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Strategies For Getting Out Of
Debt
Check
Out The "Credit Secrets Bible"
The
secret to repaying debts quickly and saving on interest charges is
to continue to pay the same amount each month until all debts are
repaid. As one debt is paid off, apply that payment amount to
another debt.
To
move forward with the same example, the current monthly payment is
$850. If you pay an additional $180 each month that
will mean $1030 becomes your total monthly payment,and
your debts will be repaid in 7 years and 10 months. You will also
avoid $23.617 in interest charges.
As
you can see, by simply allocating an additional $180, you save
$23.617. Obviously, if you allocate more to your monthly
payments, you will save more money and more time!
Don't Pay Someone Else Thousands, Do It Yourself!
If you follow your
Debt Free/Reduction Plan, you will save $23,617.86 in interest which
is equivalent to 39.5%, plus you will have your debts repaid in
7 years and 10 months, instead of 13 years and 2
months.
There
is a very important note to take into consideration. If for example
you have a debt of $5600 with 3% of interest, you will not pay 3%
each month, this amount decreases accordingly. The following table
will explain step by step how to calculate the monthly interest
rate.
Debts to
pay:
Amount: $5600
Monthly Payment: $680
Interest rate: 3%
|
Month |
Balance |
Monthly
Payment |
Interest* |
How
to calculate new balance |
|
January |
$5600 |
$680 |
$14 |
($5600-$680) + $14=
$4934 |
|
The
new balance for the next month is $4934 |
|
February |
$4934 |
$680 |
$12.34 |
($4934-$680) + $12.34 =
$4266.34 |
|
The
new balance for the next month is $4266.34 |
|
March |
$4266.34 |
$680 |
$10.67 |
($4266.34-$680) + $10.67=
$3597.01 |
|
The
new balance for the next month is $3597.01 |
|
April |
$3597.01
|
$680 |
$8.99 |
($3597.01 – $680) + $8.99=
$2926 |
|
The
new balance for the next month is $2926 |
|
May |
$2926 |
$680 |
$7.32 |
($2926 – $680) + $7.32 =
$2253.32 |
|
The
new balance for the next month is $2253.32 |
|
June |
$2253.32 |
$680 |
$5.63 |
($2253.32 – $680) + $5.63 =
$1578.95 |
|
The
new balance for the next month is $1578.95 |
|
July |
$1578.95 |
$680 |
$3.95 |
($1578.95 – $680) +$3.95 =
$902.90 |
|
The
new balance for the next month is $902.90 |
|
August |
$902.90 |
$680 |
$2.26 |
($902.90 – $680) + $2.26 =
$225.16 |
|
The
new balance for the next month is $225.16 |
|
September |
$225.16 |
$680 |
$0.56 |
|
* Interest calculation
$5600
x 3% = $168/12 months = $14 as interest for the 1st month
$4934
(new balance) x 3% = $148.08/12 months = $12.34 as interest for the
2nd month
$4266.34
x 3% = $127.99/12 months = $10.67 as interest for the 3rd
month
$3597.01
x 3% = $107.91/12 months = $8.99 as interest for the 4th
month
$2926
x 3% = $87.78/12 months = $7.32 as interest for the 5th
month
$2253.32
x 3% = $67.60/12 months = $5.63 as interest for the 6th
month
$1578.95
x 3% = $47.37/12 months = $3.95 as interest for the 7th
month
$902.90
x 3% = $27.09/12 months = $2.26 as interest for the 8th
month
$225.16
x 3% = $6.76/12 months = $0.56 as interest for the last
month
So
each month the interest decreases depending on the new
balance.
Now
that you have completed these examples, you will be able to easily
calculate and manage your debts and know exactly how much you will
pay and the time it will take to payoff all your debts. The most
important lesson here is that you can create a debt
reduction plan relatively easily, and save yourself both money
and time!
Check
Out The "Credit Secrets Bible"
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