Debt Management and Debt Consolidation Part 6
by Clifton

So why do we go to such lengths to cancel all debts and want to be debt free? The main reason is not that debt is a bad thing, but is the way you handle credit is wrong, that is why you end up in debts. If you know how to use credit in a good way, it can be on your side, just like buying a house, a car or a college education, all this needs you to be credit worthy. On your way to your destination of becoming debt-free, you need to know how you progress along the way. You need to know where you are now in debt consolidation program, if you don't know, it can be demoralising.

First add up all the loans and debts that are outstanding, for example you have $8000 in credit cards, $20,000 on your car and $150,000 on your house, that's a total of $178,000 debt. Cool off, wipe away the sweat on your eyebrows. Always start with the one that incurs the most interest and that's your credit cards. Take the figure that you paid off last month, maybe $50, now divide the paid amount of $50 by $8000 which is the amount you owed and multiply by 100 (percentage), that's 0.625% , that's the progress your have made so far. Now do the same math to all the other debts.

You will have a clearer picture by now, you will know how much progress you have made so far. Maybe your progress for your car loan is 4% and your house loan is 0.25%, start thinking which debt you will want to eliminate first, we suggest the credit cards. You can shift your money to be paid around, you might want to make a 2% payment progress for your credit cards and a lower percentage for your car loan. And of course if there are no progress, you are in trouble. Reminder: when you are in this debt consolidation program, all you want is debt free.