restructure-debt-live-richer-challenge

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Week 2: Implementation & Automation

Today’s Easy Financial Task: Lower the amount you pay in interest on your debt by restructuring it.

How to Rock this Task:

  • Make a list of your debt. Include your creditor’s name, amount owed, interest rate and minimum monthly payment.  
  • Lower how much you pay each month for debt using three different strategies.

 

FYI: Today’s task will make you put in that WORK, but….. I also secured a special Dream-Catcher only deal to help you get debt free even faster. Make sure to read the whole post.

 

Welcome back! Yesterday’s task was great practice for what you’re going to do today: negotiate. Did you know that you can pay less each month toward your debt and still pay it down faster? Yup! I’m going to show you three ways you can begin to do so today.

 

But first…

Use the My Debt List template to help you create a visual picture of the debt you owe.

 

Click here for the PDF version of The Debt List: Click:  my debt List (updated).pdf

Click here for the Excel version of both templates: Click:  My Money and Debt List (in Excel with formulas).

download (4)


After you fill out the My Debt List sheet, it’s time to tackle how to restructure your debt so you can pay less each month. Here are three things you can do today to help you do just that:

 

#1. Call your credit card company(ies) and negotiate for lower rates. The higher your credit score, the more likely they are to work with you. Use the same script I gave you yesterday in “Day 10: Find Money” to help you negotiate.

#2. Transfer the balance of your higher interest rate credit card(s) onto a lower interest rate card(s).

 

Wondering how to do a balance transfer? Here’s how:

Go to www.magnifymoney.com and search for a balance transfer card. Look for a card that offers a 0% interest rate for at least six months and the lowest transfer fee available. Take note that when doing a balance transfer, credit card companies will often charge you a fee of about 3% of the total balance you’re transferring.

 

FYI: Sometimes credit card companies run a special where you can transfer your balance without a fee. That’s the type of deal you’re looking for on www.magnifymoney.com.

Once you locate a card you’re interested in, call the company and ask:

  • How long will the 0% introductory rate last?
  • What will my rate be after the introductory rate expires?
  • What happens if I have not paid off my balance after my introductory rate expires? Will I be charged the new rate on the full balance or on the balance I have yet to pay off? This is SUPER important to know.
  • How much is the transfer fee?
  • What happens if I’m late with a payment?
  • How much am I likely to be approved for? You don’t want to have $8,000 in credit card debt and only be approved for $2,500. It’s happened to me because I forgot to ask this question.
  • Is there any fine print that I should know about?

 

Note: If your credit isn’t decent, you may not qualify for a balance transfer card. No worriesyou have another option which I explain in #3:

 

#3. Look into taking out a low-interest rate loan and paying off those high-interest rate cards and student loans. This is another way to restructure your debt and save on interest.

Let’s start with getting a loan for your high-interest credit cards, then I’ll explain how to do the same for your student loans.

 

How to use a loan to restructure your credit card debt and save:

  • Use your My Debt List to:
    • Add up how much credit card debt you have.
    • Calculate your average interest rate by adding up your all of your credit cards’ rates and dividing that number by the amount of cards you have. You’ll need to know your average interest rate so you can compare and identify a good deal when you try and refinance your debt.
  • Determine your credit score. Use www.CreditKarma.com to get an estimate of your credit score for free.  
  • Head to www.magnifymoney.com and search under “Personal Loans”. You’re looking for:
    • A company that Magnify Money has given an B+ or better.
    • A company that will give you a rate without a credit inquiry. Whenever you apply for credit, you generate a hard inquiry on your credit report. Hard inquires bring down your score and stay on your credit report for two years. You don’t want that, so choose a company that does not generate an inquiry.
    • A company that offers a fixed term, fixed interest rate and no prepayment penalties.
    • A company that does not charge upfront fees.

 

Still not sure what company to choose? Don’t worry. I have a company that I personally recommend and love. They’ve even given me a special Dream Catchers deal to share specifically with my readers.

 

My Personal Loan Company Suggestion + A Bonus…. 


Sofi is
 my personal loan company suggestion. They have a super HIGH grade on Magnify Money and I’ve personally recommended them for years. 

Here’s our Sofi personal loan link.

 

Note: If your credit is bad, you may not be approved for a personal loan at Sofi. The good thing is, trying at Sofi doesn’t give you a hard inquiry or bring down your credit score. That means, it doesn’t hurt to try. If you’re not approved, review all the steps I’ve given you in #3 above and try another company.

