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9 Steps to Get Out of Debt – Part 3

Step 3 – Analyze Your Debt

The next step is to figure out exactly how much you owe. First, make a list of every debt you have. Not just credit cards, everything. Credit cards, department store credit, mortgages, car payments, unpaid past-due bills, student loans — everything.

You do not need to count items such as recurring bills like electric, gas, cable, etc. These are not debt, they are recurring expenses. At any time you could shut these off and not owe any additional money, although it may make life unpleasant, to say the least.

Once you have a list of what you owe, you need to determine what your remaining balance is on each item, the current interest rate and your monthly payment for each debt. On most loans you’ll be able to find this information on your monthly bills. However, you may have to make some phone calls to get this information for other debt. Add the remaining amount on each of these items together, this is your total amount of debt. Also, add together your monthly payments for each of these debts to determine the total monthly cost of your debt.

Now, you need to determine how much this debt is going to cost you if you continue making the payments you currently are. You can do this by completing an amortization table for each debt. Don’t worry, we’re not going to make you do this yourself, you can use our amortization calculator located at destroydebt.com. This will tell you two key pieces of data: how much each debt is going to cost you, and when it will be paid off. Add the total cost of each loan together; this is the total cost of your debt. This number can be scary at first, but don’t get too worried yet, this should be the last time you see this number.

If your total monthly debt is greater than 50% of your net monthly income, or you have found yourself in a situation where you are unable to pay your bills and have fallen behind by several months, I would suggest you stop here and seek the advice of a professional financial counselor. Otherwise, continue on.

By: Jeremy Zongker

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Posted in Finance · July 29th, 2010 · Comments (0)

How to Determine Your Monthly Loan Amortization

If you have been in a situation in which you feel that you are simply living from one paycheck to another, the notion of living a life that is free from debt may seem too impossible at the moment. However, you should not feel helpless but rather take a proactive approach in handling your debt situation. When it comes to debt management, so many options are available out there to help those in need of a clean break. These options may come in the form of debt consolidation loans.

If you feel that this is an option that is suited to your personal situation, we suggest that you clarify the issues to help you arrive at a more informed decision if a consolidated loan is right for you. One way to do so is to estimate your monthly amortization using a debt consolidation calculator.

What is a debt consolidation calculator?

A mortgage calculator can help you to accurately determine your monthly loan amortization using a few key information and data that you already have at hand. Sort of like a short cut method, this is an especially handy tool for those who are not particularly adept at manual calculations. What is good about this tool is that you will not only be able to predict your mortgage payment, you will also be able to fully explore your options by substituting a few pieces of information to help you arrive at the best possible terms before you approach a debt consolidation company. Various websites offer free calculator options so that you can start your calculations right away.

What you need to calculate the monthly loan amortization To get the most out an online debt consolidation calculator, you will need the following information:

- The loan amount- Start with an estimated figure by adding up all your existing debts to arrive at how much money you will need to borrow. This figure will constitute the consolidated loan you will take out. You can either choose to consolidate just your credit card debts, your student loans, or why not consolidate everything so that you can get off on a fresh start.

- The loan term- This is the length of the loan or the loan term you are considering. Depending on debt consolidation loans being offered, you can choose anywhere from 10, 15, 20 or even 30 years. The loan term will also depend on how much you owe. If you have higher debts, a longer term will stretch your debts and result in lower monthly payments but higher accumulated interest. In contrast, a longer term can result in higher monthly payments but with lower interest rates and faster debt payment.

- Interest rate- You can estimate the interest rate by consulting a lending company or their website. Most debt consolidation loans come with varying interest rates depending on the loan term and amount.

- Start date- This refers to the date at which you wish to start making monthly payments.

What You Should Do

Once you have prepared the information above, all you need to do is just hit the “calculate” button to reveal the estimated monthly amortization for your desired loan. By changing the loan amount, loan term and interest rate, you can also determine which factors to change or keep depending on the results.

