Why Having a Credit Monitoring Service Is Important
But there are drawbacks. First, the loan and interest will be repaid with after-tax dollars, but the interest will be taxed again when you withdraw money from the 401(k) years later. Additionally, you must repay this loan within five years. If you leave your employment prior to full repayment, the outstanding balance becomes due and payable immediately. If it's not repaid, that amount will be treated as a distribution to you. You'll be taxed on that amount at ordinary rates. And if you're under the age of 59 and one-half years, you will also be assessed an additional 10% excise tax as a penalty for an early withdrawal of retirement funds. Accordingly, ensure any 401(k) loan can be repaid before you leave your job.
Make a few sacrifices, and you will find the extra dollars needed to increase your debt repayments dramatically. Those increased payments will save you hundreds, if not thousands, in interest payments. Plus, you will get out of the hole you've dug for yourself much more quickly. Is it fun? No. But it sure beats living a hand-to-mouth existence, fearing bills each month.
2. Snowball your debt payments Take a long, hard look at all your credit cards. Pay particular attention to the one with the lowest interest rate. Have you reached the maximum limit on that card? If not, consider transferring a higher-interest bill to that one. Many credit cards for bad credit even permit this, and it's positively Foolish to trade an 18% debt for one at 12%. If your entire balance is too large to fit on one low-interest card, pay at least the minimum amounts due on all of your cards except one. Funnel the majority of your debt repayments into that one credit card, and pay it off as quickly as possible. When the balance on that card reaches zero, move on to the next with the same aggressive repayment plan.
Indeed, many will negotiate away the farm before they'll write off your debt. As lawyers love to say, everything is negotiable. Therefore, what do you have to lose, except time? It's worth a try. And if you don't wish to do this yourself, organizations exist that can do it for you. As a last resort, file bankruptcy What if you decide you can't pay down your debt using any of the methods listed above? What should you do? The absolute last resort is bankruptcy. Within Fooldom, we firmly believe everyone has a moral obligation to repay their debts to the utmost of their ability. There are times, though, when repayment may be impossible. In those cases, bankruptcy may be the only available course of action. Nevertheless, be aware of the significant drawbacks.
You will be afforded the opportunity here to review detailed and precise credit reports, as the credit monitoring service you sign up with will pull your information through the three major credit bureaus; TransUnion, Equifax and Experian. You will have detailed access to every account on your credit report history in terms of the when and how they were initially established. Any time there is a noteworthy incident on your credit report that can significantly influence the particulars; a credit monitoring service will bring you up to speed and confirm that you are keenly aware of them. These extra set of trained eyes on your credit report are great for viewing it under the microscope with a fine tooth comb. Remember, they are professionals and a lot of the times they will pick up on things that you may have glossed over and missed.
You gain the advantage of the identity theft protection that goes side by side with a credit monitoring service. The proper measures can be apportioned here by both you and your credit monitoring agency to terminate the identity theft in its infantile stages. For the criminal parasites that might try and attach themselves to your healthy credit report; they will exposed by the unauthorized user updates that you receive. Again, this leverages you to properly and effectively stop the crime before it gets out of hand. Lastly, there is the overall sense of well-being that goes along with knowing that there is a professional out there that's got your back in terms of you and your family's financial well-being.
4. Borrow against your life insurance Do you have life insurance with a cash value? If so, borrow against the policy. Yes, you're borrowing your own money. But the interest rate is typically well below commercial rates, and you can take your time repaying the loan. Do repay it, though. If you die before it's repaid, the outstanding balance plus interest will be deducted from the face value of the policy payable to the beneficiary. While that seems a small price to pay to get out of debt now, it could be burdensome to your loved ones should you sleep the eternal sleep before paying it back.
But there are drawbacks. First, the loan and interest will be repaid with after-tax dollars, but the interest will be taxed again when you withdraw money from the 401(k) years later. Additionally, you must repay this loan within five years. If you leave your employment prior to full repayment, the outstanding balance becomes due and payable immediately. If it's not repaid, that amount will be treated as a distribution to you. You'll be taxed on that amount at ordinary rates. And if you're under the age of 59 and one-half years, you will also be assessed an additional 10% excise tax as a penalty for an early withdrawal of retirement funds. Accordingly, ensure any 401(k) loan can be repaid before you leave your job.
Make a few sacrifices, and you will find the extra dollars needed to increase your debt repayments dramatically. Those increased payments will save you hundreds, if not thousands, in interest payments. Plus, you will get out of the hole you've dug for yourself much more quickly. Is it fun? No. But it sure beats living a hand-to-mouth existence, fearing bills each month.
2. Snowball your debt payments Take a long, hard look at all your credit cards. Pay particular attention to the one with the lowest interest rate. Have you reached the maximum limit on that card? If not, consider transferring a higher-interest bill to that one. Many credit cards for bad credit even permit this, and it's positively Foolish to trade an 18% debt for one at 12%. If your entire balance is too large to fit on one low-interest card, pay at least the minimum amounts due on all of your cards except one. Funnel the majority of your debt repayments into that one credit card, and pay it off as quickly as possible. When the balance on that card reaches zero, move on to the next with the same aggressive repayment plan.
Indeed, many will negotiate away the farm before they'll write off your debt. As lawyers love to say, everything is negotiable. Therefore, what do you have to lose, except time? It's worth a try. And if you don't wish to do this yourself, organizations exist that can do it for you. As a last resort, file bankruptcy What if you decide you can't pay down your debt using any of the methods listed above? What should you do? The absolute last resort is bankruptcy. Within Fooldom, we firmly believe everyone has a moral obligation to repay their debts to the utmost of their ability. There are times, though, when repayment may be impossible. In those cases, bankruptcy may be the only available course of action. Nevertheless, be aware of the significant drawbacks.
You will be afforded the opportunity here to review detailed and precise credit reports, as the credit monitoring service you sign up with will pull your information through the three major credit bureaus; TransUnion, Equifax and Experian. You will have detailed access to every account on your credit report history in terms of the when and how they were initially established. Any time there is a noteworthy incident on your credit report that can significantly influence the particulars; a credit monitoring service will bring you up to speed and confirm that you are keenly aware of them. These extra set of trained eyes on your credit report are great for viewing it under the microscope with a fine tooth comb. Remember, they are professionals and a lot of the times they will pick up on things that you may have glossed over and missed.
You gain the advantage of the identity theft protection that goes side by side with a credit monitoring service. The proper measures can be apportioned here by both you and your credit monitoring agency to terminate the identity theft in its infantile stages. For the criminal parasites that might try and attach themselves to your healthy credit report; they will exposed by the unauthorized user updates that you receive. Again, this leverages you to properly and effectively stop the crime before it gets out of hand. Lastly, there is the overall sense of well-being that goes along with knowing that there is a professional out there that's got your back in terms of you and your family's financial well-being.
4. Borrow against your life insurance Do you have life insurance with a cash value? If so, borrow against the policy. Yes, you're borrowing your own money. But the interest rate is typically well below commercial rates, and you can take your time repaying the loan. Do repay it, though. If you die before it's repaid, the outstanding balance plus interest will be deducted from the face value of the policy payable to the beneficiary. While that seems a small price to pay to get out of debt now, it could be burdensome to your loved ones should you sleep the eternal sleep before paying it back.
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