These days a boon of cash is as a fortunate find, as it is a rare one. One of the questions that will come to mind, after the rush of excitement, is; do I pay off bills and debt or do I save?
Many people are weighed down under debt and high interest rates, and many more are in need of debt help. A sudden flush of cash from any means, like a tax refund, a work-related bonus, or extra income is a wonderful thing; but these days the dollar needs to stretch more than ever. What should you do? Do you get out from under any debt or do you start saving for the future? That all depends on your specific circumstances.
Simple math will give you the insight you need to make the right decision around your debt-management- versus-savings debate. The decision really revolves around interest rates and your long term plans. If your debt is minor, and the interest rates on your credit cards are minimal, then you are in a good position to save. Though, you may want to balance the allocation of funds, and pay a bit towards you debt, you may be able to pay the small amount off entirely, and save the rest.
But, if your debt is considerable, and the interest rates are high on your various cards, then you are going to be paying more in the long term than you would save. For instance, if your savings or money market accounts only yield 2% or lower, but your interest rates on your cards are 14%, then you are bleeding money because of the exuberant interest rates. It’s advisable to pay off the debt as quickly as you can.
If your debt is larger than you can manage, and the recent boon of funds doesn’t begin to cover it, then you may need to look into a debt settlement. This option is an alternative to filing bankruptcy, and can drastically reduce the total amount of debt you owe. You can find debt help through a number of non-profit debt management programs, or seek the aid of a debt settlement lawyer.
When it comes to the decision between savings and paying off debt, balance is generally the key. If you are unable to create a sensible monthly budget, or you don’t know how to manage your debt, then you should seek credit card debt advice, and debt settlement advice.
A debt settlement is an easier affair, and less damaging to your credit score than a bankruptcy case. It’s best to find a reputable debt settlement lawyer to mediate and negotiate with your creditors. It may be too arduous for you to negotiate with your creditors alone.
First you will be asked to cease making any and all monthly credit payments. You will need to save up cash to deposit into an escrow account that the debt settlement lawyer will monitor. Once escrow is funded, then they negotiate with your creditors, generally lowering your debt totals by 20% to 60%. They consolidate your payments, so that you make one, regularly scheduled, and budgeted monthly payment toward all your debt.
Many have fallen behind on their mortgages, and are unable to get refinanced with their underwater mortgages. Creditors would rather get what they can out of you than to lose the income from your mortgage entirely in a bankruptcy case. If you’re behind on your mortgage, and you come into sudden funds, you may need to research your debt settlement options in the way of finding refinancing, or negotiating to lower your monthly payments and you should have the property reassessed to current market value. There are ways to consolidate your property loans, and to negotiate over the total amount of mortgage debt. While these matters are more complicated by the varying state laws, you may need to seek the advice of a debt settlement lawyer. To learn more about your consumer right regarding debt click here.
If you are fortunate enough to come into a boon of funds, and you are stricken with debt, the ideal use of those funds would be to apply them toward a debt settlement of any type. You may also contact and negotiate with your creditors directly. This is a good tactic if your debt size is a manageable amount, or your number of creditors is limited to two or three.
It’s advisable to seek counsel from a debt settlement attorney, and research your consumer rights and options.
In order for you to make an educated decision on how to best use your surplus of funds, doing the math is worth it. Figure out the amount of money you’d be paying over the years with high interest rates tacked on to your credit card debt. Review your long-term financial goals, and find a balanced use of the funds. With a little advice from a debt lawyer you will be empowered to free yourself from the shackles of interest rates, and get on track for a better financial future, where you can put money in the bank.
If you are uncertain of all your options, and you aren’t finding the right information online, then seek the advice from a qualified debt lawyer, who can shed light on your rights, the laws, and the best avenue for you to reach your goals.