Debt Settlement Strategy: Setting Up a Budget to Make the Minimum Payments

July 12, 2010 - PRLog -- It is helpful if consumers know how to spend their money wisely. To budget out a plan of attack to eliminate it the solution is to decipher what type of debt they have. For instance, the two major types are secured and unsecured debt.

Aurora Lillo Editor of the "Best Debt Relief Programs" website -- http://www.BestDebtReliefPrograms.net -- pointed out;


“...Mortgages are huge financial responsibilities. Before applying for a mortgage it is best to understand all the aspects of a mortgage. In fact anyone over the age of eighteen can be pre-approved for the loan, even before they apply, but the problem is that people do not budget the hidden costs of the loan. Not only is there a mortgage payment, there are other payments that need consideration. Budgeting for this is easy. If the applicant can not afford the 20% down payment for the mortgage, they can not afford the whole mortgage...”

For example a family of four wants to purchase a $200,000 house. The down payment would be $40,000. Add on top of that closing costs and the home buyer might be required to pay $50K to $60K for the first house payment. Plus, add in the 5% to 9% of interest depending on the FICO score of the applicant. In order to afford the first payment he or she would have to save about one to two years of the average income of a family of four.

Credit cards are the simplest way to purchase anything. It is easy to get overwhelmed because the card holder does not need to know the price of the good or service; they buy and buy. They do not realize the trouble they get into until the statement comes in the mail. The statement shows the total amount due. If lucky enough they can pay off the bill without paying any interest. Most credit cards carry an interest rate from 10% to 25% on average. The interest causes the balance to sky-rocket. Some credit cards have a higher interest than that. If the card holder wants to keep this debt in check to make budgeting easier, before purchasing an item or a service, be absolutely sure the good or service is affordable from the start.

“...In order to budget their money properly, the consumer must attempt to understand what they can and can not afford...” added A. Lillo.

Further Information By Visiting; http://www.BestDebtReliefPrograms.net