4 Simple Ways To Get Out Of Debt

When you’ve got a lot of debt, it could feel like there’s no viable way out. The truth is, the world just started to recover from a devastating financial recession a couple of years ago. So if you’re in this position, you’re not alone. Many hard working consumers were laid off from work. Tons of people, struggling to make ends meet used credit cards and took out loans to cover their expenses while they looked for work that was seemingly impossible to find. But now, more and more people are getting back on solid ground, only to be reminded of their debts every single day. Here are 3 ways that you can fight back, and finally dig your way out of debt!

Option #1: Good Budgeting

I’ve worked with a lot of clients on debt relief. One of the first things I noticed in the industry is that most of the problems can be fixed with better budgeting. Although it may take a little gumption at first to get things all set up, when you get a proper budget together, it will be much easier to manage your money, and finally pay off your debts.

One of the best ways to put a budget together is through the use of a spreadsheet. On your spreadsheet, you want to include all sources of income as well as all of your necessary expenses. Your expenses should include everything from rent to food, gas, daycare, and everything in between. Subtract your total expenses from your total income, now you’ve got your extra funds amount. Allocate as much money as you can to making extra payments on your debts while still holding a little back for monthly entertainment purposes.

Option #2: Sell Your Structured Settlement

If you’ve got a structured settlement, you may be in a very good position for paying your debt off. Although receiving small payments every 2 weeks or every month is enjoyable, you’ve got the option to get paid in one big lump sum.

With one big payment, you may be able to pay off your debts, and put money in savings for the future. Although this isn’t a perfect option for everyone, for some, it’s a great way to not only pay off debts, but to get ahead once again!

Option #3: Sign Up For Credit Card Hardship Programs

Because the worldwide financial recession caused so many people to fall into debt, many lenders started opening up hardship departments within their branches. These are departments designed to help you liquidate your balance as quickly as possible without spreading your budget too thin.

Those who qualify for financial hardship programs are generally given one of two options - either a long term financial hardship plan, or a short term financial hardship plan. In long term programs, interest rates are reduced and consumers are placed on a fixed monthly payment amount. This allows them to pay off their balances quickly without adding too much interest if any at all into the mix.

Final Thoughts

If you’re in a position of overwhelming debt, it’s important to realize that you’re not trapped. You’ve got tons of options! As a matter of fact, the 3 mentioned above are just the tip of the iceberg. All it takes is doing a little research and finding an option that’s right for you!

0 Mortgage Rates Trends

Nowadays, home mortgage rates are moving steadily lower. The 30 year fixed mortgage rate is hovering near the 3.375% region and it is expected to stay below 3.5% for a long period of time. Lenders are also extending credit at reasonable rates, with most lenders charging an interest rate of 3.5% and some at 3.25%.

Mortgage rates are heavily influenced by the prevalent interest rate and the 10-year treasury auction is a good indicator of the performance of interest rate. While mortgage rates are not directly based on Treasury rates, the underlying securities (also known as mortgage backed securities) tend to trade in the same direction as Treasuries. A big move in the 10-year Treasury yield can result in huge volatility on the mortgage rates.

Inflation does have an impact on mortgage rates as well. It is an early indicator of the behavior of mortgage rates. With increasing real estate values and a period of very low inflation, interest rates have remained on an all time low. Many economists feel that mortgage rates will remain fairly low in the future because inflation rate is running extremely low at the present moment.

Most mortgage lenders offer a combination of interest rates and points, for instance 6% and 2 points or 7% and no points. Points consist of a one time upfront payment made to the lender at the time of the closing of the mortgage. It is an additional fee on top of the mortgage payments and it is not part of the down payment. A sharp reduction in mortgage rates will result in a reduction in the cost of borrowing and an increase in prices in markets where money is borrowed by most people to purchase a home. In this scenario, the average payment will remain constant.

During periods of low mortgage rates, most homeowners opt for greater savings via refinancing. Some of the benefits of refinancing at the right time include lower interest rate, consolidation of the second mortgage loan, lower loan terms, lower monthly payments and taking a substantial cash out from equity. Borrowers who refinance also have the option of reducing either their monthly payments or the length of the loan term. It is not impossible to reduce mortgage terms from 25 years to 15 years while maintaining the same monthly payments. In the event that mortgage rates move even lower, borrowers can take the opportunity to reduce it by another five years.

Taking cash out from home equity to pay off credit card debt is another benefit of low mortgage rates. Certain debt consolidation loans also allow borrowers to reduce payment on home mortgage so that the money can be channeled to repay credit card debts, which bear interest as high as 18 to 25%.

Many lenders have come up with their own perspective for the direction of mortgage rates. Mike Owens, a partner with Horizon Financial opines that mortgage rates will continue to slide from its present territory of 3.375%. According to him, it is a good sign because the economy has remained stable so far. Victor Burek of Open Mortgage notes that the 10-year Treasury rate will be kept under 1.87%. As long as the rate stays below 1.87, he will continue to float and only lock in within a few days of closing. On the other hand, Steve Chizmadia, a mortgage consultant with American Capital Home Loans, feels that the treasury and mortgage backed securities market have been very quiet for the past few weeks. The energy that has built up over the last few weeks could potentially lead to a strong movement in rates in either direction. Julion Hebron, a branch manager at RPM Mortgage, has a different opinion. From his point of view, a strong economy will keep the bid for mortgage backed securities healthy and it is less likely for mortgage rates to drop further from current levels.

Suffice to say, even though mortgage rate is close to its all time low, it has risen moderately and there is a greater risk of loss from the practice of floating. Unexpected events can cause rates to move strongly in either direction. Things to look out for this year would include legislative actions in response to US debt ceiling and the Fed's outlook regarding securities purchase.