Residents of the Detroit area and other Michiganders who read this blog regularly probably know that several recent posts have discussed how families in financial distress can try to dig out of debt, with some careful financial planning. Other couples, however, may be trying to be more proactive and pay down credit cards and other debts, while they seem to be financially healthy. Doing this also calls for some strategic thinking.
For those who are trying to pay down debt quickly, the first thing that they need to do is collect accurate information on each and every debt that they are trying to pay off. Specifically, the person will need to know the total balance due and the monthly interest rate on each debt. Once he or she has this information, there are online tools available that can approximate how much a person should apply to each debt each month.
Once a family has a concrete plan for paying off debts, they can take several additional steps to get free of debt more quickly. At the end of the process, they can enjoy some additional disposable income.
For example, some credit card companies, to keep customers, may be able to compromise on a high interest rate, meaning that more of a family's monthly payment will go to paying down the balance. Should that fail, a family could always try to transfer the balance to a card with a better rate or consolidate debts into a single personal loan. Of course, a family could also figure out a way to pinch some pennies, and apply that savings to paying off debt.
In addition to paying off debt, formulating a debt payoff strategy may also reveal some latent, but serious, financial problems that could emerge quickly in the event of a job loss or financial emergency. Should these sorts of weaknesses become apparent, it may be time to speak with a qualified Michigan bankruptcy attorney.
Source: USA Today, "How fast can you get out of debt," Gerri Detweiler, Oct. 26. 2014.