we handle our personal finances. Fortunately, there is a simple way to relieve debt pressure but you need to be careful.
What does a Debt Free America mean? Simply put it is the total elimination of non-investment borrowing. While an America that is debt free may seem to be a lofty goal, I believe that it is possible.
The first step is to get your personal finances under control. We can’t have a debt free America if the individual personal debts are high.
Americans are up to their necks in record levels of personal debt, with more people than ever owing $5000-plus on liabilities such as credit cards and personal loans.
If you are juggling credit card debts as well as personal loans, then a form of personal loan known as debt consolidation will help to eliminate creditor pressure.
It will also improve your credit rating because you’ll have just one single payment to make each month so you are not at risk of multiple late payments.
The best interest rates on such a loan range from 7.99 per cent up to 15 per cent. As well as lower interest, you will also be given a time frame to pay it off, allowing you to save money and better manage your finances.
How To Get The Best Deal
Loans can be secured (with an asset) or unsecured and offer fixed or variable interest rates. Shop around for the best deals, and then contact your bank to see if it can match or better any offer. Many of them will actually help those who ask to get a better deal. In the interests of a debt free America it is your responsibility to do this.
If you have a mortgage, you may be eligible for a package banking deal, giving you an interest rate discount off your mortgage or personal loan. It is very important that you exercise very tight control of your money to maintain your liquidity. It is part of becoming and remaining debt free.
Some financial institutions will allow you to “draw down” on your mortgage to consolidate your debts but it is important that you add no more debt and that you pay off the amount you added to your mortgage as quickly as possible. In a debt free America, the only loans you will take will be for investments such as mortgages etc.
While credit unions appear to offer the cheapest interest deals, with MECU offering 6.05 per cent for its home improvement loan, Garfield Wright, of research house Cannex, says many institutions offer a range of rates rather than a specific figure.
That’s because your interest rate will be determined by the amount you are borrowing, the size of your deposit and your credit rating. Time frames will also vary. The rates could be between 7% and 14% but rates outside of this range are also available.
There are many different ways for Americans to become debt free, you should explore them all. A debt free America will always check the interest rate.
Beware Hidden Fees And Charges
Also, find out about fees. Ask about application costs, account-keeping fees some are up to $10 a month and exit fees, which can be up to $400 if you pay out your loan before the term is up.
You need to determine the “effective interest rate”, which includes all fees, so you can make a true comparison of what other institutions are offering. Often the apparent interest rate isn’t the true interest rate.
Many banks also offer a loan plus insurance to cover, say, up to three months repayments if customers lose their job. This comes with a cost that may outweigh the benefit but if you are in an industry that suffers high staff turnover or wildly fluctuating fortunes then that may be enough to get you through.
So, is a debt free America possible, certainly on a personal basis it is and there is not much we can do about federal or state debt unless we exercise our right to vote and only vote for those who talk about a debt free America.
Originally posted 2008-06-26 20:35:31. Republished by Blog Post Promoter