Your Questions About Eliminate Your Debts

Sharon asks…

How do someone reduce or eliminate debt?

John answers:

Start with your credit cards– Take the highest balance card and pay extra on it(as much extra as you can). When you get your highest card paid off, go to the next highest card and make extra payments. Do this until all of them are paid off.

Start using cash for everything, if you continue to use the cards, you will continue to stay in debt.

Start saving 10% of your paychecks in an account– At first it might not seem like much, but over time you will save as much or more hopefully then you owe. Don’t spend it!

Hope this helps and Good Luck!

Daniel asks…

what’s the best way to eliminate debt?

John answers:

1. Spend less.
2. Increase your income is possible.
3. Pay the minimum to stay current on everything.

EVERYTHING you can spare should be applied as follows:
1. Save $1000 for emergencies
2. ATTACK the smallest debt. When it is paid off, attack the next smallest debt.
3. Save 3 to 6 months of expenses.

Maria asks…

Question for people that have succeeded in eliminating major debt?

My husband and I are $60,000.00 (due to student loans) in debt plus a $1500.00 mortgage, two cars ($300.00 per car) and other misc bills. We also have an 18 mos old daughter. I’m a stay at home mom and my husband just lost his job last week. Our finances are in disarray. My husband and I are currently looking for employment. I have B.A. in History with a Minor in Womens and Gender Studies and my husband has his MBA. My question for people who were in a similar situation what steps did you take to turn your financial situation around.

John answers:

What are your monthly payments, and cash flow situation. Are there any cash outflows you can eliminate, or do without. Pay down the debt that cost you the most (higher interest rate) first.

Can you get by with one car? Maybe a less expensive car. Question every cash outflow to see how you can reduce, combine, or eliminate.

Bankruptcy is not an option, since you cannot include student loans in a bankruptcy.

Lisa asks…

eliminating debt and building credit?

Hi, I have accumulated thousands of $$ in medical bills due to having caner and not being able to work. My credit is Now screwed. I am cancer free Now have a good job making about 80,000 a year. I have paid off collection accounts and made payments arrangements for 2 derogatory accounts. I recently was just approved for a Finger Hut account. I made a small purchase and paid off. I know rebuilding my credit will take time, but Can anyone provide and other ideas to help reestablish and rebuild my credit after is was damaged so badly?
I also want to add that like many people I could have chose just to file bankruptcy, but I haven’t I and I won’t. I will continue to pay off my debt and hopefully it won’t take a lifetime to get my credit back.

John answers:

Sorry to hear you had a battle with cancer. I’m glad your ok and back to work.

Continue to pay any derogatory debt you have. The best way to rebuild your credit after a credit struggle like you had is to save up some money and put it in a savings account or a CD account and take out a personal loan against it. With your credit in bad shape, you may not be able to get a personal loan from a national or community bank as easily as before the credit struggle. But, if you put up a liquid instrument like a savings account or CD as collateral; the bank should be willing and ready to give you a loan since its “cash secured”. Pay the loan on time and make sure you let it sit on your credit for at least 6 months to 1 year (preferably 1 year) to allow your credit to rebound a bit.

But make sure you payoff your old debt. Cleaning up your credit will help with the rebound of a “deposit” secured loan.

Carol asks…

how to eliminate debt?

John answers:

Check out and use the debt snowball and “total money makeover” book

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