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Graylock Advisors Shares Ways to Get out of Debt Quickly and Responsibly

Amid record high consumer confidence, the debt burden continues to weigh down many households in America. A State of Credit 2017 report unveiled by Experian shows the average American holds credit card debts amounting to $6,350 and non-mortgage debt of over $24,700. The non-mortgage debts are collateralized credit facilities such as car loans, commercial loans and personal loans. The average student loan has also been rising over the years and stood at a record $34,140 in 2017. The debt situation is worsened by reports showing people are spending much more than their monthly earnings. To bridge the gap, many are turning to new lines of credit.

Experts see the debt as an emotional rather than a rational problem. This is demonstrated by the continued practice of buying stuff one can ill afford. According to Financial Mentor, the top habitudes blamed for the rising debt problem include emotional spending, sense of entitlement, complacency, lack of plan and instant gratification. People with emotional spending problems are often tempted to use shopping as a route to escape boredom or relieve stress. The habit can easily cause bills to pile up, thereby making repayment untenable. Lack of a plan causes a disconnection between spending on one hand and earnings and savings on the other hand.

It also leaves the affected individual with no concrete budget, long term earning strategy or retirement plan. Complacency is an attitude that is widely blamed for causing debt escalation. An individual with this mentality believes he or she is already in debt so spending a little more wouldn’t make any big difference. Although the habit may keep you going for a few months, it may cause serious problems down the line such as increased charge offs, bankruptcy and foreclosure. The first step of getting out of debt is accepting you have a problem that needs urgent intervention. According to AARP, here are 6 ways to turn the corner when you are in debt:

Getting out of debt quickly and responsibly

1. Use savings to pay down large debts

It is safe to use part of your savings to pay the initial credit down payment, assuming your savings are at a level to justify this expense. This decision can go a long way to curtail the accruing interest normally associated with high interest debt. You will also get the money sitting idle in the bank to work for you.

2. Use your tax refund to pay debt

Instead of splurging your tax funds to satisfy short-term desires like going on a vacation or buying high value items, you could use the check to clear some of the crippling debts. Paying debts in a lump sum will ease your debt burden and make it easier to clear the remaining debt moving forward.

3. Increase your debt repayment percentages

If you are serious about offsetting your debt, consider setting aside about 15% of your paycheck or social security benefits on loan and credit card debt repayment. Making slightly larger repayments will help you offset the accruing interest and clear the debts quicker. Most credit card issuers usually request around 2% monthly debt repayment on the existing balance.

4. Learn to negotiate lower interest rates

This is a popular strategy for lessening the debt burden. Once you have negotiated for a lower interest rate, you need to strictly adhere to the agreed terms of repayments in order to maintain a good standing with your creditors. This will place you in the good books and earn you better terms of credit in the future.

5. Find ways to earn more

As you work on paying off your debt, you should consider new strategies to increase your income and clear debt in the shortest time possible. Some of the ways to do this include negotiating a pay raise with your employer and looking for a part time position or a side gig to boost earnings.

6. Use Statute of Limitation to your advantage

If you have old, charged off debts and debts you are not obligated to pay, you can use the Statute of Limitation to clear your credit history. Old debts will feature on your credit history for seven years or thereabout and will certainly limit your chances of getting credit or favorable loan terms in the future. Some states have set limits on the types of debts that debt collectors can pursue and the legal means they can use to pursue such debts. A debt expert like those at Graylock Advisors can help clarify the matter.

How a professional debt expert can help

If you are in a bind and do not know what to do about your debts, you need to get in touch with a local debt expert. Debt management entities like Graylock Advisors offer an array of services, including debt consolidation and low interest rate debt consolidation loans to help clients stay debt free. Graylock Advisors will help consolidate your debt into one, low interest payment.


Brice Capital Effects of Debt

Unexpected Side-Effects of Debt According to Brice Capital

Many people today are struggling under a massive load of debt. According to the Washington Post, 7 million people in the United States are now behind in their auto loan payment for three months or more. This means that the debt of their auto loan is now overwhelming them. 

Also NerdWallet stated that Americans have an average of just under $7,000 in credit card debt. Since the credit cards issued today have very high interest rates, many of the people who struggle under this debt don’t think they will ever be able to fully pay it off. 

Brice Capital has found that, for their clients, this debt has many unexpected consequences: 

No Retirement Savings – 

Debtors are unable to save for their retirement, since they are making the mandatory interest rate payments on credit card debt. This will force them to have to work later in life. 

Marriage and Health Problems – 

The stress of trying to keep up with payments to multiple lenders, some of whom have ridiculous interest rates, takes its toll on young married couples. Also, people can have trouble sleeping, be depressed, get headaches and even have a heart attack when they are deeply in debt. 

Credit Score Domino Effect – 

Sadly, according to TheBalance.com, even if you are making those payments on time, 30 percent of your credit score relates to how much debt you carry. If you carry too much debt, your credit score will decline. 

That creates a domino effect, since it can also influence the amount of money you pay for auto insurance and even the type of job you qualify for. 

Juggling Other Expenses – 

Over time, people who are paying exorbitant rates for credit will begin to have trouble paying for other expenses, such as utilities, food and gasoline. 

Precluded from Home Ownership and Other Housing –

If your costs for servicing your debt exceed a certain formula, you will not be able to buy a home because your ratio of expenses to income will be too high to qualify for a home mortgage. 

Even if you are forced to rent an apartment, bad credit could preclude you from being approved by the landlord. 

Staying in a Bad Job – 

Changing jobs is risky. People struggling under a high load of debt and interest payments are hesitant to leave a soul-crushing job because they are afraid things may not work out at the new job, leaving them unable to service their debt payments at all. So, they may stay with jobs that are causing them even more stress and possibly harming their health. 

Paying Too Much for Purchases – 

If you are paying high interest rates on credit cards, you end up paying far too much for your purchases when you take into account the interest payment as well. 

Ignoring Health Issues – 

Since we don’t have a universal health care system in the United States, many people have to pay for their health care out-of-pocket. According to United Federal Credit Union, when one is juggling bill payments, some people opt to skip going to the doctor for a small thing that can morph into a larger health issue. 

Wage Garnishments –

If you get behind in these crushing payments and a creditor takes you to court, you could have some wages garnished from your paycheck. 

Bankruptcy May Not Help – 

If you mostly owe student loans or back taxes, as many in the U.S. do, these debts are rarely discharged in bankruptcy, so you will still owe the student loans and tax payments, even after bankruptcy proceedings. 

United Federal Credit Union also stated that the average credit card interest rate is just under 24 percent. If one could get a loan with a lower interest rate, such as nearer 10 percent, one could save about $260 yearly, if they had a balance of $2,000. 

If you are in excessive amounts of debt, consider consulting industry leaders, like Brice Capital, on debt consolidation and other means of improving your financial stability. Heavy loads of debt carry too many unintended consequences that devastate the quality of life for those who are ensnared in that web.