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How to restructure your student loan debt and save:

  • Log onto your student loan company’s website.  
    • Determine if your student loan debt is a private student loan or a federal loan.
    • Note: This is SUPER important. If your loans are federal loans, do notI repeat, DO NOTrefinance them with a private company. Here’s why: the federal government offers a certain level of protection to federal student loan borrowers.
    • Examples:
      • It takes 9 months of missed payments to default on a federal loan. It takes one missed payment to default on a private loan. A student loan default will dramatically bring down your credit score. Think, bankruptcy and foreclosure. Yup! It’s that serious.
      • If you’ve become disabled, unemployed or are experiencing financial hardship, you can apply for forbearance or deferment of your federal loans. Most private loans do not have this option.
      • If you work in a specific sector (i.e. teacher, nonprofit etc), you can apply for loan forgiveness if you have federal loans. Private loans do not have this option. 
  • If you’re unsure if you have federal or private student loans, call your loan provider and ask. If you have federal loans and are having trouble paying, ask to apply for an income-based repayment (IBR) program and any other program that you might be eligible for. Just make sure to keep your federal loans, federal.
  • If you have private loans, follow these steps:
    • Add up how much student loan debt you have.
    • Calculate your average interest rate by adding up all of your private student loan rates and dividing that number by the number of loans you have. You’ll need to know your average interest rate so you can compare and identify a good deal when you try and refinance your loan.
  • Determine your credit score. Use www.CreditKarma.com to get an estimate of your credit score for free.  

Head to www.magnifymoney.com and search for “Student Loan Refinance”. You’re looking for:

    • A company that Magnify Money has given an B+ or better.
    • A company that has no origination fee. An origination fee is an up-front fee charged by a lender for processing a new loan application, used as compensation for putting the loan in place. It’s usually a percentage of the loan.
    • A company that has no max. It offers graduates the ability to refinance qualified education loans.

 

Again, still not sure what company to choose? Then this name will be familiar…

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My Student Loan Refinance Company Suggestion + An Extra Bonus…. 

 

Yup! You guessed it. Sofi is my student loan refinance company suggestion too. You already know that they have a super HIGH grade on Magnify Money.

When I reached out to them for your personal loan deal.

Here’s our Sofi student loan refinance link.

Note: If your credit is bad, you may not be approved to refinance your student loan at Sofi. Just remember at Sofi trying doesn’t give you a hard inquiry or bring down your credit score, so it doesn’t hurt to try. If you’re not approved, review all the steps I’ve given you above and try another company.
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Whew!

I know, I know. Today is going to be a busy day. Don’t let all of the steps discourage you from taking action today. It’s really just four things:

  1. Call and negotiate a lower interest rate on your existing credit cards.
  2. Consider transferring your current credit card balance to a lower interest rate balance transfer card. You’ll need good credit.
  3. Consider refinancing your debt, credit card debt and private student loans with a refinancing company that offers lower interest rates.
  4. Use my recommended company and special Dream Catcher offer to help you.


My Personal Loan Company Suggestion: Click: HERE.
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My Student Loan Refinance Company Suggestion: Click: HERE.

 

That’s it!

I know these work. I myself have done #1 and #2 with great success. I’ve also coached a number of clients, friends, and family on #3. As a result, many of them have saved thousands of dollars a year. Yes, that much!

 

So what are you waiting for? Your dreams aren’t going to fund themselves. They need your help. Let’s knock today’s task out of the park.

 

I’m really excited to hear how much you were able to save as a result of today’s task. Share your thoughts, questions, and successes in the comments below vs. emailing me. Make sure to check in with your accountability partner. Have they begun to create a debt restructuring plan? Work on your plans together.

 

Remember, you’re not in this alone. Share your process with your fellow Dream Catchers in our forum too. Money Management is a team sport. 

 

Lastly, share what you’re doing today with your tweeps:

Today I'm restructuring my debt to save on interest Day 11: #LiveRicherChallenge Click To Tweet

 

Remember, you can find me here:

Twitter: @thebudgetnista

Instagram: @thebudgetnista

Facebook: The Budgetnista

Forum: Dream Catchers  (if you’re not already a member.)


Live richer,

Tiffany “The Budgetnista” Aliche

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FYI:

My Lisa Rule: I have 4 sisters and Lisa is the baby (we’ll she’s not a baby anymore). Of all of my sisters I’m the most protective over her. Before I share any product or service with you, it must pass my Lisa Rule.

What’s the Lisa Rule? If I would not advise Lisa to use a product or service, I won’t advise you to. YOU are my Lisas. I feel protective over you and your financial journey.

Sofi passes my Lisa Rule. Yes, I am an affiliate of Sofi, and I earn a commission off of referrals, but I would not recommend a product or service that I didn’t believe was helpful and useful. If fact, I’ve suggested Sofi to Lisa and all of my mentees that have recently graduated from college.
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A Freebie:
Have you saved and printed the Live Richer Starter Kit yet? It’s full of awesome freebies. Click the picture to get your kit.

Copy of 2016 LRC Starter Kit

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Click the link below and get your copy.

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