Your ability to find money for paying off debt is important for picking your debt relief option. In fact, the amount of cash you can raise determines the way you can get out of debt. For this reason, you need to tap any money sources you can think of for making debt repayments.
There are different sources of funds that are available for you. It starts with ways to make the most of the money that you earn and ideas on how to make extra money.
Then other sources of borrowed money you can creatively raise. Finally, it briefly introduces free government grant money for debt relief.
How Do You Find Money for Debt Relief?
1. Reduce monthly expenses. Food, entertainment and travel expenses are good items for you to start saving money. If you’re spending more than you earn create a monthly budget and slash your monthly expenses by making some sacrifices out of your current lifestyle.
2. Cash out savings or investments and then use the proceeds toward debt repayment. As the interest on your debt gets higher you’ll be amazed to find that debt repayment becomes more attractive than the after-tax earnings of your savings or investments.
4. Utilize existing assets. You can raise some cash by renting your spare room or offering a lift to a neighbor for a fee. And if you have equity on your assets consider getting a home equity loan, which usually offer lower interest rates than most of your debts.
5. Sell assets. Selling assets to pay off debt are one of the many ways to raise cash if you find it difficult to make monthly payments with your net income. You can sell your home if you are in need of a lot of money to settle your debts.
Kinds of Loans To Pay Off Debt
6. Get a consolidation loan. The good thing about this loan is that it has a lower interest rate than the rate of credit cards. Banks and credit unions may lend an unsecured loan or a secured loan based on your credit history. If you have bad credit rating chances are they want collateral.
7. Borrow against the policy of a life insurance that has a cash value. This is a good source of money because the interest rate is usually lower than commercial rates. But repay it as soon as possible because if you die before it’s repaid your insurance company will deduct the face value of your policy with the outstanding balance plus interest.
8. Borrow money from friends or family. Friends and families who love and trust you may want to lend you some money with no to a low-interest rate — and even tolerate a late payment or two. Just make sure you adhere to the agreed repayment schedule to avoid hard feelings.
9. Borrow from 401k retirement plan. A 401(k) plan loan or retirement plan loan is a good source of money for debt relief. But you will owe taxes on the loan amount plus a 10% early withdrawal penalty and the outstanding balance becomes due and payable immediately, if you leave your job before full repayment.
Can You Find Money from The Government?
10. Government grant programs are one of the best debt relief options. If you’re eligible you can have the funds you need to get rid of your debt without incurring another debt. Alternatively, apply for a consolidation loan from the Government if you’re consolidating student loans.
No matter which sources of cash to tap into always try to negotiate with creditors to reduce your monthly payments.
If you’ve fallen behind on your payments tell them that your only way out is to declare bankruptcy. Your creditors will do what they can to avoid a total loss and are willing to offer a new repayment schedule or lower their interest rates.
So there are many places where you can find money for paying off your debt. Just explore the details of each option and list down ones that are right for you and then take actions to get the funds.