Planning For Debt Elimination Without Surplus Cash

Previously we looked at using surplus cash each month to chip
away at those outstanding loans, on our long road to debt
elimination. But what can you do if there is no surplus cash
every month?

So, you have examined your monthly outgoings, and there is
nothing to cut out in the way of expenditure. Or you can make
some savings, but it just brings your outgoings and income into
balance each month, whereas before your outgoings were in excess
of the income. Well, at least you have made some progress by
bringing income and expenditure into equilibrium. But where
does that leave you in your debt elimination challenge?

It is probably time to focus on those debts, and see what can
be done to bring down the cost of those loans, and the monthly
repayments. It may still be possible to plan for debt
elimination in 5 years, especially with your newly developed
anti debt mindset.

Taking out another loan will not, of course, bring instant debt
elimination. However, it may be that a debt consolidation loan
will give you a chance to structure your plan over a 3, 5 or 7
year period. With the right approach, this may be an excellent
opportunity to improve your finances no end, resulting in debt
elimination at the end of the loan period. The key will be in
whether you are able to reduce your total loan repayments, and
whether you are then able to set aside those savings each
month.

Let us look at a simple example, of a consumer who has two
credit cards and two other loans. He owes a total of $11300,
and has a minimum monthly payment of $346. Let's say he is able
to obtain a new consolidation loan at 10% annual interest, and
would have repayments of $240 per month over 5 years, a saving
of $106 per month, or $6360 over the 5 year period.

That is a significant amount to put away each month. Enough for
a replacement second hand car? No need for any more loans? In
which case, debt elimination, by our definition excluding the
mortgage, could be achieved within that 5 year period.

There are, of course, millions of permutations of figures, so
you will have to consider your own. But the principles are
always the same. Living within your budget, planning ahead, and
saving for any future purchases in cash. That's a simple
formula.

All it needs to accomplish debt elimination is your new
mindset; the mindset that does not want debt, borrowings, loans
to be a part of your future life. The mindset that has patience
in clearing the debt, and is able resist new purchases of
optional items until the cash is available.

It is worth always remembering, if you cannot to afford to pay
cash for something, then you cannot really afford it at all.
The only exception is the house, where the investment potential
and rent saving alter the financial viewpoint.

Once you have the cash-save mindset, you have all you need to
clear unwieldy and expensive debt from your life, once and for
all.


About The Author: Roy Thomsitt is the owner and part author of
http://www.eliminate-credit-card-debt-now.com