By: William Gabriel

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Posted in Finance · January 31st, 2009 · Comments (0)

All About Useful Amortizations

Applying for a loan can be a daunting task for a consumer. Everyone worries about the prime lending rate, loan terms and such. So it is important to know a little about how these things are calculated.

An amortization table is exactly what you need to look at before you take out any loan. Ask your lender to show you one prior to the signing.

An amortization schedule is a report that spells out in detail the effects of each payment on a loan throughout the life of that loan. This is typical of a mortgage loan since they are long term at 25 to 40 years, but can be used on any type of loan. Car loans, personal loans and student loans can all be reviewed using an amortization schedule.

Every loan is split into two pieces: the principal (what you are borrowing) and the interest (what you pay for the loan). An amortization table breaks down each payment and tells you how much of your payment is going to interest and how much goes towards paying down the principal.

At the beginning of the loan, a large part of the payment goes towards interest with very little going to the principal pay down. The amount going to the principal increases as the term progress Usually, the final payment is somewhat lower than the previous ones.

Additionally, the amortization chart shows interest paid to date, principal paid to date and principal remaining after each payment.

As you can already see, this is a valuable tool for the savvy consumer to properly decide on the right loan deal.

The formula is very involved and looks like this where P=Payment, I=interest and n=number of payments:

P= I x principal x (1+I) x n / (1 + I) x n

You could try that for your self or just use one of the many free amortization calculators like the one at http://www.amortization-calc.com/.

Aside from getting this information from a lender, there are quite a few companies that sell amortization software like Slateboard’s Quick Calc Pro Amortization software. See it at http://www.slateboard.com/pro_quikcalcpro.htm

With the software in hand, you could easily preview the financial impact of any loan you are considering. Look for the best rate, put it into the calculator and figure exactly what the payments will be for a given term.

This is especially useful when considering a re-finance or re-mortgaging. What happens is that all of the interest paid on the original loan is lost. The re-finance stars the process all over again.

There are also several different types of amortization schedules including linear, declining balance, annuity, bullet (all at one time) and increasing balance (negative amortization). Of these, the most common one is linear.

Almost any financial web site has calculators available freely. Simply Google “amortization calculators” and you will see a plethora of free ones to choose from. Software like that mentioned above is also available openly either at your favorite software store or online. Again, just Google “amortization software”.

A little knowledge goes a long way and using an amortization schedule is good preparation and even better foreknowledge.

By: Rita Lambros-Segur

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Posted in Real Estate · July 6th, 2007 · Comments (0)

Student Debt Consolidation Loans

More than a few students would benefit from knowing more about student loan consolidation because for most it means help in managing the stress related to student loan repayment. Well student loan debt consolidation is the act of putting together all your student loans into one combined loan so as to aid in managing your financial debt caused due to college or any trade school.

Once you combine or consolidate student loans, you will then have only a single monthly payment to make. Also, that single payment is more often than not, lower than what your combined monthly payments of an unconsolidated student debt would sum up to be. This is payment ends up being lower simply due to the fact that once you consolidate loans you are usually offered an extended time period to pay off the debt. Sometimes this period can extend up to even thirty years. Most people find the lower payment to be a huge benefit that of course it is. However, consolidation may also lead to your paying more interest, over a longer length of time, than you what you would have paid with your combined unconsolidated debt.

It is a fact that student debt consolidation loan rates are in general of a lower amount than unconsolidated loan rates. Also, most commonly the student loan consolidation rates are fixed. The interest rates however are more often variable in the case of unconsolidated loans. This means that the rates can change at any given time and that too sometimes even without much warning. In the case of a fixed rate, the monthly interest will stay the same throughout the complete period of your consolidated student loan.

If you require detailed information on student debt consolidation loans, you can normally get it from any financial aid office of any educational institution. Another option is that you can even request the information from the original holder of your debt. It is always wise to keep your options open for student debt consolidation loans as it can be beneficial for most students.

By: Max Bellamy

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Posted in Finance · June 12th, 2007 · Comments (0)

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